ASSET PURCHASE AGREEMENT
dated as of January 8, 1998
by and between
RAYTHEON TI SYSTEMS, INC.
and
TRIQUINT SEMICONDUCTOR, INC.
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1 PURCHASE AND SALE............................ 2
Section 1.1 Acquired Assets......................... 2
Section 1.2 Excluded Assets......................... 3
Section 1.3 Determinations as to Mixed-Use Assets... 5
ARTICLE 2 ASSUMPTION OF CERTAIN OBLIGATIONS............ 5
ARTICLE 3 PURCHASE PRICE............................... 6
Section 3.1 Purchase Price.......................... 6
Section 3.2 Purchase Price Adjustments.............. 7
Section 3.3 Call Option on Shares................... 9
Section 3.4 Delays in Demand Registration........... 9
ARTICLE 4 CLOSING...................................... 10
Section 4.1 Time and Place.......................... 10
Section 4.2 Transactions at Closing................. 10
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
OF THE SELLER................................ 11
Section 5.1 Incorporation; Authority................ 11
Section 5.2 Rights to Sell Acquired Assets;
Approvals; Binding Effect............. 11
Section 5.3 No Defaults............................. 11
Section 5.4 Title to Assets......................... 12
Section 5.5 Financial Statements.................... 13
Seciton 5.6 Absence of Certain Changes.............. 13
Section 5.7 Litigation, Etc......................... 15
Section 5.8 Labor Relations......................... 15
Section 5.9 Contracts............................... 15
Section 5.10 Pensions and Benefits................... 17
Section 5.11 Intellectual Property................... 17
Section 5.12 Governmental Consent.................... 19
Section 5.13 Compliance with Laws, Etc............... 19
Section 5.14 Equipment............................... 19
Section 5.15 Location of Inventories................. 19
Section 5.16 Customers............................... 19
Section 5.17 Environmental Matters................... 19
Section 5.18 Brokers................................. 20
Section 5.19 Taxes................................... 20
Section 5.20 Absence of Undisclosed Liabilities...... 21
Section 5.21 Licenses................................ 21
Section 5.22 Collectibility of Gross Accounts Receivable 22
Section 5.23 Investment Representations.............. 22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF
THE BUYER.................................... 24
Section 6.1 Organization and Standing of the Buyer.. 24
Section 6.2 Corporate Approval; Binding Effect...... 24
Section 6.3 Non-Contravention....................... 24
Section 6.4 Government Consents, Etc................ 24
Section 6.5 Buyer's Capabilities.................... 24
Section 6.6 Brokers................................. 25
Section 6.7 Capital Stock........................... 25
Section 6.8 Authorization for Shares................ 25
Section 6.9 Reports and Financial Statements........ 26
Section 6.10 Absence of Certain Changes or Events.... 26
Section 6.11 Registration Statements................. 27
Section 6.12 Registration Rights Agreement........... 27
ARTICLE 7 CERTAIN REGULATORY APPROVALS................. 27
Section 7.1 Department of Justice and Department of
Defense................................. 27
Section 7.2 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇....................... 28
ARTICLE 8 CONDUCT OF BUSINESS PENDING
CLOSING...................................... 28
Section 8.1 Full Access............................. 28
Section 8.2 Carry on in Regular Course.............. 28
Section 8.3 No General Increases.................... 28
Section 8.4 Sale of Capital Assets.................. 29
Section 8.5 Insurance............................... 29
Section 8.6 Preservation of Organization............ 29
Section 8.7 Compliance with Final Judgment.......... 29
Section 8.8 Advice of Change........................ 29
Section 8.9 No Shopping............................. 29
ARTICLE 9 CONDITIONS PRECEDENT TO BUYER'S
OBLIGATIONS.................................. 30
Section 9.1 Representations and Warranties.......... 30
Section 9.2 Compliance with Agreement............... 30
Section 9.3 No Litigation........................... 30
Section 9.4 Regulatory Clearance.................... 30
Section 9.5 Intellectual Property Agreement......... 31
Section 9.6 Supply Agreement........................ 31
Section 9.7 Master Services Agreement............... 31
Section 9.8 Sublease Agreements..................... 31
Section 9.9 Amendment to Registration Rights Agreement 31
Section 9.10 Non-Disclosure Agreement................ 31
Section 9.11 TI Amendment............................ 31
Section 9.12 Voting Trust Agreement.................. 32
ARTICLE 10 CONDITIONS PRECEDENT TO SELLER'S
OBLIGATIONS.................................. 32
Section 10.1 Representations and Warranties......... 32
Section 10.2 Compliance with Agreement.............. 32
Section 10.3 No Litigation.......................... 32
Section 10.4 Regulatory Clearance................... 32
Section 10.5 Intellectual Property Agreement........ 33
Section 10.6 Supply Agreement....................... 33
Section 10.7 Master Services Agreement.............. 33
Section 10.8 Sublease Agreements.................... 33
Section 10.9 Amendment to Registration Rights Agreement 33
Section 10.10 Non-Disclosure Agreement............... 33
Section 10.11 TI Amendment........................... 33
Section 10.12 Voting Trust Agreement................. 33
ARTICLE 11 EMPLOYEES AND EMPLOYEE BENEFITS.............. 34
Section 11.1 Hiring Employees........................ 34
Section 11.2 Benefit Plans Generally................. 35
Section 11.3 Savings Plan............................ 36
Section 11.4 Pension Plans........................... 36
Section 11.5 Incentive Plans......................... 36
Section 11.6 Stock Option Plans...................... 37
Section 11.7 Accrued Vacation........................ 37
ARTICLE 12 CERTAIN COVENANTS............................ 37
Section 12.1 Third Party Consents.................... 37
Section 12.2 Novation of Government Contracts........ 38
Section 12.3 Access to Books and Records............. 39
Section 12.4 Use of Raytheon TI Systems Name......... 39
Section 12.5 Non-Solicitation........................ 40
Section 12.6 Compliance with Certain Agreements...... 40
Section 12.7 Compliance with Final Judgment.......... 40
Section 12.8 Best Efforts and Mutual Cooperation..... 40
Section 12.9 Move to North Building.................. 40
Section 12.10Collection of Accounts Receivable....... 41
Section 12.11Buyer's Business........................ 42
ARTICLE 13 INDEMNITY.................................... 42
Section 13.1 Indemnification by the Seller........... 42
Section 13.2 Indemnification by the Buyer............ 43
Section 13.3 Indemnification Procedures.............. 44
Section 13.4 Scope of Indemnity...................... 44
Section 13.5 Waiver of Statutory Claims.............. 45
ARTICLE 14 TAX MATTERS.................................. 45
Section 14.1 General................................. 45
Section 14.2 Cooperation on Tax Matters; Conduct of
Proceedings............................. 45
Section 14.3 Allocation of Transfer and Property Taxes 45
Section 14.4 Allowable Taxes......................... 46
Section 14.5 Scope of Article........................ 47
ARTICLE 15 TERMINATION.................................. 48
ARTICLE 16 CONFIDENTIALITY.............................. 48
Section 16.1 Confidentiality Agreement............... 48
Section 16.2 Classified Information.................. 49
ARTICLE 17 DEFINITIONS.................................. 49
ARTICLE 18 GENERAL...................................... 52
Section 18.1 Survival of Representations and Warranties 52
Section 18.2 Expenses............................... 52
Section 18.3 Assigns................................ 52
Section 18.4 Entire Agreement, Etc.................. 52
Section 18.5 Waiver of Certain Damages.............. 53
Section 18.6 Construction........................... 53
Section 18.7 Governing Law.......................... 53
Section 18.8 Notices................................ 53
Section 18.9 Counterparts........................... 54
Section 18.10 Section Headings....................... 54
Section 18.11Public Statements or Releases........... 54
Section 18.12Disclosure in Schedules................. 54
DISCLOSURE SCHEDULES
1.1(a) Equipment
1.1(g) Certain MMIC Business Contracts
1.1(h) Certain Purchase Orders
3.1 Purchase Price Allocation
3.2(a) Accounting Procedures
3.2(b) Model Statement
5.3 Defaults, Violations, Etc.
5.4 Sufficiency of Assets
5.5 Financial Statements
5.6 Certain Changes
5.7 Litigation
5.8 Labor-Related Charges, Violations and Work Stoppages
5.9 Contracts
5.10(a) Pensions and Benefits; MMIC Retention Program
5.10(b) Certain ERISA and Non-ERISA Plans
5.11 Intellectual Property
5.12 Governmental Consent
5.13 Compliance with Laws, Etc.
5.15 Location of Inventories
5.16 Customers
5.17 Environmental Matters
5.19 Taxes
5.21 Licenses
5.22 Accounts Receivable
11.1 Non-Assumed Employees
11.5 Incentive Plans
EXHIBITS
A Intellectual Property Assignment, License and Sublicense Agreement
B Supply Agreement
C Master Services Agreement
D-1 Sublease Agreement
D-2 Sublease Agreement
E-1 Registration Rights Agreement
E-2 Amendment to Registration Rights Agreement
F Non-Disclosure Agreement
G Guaranty Agreement
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of the 8th
day of January, 1998, by and between RAYTHEON TI SYSTEMS, INC., a Delaware
corporation (the "Seller"), and TRIQUINT SEMICONDUCTOR, INC., a Delaware
corporation (the "Buyer").
On July 11, 1997, the Seller, a wholly-owned subsidiary of Raytheon
Company, a Delaware corporation (the "Parent"), purchased the Gallium Arsenide
("GaAs") foundry and Monolithic Microwave Integrated Circuit ("MMIC") business
of the ▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ Instruments Incorporated, a
Delaware corporation ("TI"), including, without limitation, TI's GaAs
Operations Group, TI's Microwave GaAs Products Business Unit, the MMIC
component of TI's Microwave Integrated Circuits Center of Excellence and the
MMIC research and development component of TI's Systems Component Research
Laboratory (collectively, the "MMIC Business");
Pursuant to a Final Judgment entered on November 6, 1997 (the "Final
Judgment") in the United States District Court for the District of Columbia in
Civil Case No. 97-1515 known as United States of America v. Raytheon Company
and Texas Instruments, Inc., a related Stipulation and Order entered in the
same case on July 2, 1997, and a related Hold Separate and Partition Plan
Stipulation and Order entered in the same case on July 2, 1997 (the "Hold
Separate Order"), Parent has agreed to promptly divest the MMIC Business and,
pending such divestiture, to maintain the MMIC Business as an independent
competitor held separate from Parent; and
The Seller desires to sell and the Buyer desires to purchase the MMIC
Business.
In connection with the negotiation and preparation of this Agreement, the
Seller has prepared, and the Buyer has reviewed, a set of disclosure schedules,
dated the date hereof and delivered separately as one or more volumes (the
"Disclosure Schedule", with any reference in this Agreement to a Schedule being
a reference to the Disclosure Schedule).
Certain defined terms not defined elsewhere in this Agreement are defined
in Article 17.
In consideration of the mutual agreements and covenants herein contained,
the parties hereto agree as follows:
Article 1
Purchase And Sale
1.1. Acquired Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing referred to in Article 4 hereof, the Seller
shall sell, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase, acquire and take assignment and delivery of, all of the following
assets of the Seller used in or relating to the MMIC Business, with the
exception of the Excluded Assets (as defined in Section 1.2) (all of which
assets are hereinafter referred to collectively as the "Acquired Assets"):
(a) All machinery, equipment, installations, fixtures, furniture,
tools, supplies, materials and other personal property used primarily in
connection with the MMIC Business, including without limitation those
items described on Schedule 1.1(a) hereto, with such additions and
deletions thereto as may arise, or may have arisen, from the date as of
which such Schedule was prepared in the ordinary course of business prior
to the Closing consistent with the Seller's obligations under Article 8
hereof (the "Equipment");
(b) Except as set forth in Schedule 5.22, all of the Seller's
accounts receivable relating to the MMIC Business outstanding on the
Closing Date, to the extent reflected on the Closing Balance Sheet (as
defined in Section 3.2), as finally adjusted pursuant to Section 3.2;
(c) All of the Seller's inventories held for use in the MMIC
Business, including raw materials, work in process and finished goods
(the "Inventories"), to the extent reflected on the Closing Balance Sheet
(as finally adjusted pursuant to Section 3.2);
(d) All of the Seller's prepaid expenses relating to the MMIC
Business, to the extent reflected on the Closing Balance Sheet (as
finally adjusted pursuant to Section 3.2);
(e) all of the Seller's deferred charges relating to the MMIC
Business, to the extent reflected on the Closing Balance Sheet (as
finally adjusted pursuant to Section 3.2);
(f) All of the Seller's rights under all leases of personal
property used primarily in connection with the MMIC Business;
(g) All of the Seller's rights under all contracts and agreements,
including without limitation joint venture agreements, teaming
agreements, distribution agreements, supply agreements, license
agreements, personal property leases and development contracts, entered
into by the Seller primarily in connection with the MMIC Business,
including without limitation the contracts listed on Schedule 1.1(g);
(h) All of the Seller's rights under purchase orders outstanding on
the Closing Date and relating primarily to the MMIC Business, including
without limitation the purchase orders listed on Schedule 1.1(h);
(i) All of the Seller's rights with respect to all MMIC Business
Intellectual Property (as defined in Article 17) of the Seller;
(j) to the extent transferable, all of the Seller's rights with
respect to all computer software programs used primarily in the MMIC
Business;
(k) to the extent transferable, all of the Seller's rights with
respect to any licenses, permits, concessions, orders, authorizations,
approvals or registrations from, of or with any Governmental Entity (as
defined in Article 17) and relating primarily to the MMIC Business; and
(l) subject to Section 12.3, all records of the Seller relating
primarily to the MMIC Business, including, without limitation, financial
and tax records, property records, production records, purchasing and
sales records, personnel and payroll records, customer lists, credit
records, accounting records and such other records as the Buyer may
reasonably require to conduct the MMIC Business subsequent to the
Closing.
1.2. Excluded Assets. Notwithstanding the foregoing, the Seller is not
selling and the Buyer is not purchasing pursuant to this Agreement, and the
term "Acquired Assets" shall not include, any of the following assets (the
"Excluded Assets"):
(a) any of the Seller's title to, interest in or rights with respect
to any real property other than to the extent set forth in the Sublease
Agreements (as hereinafter defined);
(b) any of the Seller's cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on hand or in
bank accounts, and all of the Seller's bank accounts;
(c) any computers not used primarily in the MMIC Business, and any
software embodied in any such computers, any communication or data
network systems not used primarily in the MMIC Business, and any other
equipment used to support the MMIC Business but not located at the
Seller's facilities at 13510 and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ (the "North Building" and the "Research East Building",
respectively, and collectively, the "MMIC Facilities");
(d) any rights under the Asset Purchase Agreement dated as of
January 4, 1997 between Parent and TI (the "TI Asset Purchase
Agreement"), or under any agreement entered into in connection therewith;
(e) any other assets of the Seller not used primarily in the MMIC
Business except to the extent the use of such assets is determined
pursuant to Section 1.3;
(f) any rights to any patents, copyrights, mask works, invention
disclosures, know-how, trade secrets, technical information and other
data, operating procedures, technology or other intellectual property not
included in the MMIC Business Intellectual Property;
(g) any rights to any tradenames, trademarks or corporate names,
including, without limitation, the tradenames, trademarks or corporate
names "Raytheon", "TI", "Raytheon TI Systems" and any derivations
thereof;
(h) any insurance policies relating to the MMIC
Business;
(i) any rights under any ERISA Plan or Non-ERISA
Plan retained by the Seller pursuant to Article 11;
(j) any prepaid expenses relating to Excluded
Liabilities;
(k) unless specifically listed on Schedule 1.1(g) hereto, any
contracts primarily related to the design, manufacture or supply of
modules or the supply of related services and any contracts primarily
related to the design, manufacture or supply of other systems or the
supply of related services for which Seller, as of the Closing Date, will
be granted a license under Section 3.2 of the Intellectual Property
Agreement (as defined in Article 9); and
(l) all corporate records of the Seller and all other records and
files not relating primarily to the MMIC Business.
1.3. Determinations as to Mixed-Use Assets. The Seller and the Buyer shall
cooperate in good faith to resolve any disputes as to whether any specific
assets (including, without limitation, any contracts and agreements) of the
Seller which relate to both the MMIC Business and another business of the
Seller are used primarily in, or relate primarily to, the MMIC Business.
Further, without limiting the foregoing, with respect to any asset necessary to
and presently used in connection with the MMIC Business that is also used by
the Seller in connection with another business, excluding any assets to be
retained by the Seller and used to provide services pursuant to the Master
Services Agreement, the parties shall cooperate in good faith to (i) determine
which business predominantly uses such asset in order that such party is vested
with title thereof and (ii) coordinate the shared used thereof by both parties.
With respect to any contracts or licenses applicable to both the MMIC Business
and other businesses of the Seller, the Seller and the Buyer will cooperate to
structure contractual arrangements providing them both with the relevant rights
and obligations under such contract or license. These arrangements may take the
form of a subcontract or sublicense or causing the other party to such contract
or license to agree to split the contract or license into two separate
agreements.
Article 2
Assumption of Certain Obligations
At the Closing, the Buyer shall assume, and agree to pay, perform, fulfill
and discharge, all obligations and liabilities of the Seller relating primarily
to the MMIC Business of any nature, fixed or contingent, known or unknown,
including liabilities for product warranty claims and product returns and
including liabilities for outstanding orders for capital equipment listed on
Schedule 1.1(h) (collectively, the "Assumed Obligations"), excluding, however,
(i) liabilities for Indebtedness (as defined in Article 17) of the Seller, (ii)
those liabilities for Taxes (as defined in Article 17) that remain the
responsibility of the Seller pursuant to Article 14, (iii) those liabilities of
the Seller under its pension and health and welfare benefit plans retained by
it pursuant to Article 11, and (iv) liabilities of the Seller under the
Settlement Agreement dated February 23, 1995 between Westinghouse Electric
Corporation and TI, other than the obligations restricting the sale of the F-22
ASEA product referred to therein with respect to the MMIC Business (which
obligations shall be an Assumed Obligation) (collectively, the "Excluded
Liabilities").
Article 3
Purchase Price
3.1. Purchase Price. At the Closing, the Buyer shall deliver cash and
shares of the Buyer's Common Stock, $.001 par value (the "Shares"), to the
Seller, as the aggregate purchase price for the Acquired Assets, subject to
adjustment as provided in Section 3.2 hereof (the "Purchase Price"). The
Purchase Price shall be payable as follows: (i) $19,500,000 shall be paid in
cash or by wire transfer of same day funds (the "Cash Portion") and (ii) the
remainder of the Purchase Price shall be paid by delivery of Shares (the "Stock
Portion") having an aggregate value equal to $19,500,000, based on the average
of the closing bid prices of the Shares on the five trading days preceding the
Closing Date, as quoted through the NASDAQ National Market (the "Closing
Trading Price"); provided, however, that if the number of Shares that would
constitute the Stock Portion exceeds 9.9% of the number of Shares outstanding
as of the Closing Date after giving effect to the issuance of the Shares
constituting the Stock Portion, then (a) the Stock Portion shall consist of
9.9% of the number of Shares outstanding as of the Closing Date after giving
effect to the issuance of the Shares constituting the Stock Portion and (b) the
Cash Portion shall consist of (x) $39,000,000 less (y) the value, based on the
Closing Trading Price, of the Shares constituting the Stock Portion referred to
in clause (a). The Shares comprising the Stock Portion are entitled to the
rights, and subject to the limitations, set forth in the Registration Rights
Agreement (as defined in Section 6.12), as amended by the Amendment to
Registration Rights Agreement (as defined in Article 9) (as so amended, the
"Amended Registration Rights Agreement"), which shall include "demand" and
"piggyback" registration rights beginning 180 days after the Closing Date. The
Purchase Price shall be allocated among the Acquired Assets in the manner set
forth on Schedule 3.1 hereto. The Buyer and Seller shall report the purchase
and sale of the Acquired Assets, including, without limitation, in all federal,
foreign, state, local and other Tax Returns (as defined in Article 17) prepared
and filed by or for either of the Buyer or the Seller, in accordance with the
basis of allocation set forth on Schedule 3.1 hereto. The Buyer and the Seller
further agree that they will prepare and file asset acquisition statements on
Form 8594 reflecting such allocation with their Federal income tax returns for
the taxable year that includes the Closing Date.
3.2. Purchase Price Adjustments.
(a) Within sixty (60) days after the Closing Date, the Seller shall
prepare and deliver to the Buyer an audited statement of the Acquired
Assets and Assumed Obligations for the MMIC Business as of the close of
business on the day immediately preceding the Closing Date (the "Closing
Balance Sheet"). The Closing Balance Sheet shall be prepared in
accordance with GAAP applied on a basis consistent with the October
Balance Sheet (as defined in Section 5.5), except that the Closing
Balance Sheet (i) will be prepared in accordance with the accounting
procedures set forth on Schedule 3.2(a) hereto, (ii) will not include any
cash or cash equivalents of the MMIC Business, (iii) will not have an
accrual for Income Taxes payable by the Seller and (iv) will not contain
any intercompany accounts.
(b) When the Seller delivers the Closing Balance Sheet, the Seller
shall also deliver a certificate (i) certifying that the Closing Balance
Sheet was prepared in accordance with paragraph (a) above, and (ii)
containing the Seller's calculations, based on the Closing Balance Sheet
and calculated in a manner consistent with the Model Statement (as
defined below) (the "Seller's Proposed Calculations"), of the Net Assets
as of the Closing Date. As used in this Agreement "Net Assets" means the
difference of (x) the book value of the total assets of the MMIC Business
(including, without limitation, equipment, accounts receivable,
inventory, prepaid expenses and deferred charges, but excluding cash and
cash equivalents and intercompany accounts) constituting part of the
Acquired Assets less (y) the book value of the total liabilities of the
MMIC Business (including, without limitation accounts payable and accrued
expenses, but excluding pension and accumulated post-retirement benefits,
intercompany accounts and retained earnings) constituting part of the
Assumed Obligations. Attached hereto as Schedule 3.2(b) is a preliminary
statement of Net Assets as of October 31, 1997, based upon the balance
sheet of the MMIC Business as of October 31, 1997 and the procedures for
calculating Net Assets as provided above (the "Model Statement").
(c) Within thirty (30) days after receipt of the Closing Balance
Sheet and the accompanying certificate, the Buyer shall notify the Seller
of its agreement or disagreement with the Closing Balance Sheet and the
accuracy of any of the Seller's Proposed Calculations; provided, that the
Buyer may only dispute the Closing Balance Sheet and the Seller's
Proposed Calculations to the extent that they deviate from the
requirements of paragraphs (a) and (b) above. If the Buyer disputes any
such aspect of the Closing Balance Sheet or the amount of any of the
Seller's Proposed Calculations, then the Buyer shall have the right to
direct its independent accountants, at the Buyer's expense, to review and
test the Closing Balance Sheet. The Buyer's accountants shall complete
their review and test within thirty (30) days after the date the Buyer
disputes the Seller's Proposed Calculations. If the Buyer and its
independent accountants, after such review and test, still disagree with
the Seller's Proposed Calculations, and the Seller does not accept the
Buyer's proposed alternative calculations (the "Buyer's Proposed
Calculations"), then, within thirty (30) days after the date of the
Seller's rejection of the Buyer's Proposed Calculations, the Seller and
the Buyer shall select a third nationally recognized independent
accounting firm (the "Independent Accounting Firm") to resolve the
remaining disputed items (the "Remaining Disputed Items") by conducting
its own review and test of the Closing Balance Sheet and thereafter
selecting either the Buyer's Proposed Calculation of the Remaining
Disputed Items or the Seller's Proposed Calculation of the Remaining
Disputed Items or an amount in between the two. The Independent
Accounting Firm shall be instructed (i) that the scope of its review
shall be limited solely to the Remaining Disputed Items, (ii) that it
shall accept the Closing Balance Sheet and the Seller's Proposed
Calculations except to the extent that they deviate from the requirements
of paragraphs (a) and (b) above, and (iii) that it is to use every
reasonable effort to complete such assignment and deliver copies of such
opinion and, if required, a revised Closing Balance Sheet to the Buyer
and the Seller within thirty (30) days following the date such Remaining
Disputed Items are referred to it. The Buyer and the Seller agree that
they shall be bound by the determination of the Remaining Disputed Items
by the Independent Accounting Firm. The fees and expenses of the
Independent Accounting Firm shall be paid jointly by the Buyer and the
Seller.
(d) Upon the determination pursuant to paragraph (c) of this Section
3.2 of the definitive Closing Balance Sheet and the Net Assets as of the
Closing Date, the Purchase Price shall be either (i) increased by the
amount, if any, by which the amount of Net Assets is greater than
$23,637,000 or (ii) decreased by the amount, if any, by which the amount
of Net Assets is less than $23,437,000 (the "Adjustment"). If the
Purchase Price is increased, the Buyer shall pay such amount to the
Seller, and if the Purchase Price is decreased, the Seller shall pay such
amount to the Buyer. Any such payment shall be made in cash or same day
funds within ten (10) days after the determination of the Adjustment
pursuant to paragraph (c). Any such payment shall bear interest at a rate
equal to the "Prime Rate" as set forth from time to time in The Wall
Street Journal "Money Rates" column from the Closing Date to the date
preceding payment.
3.3. Call Option on Shares. For a period of 180 days after the Closing
Date, the Buyer may, at its option, repurchase from the Seller, and the Seller
will at the request of the Buyer sell to the Buyer, all (but not less than all)
of the Shares constituting the Stock Portion at a purchase price equal to
$19,500,000 (or, in the event that the proviso to the second sentence of
Section 3.1 is applicable, such lesser amount corresponding to the value, based
on the Closing Trading Price, of the Shares constituting the Stock Portion)
(the "Call Price"). By written notice to the Seller received not later than the
180th day after the Closing Date, the Buyer may extend such period for an
additional 180 days after such 180th day after the Closing Date, provided that
the Buyer shall pay the Seller interest on a monthly basis at the daily rate
equivalent of 1% per month on the amount of the Call Price for the portion of
such additional 180 day period during which the Shares constituting the Stock
Portion have not been repurchased. The Buyer's call rights under this Section
3.3 shall be exercisable by the Buyer by written notice to the Seller
specifying the date and time of a closing for the repurchase (the "Call
Notice"), which shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, not earlier than five (5) days nor later than
ten (10) days after delivery of the Call Notice to the Seller. The receipt of a
Call Notice by the Seller shall constitute a binding agreement of the Buyer to
purchase the Shares constituting the Stock Portion from the Seller in
accordance with this Section 3.3. At the closing of the call option, the Buyer
shall pay the Seller the Call Price (plus any accrued but unpaid interest
thereon in accordance with this Section 3.3) in cash or by wire transfer of
same day funds, in exchange for the transfer of the Shares constituting the
Stock Portion from the Seller to the Buyer. The Buyer's call rights set forth
in this Section 3.3 shall lapse if not exercised within the time periods
specified above in accordance with the provisions hereof.
3.4. Delay in Demand Registration. In the event that (i) the Seller, at
any time after the 180th day after the Closing, requests the Buyer in writing
to file a registration statement with respect to any of the Shares pursuant to
Section 2 of the Amended Registration Rights Agreement, (ii) the Buyer requests
that the filing of such registration statement be delayed for a period not in
excess of 180 days by delivery to the Seller of a certificate signed by the
Chairman of the Board of the Buyer pursuant to Section 2(d)(ii) of the Amended
Registration Rights Agreement stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Buyer and its
shareholders for such registration statement to be filed and that it is
therefore essential to defer the filing of such registration statement, and
(iii) the Buyer has not extended its call option under Section 3.3 for an
additional 180 days after the 180th day after the Closing Date and is therefore
not paying the Seller interest as contemplated by Section 3.3, the Buyer shall
pay the Seller interest on a monthly basis at the daily rate equivalent of 1%
per month on the amount of the Call Price for the period of such delay.
Article 4
Closing
4.1. Time and Place. The closing of the transfer and delivery of all
documents and instruments necessary to consummate the transactions contemplated
by this Agreement (the "Closing") shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, on the fifth business day
following completion of the regulatory approval referred to in Sections 7.1 and
7.2, but in any case on or before January 26, 1998, or at such other time or
such other place as the Buyer and the Seller may agree. The date on which the
Closing is actually held hereunder is sometimes referred to herein as the
"Closing Date". The Closing will be deemed to be effective for purposes of this
Agreement as of 11:59 p.m. in Dallas, Texas on the Closing Date.
4.2. Transactions at Closing. At the Closing:
(a) The Seller shall duly execute and deliver to the Buyer or its
nominee or nominees such bills of sale, certificates of title and other
instruments of assignment or transfer with respect to the Acquired Assets
as the Buyer may reasonably request and as may be necessary to vest in
the Buyer all of the Seller's title to the Acquired Assets.
(b) The Buyer shall deliver the Cash Portion of the Purchase Price
by wire transfer to the Seller and the Stock Portion of the Purchase
Price by delivery of stock certificates in appropriate form.
(c) The Buyer shall duly execute and deliver to the Seller such
instruments of assumption with respect to the Assumed Obligations as the
Seller may reasonably request.
(d) The Buyer and the Seller, as applicable, shall each duly execute
and deliver the Intellectual Property Agreement, the Master Services
Agreement, the Supply Agreement, the Sublease Agreements, the Amendment
to Registration Rights Agreement and the Non-Disclosure Agreement (as
such terms are defined in Article 9 hereof and, collectively with this
Agreement, the "Transaction Documents").
Article 5
Representations And Warranties Of Seller
The Seller represents and warrants to the Buyer as follows:
5.1. Incorporation; Authority. The Seller 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 carry on the MMIC
Business as now conducted.
5.2. Rights to Sell Acquired Assets; Approvals; Binding Effect. The Seller
has all requisite corporate power and authority to enter into this Agreement
and the other Transaction Documents, to perform all of its agreements and
obligations hereunder and thereunder in accordance with their terms, and to
sell and transfer to the Buyer all of the Acquired Assets. This Agreement has
been duly executed and delivered by the Seller and constitutes, and the
Transaction Documents when executed and delivered by the Buyer will constitute,
the legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such validity, binding effect or
enforcement may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally or by equitable principles relating to the
availability of remedies.
5.3. No Defaults. Except for consents to transfer with respect to any
agreement that is part of the Acquired Assets and except as set forth on
Schedule 5.3, and the consent referred to in Section 7.1 hereof, the entering
into of this Agreement and the other Transaction Documents, the performance and
compliance by the Seller with the terms hereof and thereof, and the
consummation of all the transactions contemplated hereby and thereby, will not
either currently, or after notice or lapse of time or both:
(a) result in a violation of any provision of the charter, by-laws
or other organizational documents of the Seller; or
(b) result in a violation by the Seller of any statute, regulation,
order, law, ordinance or restriction applicable to the Seller, other than
any violation which would not have a Material Adverse Effect; or
(c) result in a violation by the Seller of any judgment, order or
decree of any court or judicial or quasi-judicial tribunal applicable to
the Seller, other than any violation which would not have a Material
Adverse Effect; or
(d) violate or conflict with or result in a breach of, or constitute
a default or acceleration of or give rise to a right of termination (or
an event which with notice or lapse of time or both would become a
default) under, any provision of any contract, indenture, mortgage,
lease, agreement or other instrument primarily related to the MMIC
Business to which the Seller is a party or to which the MMIC Business is
subject, which would individually or in the aggregate have a Material
Adverse Effect.
5.4. Title to Assets. (a) The Seller owns or has the right to transfer all
of the Acquired Assets. At and as of the Closing, the Seller will convey to the
Buyer good and marketable title to the Acquired Assets, free and clear of all
Encumbrances (as defined in Article 17) except for Permitted Encumbrances (as
defined in Article 17); provided, however, that this paragraph (a) shall not be
considered a representation or warranty as to the non-infringement of any of
the intellectual property referred to in the Intellectual Property Agreement.
(b) Except as set forth on Schedule 5.4, the Acquired Assets and the
Subleases, when utilized by a labor force substantially similar to that
utilized by the Seller for the MMIC Business as of the date of this Agreement,
and taken together with the services to be provided by the Seller pursuant to
the Master Services Agreement and the other assets to be made available to the
Buyer as provided in Section 1.3, are sufficient for the fulfillment by the
Buyer of its obligations under the Supply Agreement as they exist as of the
Closing Date and are adequate to conduct the MMIC Business after the Closing
Date in the same manner in all material respects as such business was conducted
immediately prior to the Closing Date. The preceding sentence shall not be
construed as a representation as to the adequacy or scope of the intellectual
property to be conveyed, licensed or sublicensed pursuant to the Intellectual
Property Agreement, with respect to which the Seller is making representations
and warranties as provided in Section 5.11.
(c) The Acquired Assets constituting tangible personal property are in
good working condition, ordinary wear and tear excepted, have been properly
maintained in all material respects, are suitable in all material respects for
the purposes for which they are used, and conform in all material respects to
the requirements of all laws, ordinances and regulations applicable to their
use and ownership or lease by the Seller; and the buildings and structures
containing the space to be leased to the Buyer pursuant to the Subleases are
suitable in all material respects and properly zoned for the purpose for which
they are currently used, have been properly maintained in all material respects
to the extent the Seller is required to do so, and there are no material
outstanding work orders with respect to any maintenance, repair or alterations
to be performed by the Seller thereon.
5.5. Financial Statements. The Seller has furnished to the Buyer, and
attached as Schedule 5.5 hereto are, copies of the unaudited balance sheet of
the MMIC Business as of October 31, 1997 (the "October Balance Sheet"), and the
unaudited income statement of the MMIC Business for the one month period then
ended (the "October Income Statement"). Each of such financial statements has
been prepared in accordance with the Seller's accounting policies and practices
except as otherwise noted on Schedule 5.5; and except as otherwise noted on
Schedule 5.5, the October Balance Sheet fairly presents in all material
respects the financial condition of the MMIC Business as of October 31, 1997,
with the exception that the October Balance Sheet excludes an allocation for
costs associated with certain services currently provided to the MMIC Business
by Seller and Raytheon Company.
5.6. Absence of Certain Changes. Except as set forth on Schedule 5.6, from
October 31, 1997 to the date of this Agreement the MMIC Business has operated
only in the ordinary course and there has not been:
(a) any change in the condition (financial or otherwise), results of
operations, assets, liabilities or business of the MMIC Business other
than changes arising in the ordinary course of business, none of which,
individually or in the aggregate, has had a Material Adverse Effect (as
defined in Article 17);
(b) any acquisition or disposition by the Seller outside the
ordinary course of business of any asset or property used primarily in
the MMIC Business or necessary to and previously used in the MMIC
Business;
(c) any damage, destruction or casualty loss to any asset of the
Seller and relating to the MMIC Business, whether or not covered by
insurance, which has had a Material Adverse Effect;
(d) any increase in (or commitment to increase) the compensation,
pension or other benefits payable or to become payable to any of the
officers, employees, agents or representatives of the MMIC Business or
any bonus payments or arrangements made to or with any of them, that will
constitute an Assumed Obligation, other than (i) increases amounting to
less than $25,000 in the aggregate and effected on a basis consistent
with the past practice of the Seller and (ii) any increase required under
the terms of any of the benefit plans listed on Schedule 5.10(a) or (b)
hereto;
(e) any voluntary forgiveness or cancellation of any debt or claim
of the MMIC Business in excess of $5,000 or any voluntary waiver of any
right of material value other than compromises of accounts receivable in
the ordinary course of business;
(f) the imposition of any Encumbrance on any of the assets of the
MMIC Business except for Permitted Encumbrances;
(g) any disposition of or lapse of any intellectual property right
or termination of any agreement under which the Seller (insofar as it
relates to the MMIC Business) has any right or license, the disposition,
lapse or termination of which would have a Material Adverse Effect;
(h) any lapse, termination or expiration of any contract or
agreement, including any joint venture agreement, teaming agreement,
distribution agreement, supply agreement, license agreement, personal
property lease or development contract, to which the Seller (insofar as
it relates to the MMIC Business) had been a party, the lapse, termination
or expiration of which would have a Material Adverse Effect; or
(i) any intercompany transactions relating to the MMIC Business with
any Affiliate (as defined in Article 17) of the Seller, except (i) in the
ordinary course operation of the MMIC Business or (ii) involving
consideration or transfers in any one transaction of not more than
$25,000 and not more than $100,000 in the aggregate.
5.7. Litigation, etc. As of the date of this Agreement, no proceeding,
arbitration, action or suit is pending or, to the knowledge of the Seller,
threatened against the Seller (insofar as it relates to the MMIC Business),
except as set forth on Schedule 5.7 hereto and except for any such proceeding,
arbitration, action, or suit that alleges claims, singly or in the aggregate,
in excess of $100,000. As of the date of this Agreement, the Seller (insofar as
it relates to the MMIC Business) has not received any written notice from any
Governmental Entity of any pending or threatened governmental investigation
relating to the MMIC Business which, if concluded with a determination adverse
to the MMIC Business, would have a Material Adverse Effect.
5.8. Labor Relations. Except as set forth on Schedule 5.8, as of the date
of this Agreement there is no charge pending or, to the knowledge of the
Seller, threatened against the Seller alleging, with respect to any employee or
employees of the MMIC Business, any violation of any statute or regulation
relating to employment and employment practices, or any violation of any
collective bargaining agreement, any unlawful discrimination in employment
practices or any unfair labor practices before any court, agency, or other
judicial or arbitral body, except for any such violation that would not
individually or in the aggregate be in excess of $100,000. As of the date of
this Agreement, there is no labor strike, dispute, slow-down or work stoppage
actually pending or, to the Seller's knowledge, threatened against the Seller
(with respect to employees of the MMIC Business). No employees of the MMIC
Business are covered by any collective bargaining agreement, and no collective
bargaining agreement or other labor union agreement or agreement with organized
labor for employees of the MMIC Business is currently being negotiated or
pending negotiation. Except as set forth on Schedule 5.8 hereto, there has been
no material concerted work stoppage with respect to the MMIC Business during
the last three years.
5.9. Contracts. Except for contracts, commitments, plans, agreements and
licenses listed on Schedules 1.1(g), 1.1(h), 5.9, 5.10(a) or 5.10(b), as of the
date of this Agreement, the Seller (insofar as it relates primarily to the MMIC
Business) is not a party to or otherwise bound by:
(a) any contract or purchase order to sell products or provide
services to any customer (i) providing for payments in excess of $100,000
or (ii) having a term greater than one calendar year;
(b) except for any contract or agreement that is terminable upon
less than 90 days' notice by the Seller or that will not constitute an
Assumed Obligation, any contract or agreement with any director, officer
or employee of the MMIC Business (i) providing for total annual
compensation in excess of $100,000 or (ii) having a term greater than one
calendar year;
(c) any contract for the lease or sublease as lessee, lessor,
sublessee or sublessor of real or personal property of the MMIC Business,
or any license of computer software used primarily in the MMIC Business,
requiring payments in excess of $25,000 per year;
(d) except for purchase orders issued in the ordinary course of
business, any contract requiring payments in excess of $25,000 for the
purchase or sale of any personal property used primarily in the MMIC
Business;
(e) any contract or agreement containing non-competition covenants
limiting the freedom of the Seller to operate the MMIC Business, or any
exclusive licensing agreement with respect to any MMIC Business
Intellectual Property;
(f) any partnership, joint venture, teaming, consortium, or other
similar contract, arrangement or agreement representing more than 5% of
the MMIC Business' sales in 1996 or that the Seller reasonably believes
as of the date of this Agreement will represent more than 5% of the MMIC
Business' sales in 1997;
(g) any development contracts relating primarily to the MMIC
Business and requiring estimated or actual annual expenditures by Seller
in 1997 in excess of $100,000; or
(h) any contract or agreement for guaranty, indemnity or suretyship
of Indebtedness of the MMIC Business in excess of $25,000.
Neither the Seller nor, to the knowledge of the Seller, any other party to
any contract, agreement, lease or instrument listed on Schedules 1.1(g),
1.1(h), 5.9, 5.10(a) or 5.10(b) (collectively, the "Contracts") is, as of the
date of this Agreement, in default in complying with any provisions thereof,
except for any such default that would not have a Material Adverse Effect. All
Contracts are valid, legally binding and enforceable in accordance with their
respective terms in all material respects. As of the date of this Agreement,
there is no pending written claim or request, or to the Seller's knowledge, no
threatened claim or request, for equitable adjustment under any Government
Contract (as defined in Article 17) that would reasonably be expected to have a
Material Adverse Effect. As of the date of this Agreement, except where the
same would not, individually or in the aggregate, have a Material Adverse
Effect, the Seller has not (i) received any written notice of the intention of
any party to terminate any Contract, whether as a termination for convenience
or for default of the Seller thereunder, or (ii) received any written cure
notice or show cause notice (as defined in the Federal Acquisition Regulations
Part 49, P. 49.607(a) and (b), respectively) in respect of any Government
Contract. The MMIC Business is in compliance with all obligations relating to
any equipment or fixtures owned by any Governmental Entity and loaned, bailed
or otherwise furnished to or held by any part of the MMIC Business, except
where the failure to so comply would not, individually or in the aggregate,
have a Material Adverse Effect.
5.10. Pensions and Benefits.
(a) Except as set forth on Schedule 5.10(a) hereto, as of the date
of this Agreement, the Seller does not maintain or have any obligation to
make contributions to, any employee benefit plan (an "ERISA Plan") within
the meaning of Section 3(3) of the United States Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any other
retirement, profit sharing, stock option, stock bonus or other benefit
program (a "Non-ERISA Plan"), in either case, for the benefit of any
officers, employees or consultants of the MMIC Business. The Seller has
heretofore delivered or made available to the Buyer copies or summaries
of each such ERISA Plan and Non-ERISA Plan and any associated funding
instruments and, with respect to any such ERISA Plan, the most recently
completed annual report (with any required attachments), the most recent
IRS determination letter, and any other advisory opinions or rulings
applicable to such Plan.
(b) To the Seller's knowledge, except as set forth on Schedule
5.10(b), all of Seller's ERISA Plans and Non-ERISA Plans have been
maintained and operated in all material respects in accordance with all
federal, state, provincial and local laws applicable to such plans, and
the terms and conditions of the respective plan documents.
5.11. Intellectual Property. (a) Schedule 5.11 hereto sets forth a list of
the patents, pending patent applications, invention disclosures and mask works
that will be transferred to the Buyer at the Closing. Pursuant to the
Intellectual Property Agreement (as defined in Article 9 hereof), and subject
to the terms, conditions and restrictions set forth therein, the Buyer shall,
as of the Closing Date, have the right to use, hold for use or otherwise
exploit (to the extent set forth in the Intellectual Property Agreement) all
the MMIC Business Intellectual Property, whether or not set forth in Schedule
5.11, in a manner not materially different than that in which such MMIC
Business Intellectual Property is or may be used, held for use or otherwise
exploited by the Seller in the MMIC Business as of the date hereof and as of
the Closing Date. The Seller and the Buyer acknowledge that the foregoing
representation and warranty is not intended to act as a limitation on the use
by the Buyer of the MMIC Business Intellectual Property.
(b) The Seller owns or has the right to use all material MMIC Business
Intellectual Property on the date hereof and as of the Closing Date. The MMIC
Business Intellectual Property is not subject to any material Encumbrances,
other than Permitted Encumbrances, and is not subject to any obligations
inconsistent with the terms of the Intellectual Property Agreement. The Seller
has used commercially reasonable measures to protect the secrecy,
confidentiality and value of the material MMIC Business Intellectual Property.
To the knowledge of the Seller, no material MMIC Business Intellectual Property
(other than unregistered copyrights) has been used, divulged or appropriated
for the benefit of any Person other than the Seller, except where such use,
divulgence or appropriation would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) As of the date hereof, Seller has not made any claim in writing of a
violation, infringement, misuse or misappropriation by others of rights of the
Seller to or in connection with any material MMIC Business Intellectual
Property.
(d) As of the date hereof, there is no pending or to the knowledge of the
Seller, threatened claim by any third Person of a violation, infringement,
misuse or misappropriation by the Seller in connection with the MMIC Business
of any patents, trademarks, copyrights, mask works or trade secrets owned by
any third Person, or of the invalidity of any patent included in the MMIC
Business Intellectual Property, that would, individually or in the aggregate,
have a Material Adverse Effect. To the knowledge of the Seller, the conduct of
the MMIC Business by the Buyer following the Closing in the manner currently
conducted by the Seller will not result in the infringement of any patent,
trademark, copyright, mask work or trade secret owned by any third Person that
would, individually or in the aggregate, have a Material Adverse Effect. There
are no interferences or other contested inter partes proceedings, either
pending or, to the knowledge of the Seller, threatened, in any domestic or
foreign copyright office, patent and trademark office or any other Governmental
Entity relating to any pending application with respect to any material MMIC
Business Intellectual Property.
5.12. Governmental Consent. Except for the approval required with respect
to the DOJ and DOD (as such terms are defined in Section 7.1) and the other
consents referred to in Section 7.2, consents to transfer required with respect
to contracts with governments or governmental agencies and for those items set
forth on Schedule 5.12, no consent, approval or authorization of or
registration, designation, declaration or filing with any Governmental Entity,
on the part of the Seller, is required in connection with the consummation of
any of the transactions contemplated hereby, except for any approval,
authorization, registration, designation, declaration or filing that, if not
obtained or made, would not have a Material Adverse Effect, and would not
materially adversely affect the ability of the Seller to perform its
obligations under this Agreement.
5.13. Compliance with Laws, Etc. Except as set forth on Schedule 5.13
hereto, the Seller (insofar as it relates to the operation of the MMIC
Business) is in compliance with all laws, statutes, governmental regulations
and all judicial or administrative tribunal orders, judgments, writs and
injunctions applicable to it, except for any non-compliance that would not have
a Material Adverse Effect.
5.14 Equipment. Schedule 1.1(a) hereto sets forth a complete and accurate
list as of September 30, 1997 of all of the Seller's Equipment having a book
value in excess of $500.
5.15. Location of Inventories. Except for the MMIC Facilities, Schedule
5.15 hereto specifies all locations at which Inventories having an aggregate
value in excess of $100,000 are located as of the date of this Agreement.
5.16. Customers. Schedule 5.16 hereto sets forth a list of each paying
account that represented more than 5% of gross sales in 1996 of the MMIC
Business.
5.17. Environmental Matters. (a) (i) Except as referenced on Schedule
5.17, the MMIC Business is in compliance with all applicable Environmental Laws
except where the failure to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect.
(ii) The MMIC Business has all licenses, permits, concessions,
orders, authorizations, approvals and registrations required under
Environmental Laws for the operation of the MMIC Business as presently
conducted (the "Environmental Permits") and as of the date of this
Agreement there are no existing violations and there are no pending
investigations or proceedings by any Governmental Entity nor to the
knowledge of the Seller are any investigations or proceedings threatened,
with respect to the Environmental Permits except where the failure to
have such Environmental Permits or where the violation, investigation or
proceeding relating thereto would not, individually or in the aggregate,
have a Material Adverse Effect.
(iii) Since December 31, 1994, no notice, notification, demand,
request for information, citation, summons, complaint or order has been
received by the Seller or, to the knowledge of the Seller, is pending or
threatened by any Person against, any part of the MMIC Business nor has
any material penalty been assessed against any part of the MMIC Business
with respect to any alleged violation of any Environmental Law or
liability thereunder, other than where such notice, notification, demand,
request for information, citation, summons, complaint or order has been
fully resolved, or where resolution would not, individually or in the
aggregate, have a Material Adverse Effect.
(iv) To Seller's knowledge, as of the date of this Agreement, no
Hazardous Substance has been discharged, generated, treated, manufactured,
handled, stored, transported, emitted, released or is present at any
property now or previously owned, leased or operated by any part of the
MMIC Business in violation of any Environmental Law, which circumstance,
individually or in the aggregate, would have a Material Adverse Effect.
(b) Since January 1, 1994, there has been no environmental investigation
conducted of which the Seller has knowledge in relation to the MMIC Business or
any property or facility now or previously owned or leased with respect to the
MMIC Business with respect to any matter which has had or would, individually
or in the aggregate, have a Material Adverse Effect.
5.18. Brokers. Except for Credit Suisse First Boston Corporation, whose
fees and expenses will be paid by the Seller, no finder, broker, agent or other
intermediary has worked for or on behalf of the Seller in connection with the
negotiation or consummation of the transactions contemplated hereby.
5.19 Taxes. Except as set forth on Schedule 5.19, as of the date of this
Agreement the Seller has timely filed within the time period for filing or any
extension granted, or appropriately amended, with respect thereto all federal,
state, local and other returns, estimates and reports ("Returns") relating to
any and all Taxes or other governmental charges, obligations or fees including
any secondary or transferee liability for taxes and any related interest or
penalties it is required to file and such Returns were true and correct when
filed and were completed in accordance with applicable law in all material
respects. Except for Taxes contested in good faith and which are disclosed in
Schedule 5.19, as of the date of this Agreement the Seller has paid all Taxes
it is required to pay and has withheld with respect to the Seller's employees,
all federal and state income Taxes, FICA, FUTA and other Taxes required to be
withheld. No Tax Return of the Seller relating to the MMIC Business has been
examined or audited by the IRS or any other taxing authority. As of the date of
this Agreement there are no pending or, to the Seller's knowledge, threatened
audits, examinations, assessments, asserted deficiencies or claims for
additional Taxes with respect to the Seller. There are (and as of the Closing
there will be) no Encumbrances, other than Permitted Encumbrances, relating to
or attributable to Taxes, which if adversely determined, would result in an
Encumbrance, other than a Permitted Encumbrance, on the Acquired Assets or
would otherwise have a Material Adverse Effect upon the MMIC Business.
5.20 Absence of Undisclosed Liabilities.
(i) As of October 31, 1997, the Seller did not have any liability or
obligation (absolute, accrued, contingent or otherwise) primarily related to
the MMIC Business of a nature required by GAAP to be reflected on the October
Income Statement or October Balance Sheet or disclosed in the notes thereto,
and from October 31, 1997 to the date of this Agreement the Seller has not
incurred any liability primarily related to the MMIC Business, in each case
except: (i) liabilities stated or adequately reserved against in the October
Balance Sheet; and (ii) liabilities incurred in the ordinary course of business
and which are not individually or in the aggregate material to the financial
condition or earnings of the Seller insofar as it relates to the MMIC Business
or the value of the Acquired Assets; and
(ii) As of the date of this Agreement, the Seller has not been notified in
writing that any material supplier, client or customer of the Business had
made, or intends to make, a reduction in its present level of business with the
Seller as a result of this Agreement and the transactions contemplated hereby
or for any other reasons.
5.21 Licenses. Except as disclosed on Schedule 5.21, all rights to operate
under all governmental licenses, permits, franchises and approvals and all
related vendor numbers which are required to conduct the MMIC Business, where
and as such MMIC Business is conducted ("Licenses") are, and will be
immediately before the Closing, valid and in full force and effect and
enforceable in all material respects. Except as noted on Schedule 5.21, all of
such Licenses require the consent of, or a filing or qualification with, the
permitting or licensing authority with respect to the transactions contemplated
by this Agreement.
5.22 Collectibility of Gross Accounts Receivable. Except as indicated on
Schedule 5.22, as of the date of this Agreement the gross accounts receivable
reported on the October Balance Sheet represent valid claims against account
debtors for goods delivered or services rendered by the Seller. To the Seller's
knowledge, except as set forth on Schedule 5.22 as of the date of this
Agreement there is no reason why all such gross accounts receivable will not be
collected in the ordinary course of business, and as of the date of this
Agreement such gross accounts receivable are not subject to set-off or
counterclaim.
5.23. Investment Representations.
(a) Purchase Entirely for Own Account. This Agreement is made with the
Seller in reliance upon the Seller's representation to the Buyer, which by the
Seller's execution of this Agreement the Seller hereby confirms, that the
Shares to be acquired by the Seller will be acquired for investment for the
Seller's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof except pursuant to the Amended
Registration Rights Agreement or the call option referred to in Section 3.3
hereof and that the Seller has no present intention of selling, granting any
participation in, or otherwise distributing the same, except pursuant to the
Amended Registration Rights Agreement or the call option referred to in Section
3.3 hereof.
(b) Disclosure of Information. The Seller represents that it has had an
opportunity to ask questions and receive answers from the Buyer regarding the
terms and conditions of the transactions contemplated by this Agreement. The
foregoing, however, does not limit or modify the representations and warranties
of the Buyer in Article 6 of this Agreement or the right of the Seller to rely
thereon.
(c) Investment Experience. The Seller understands that the Shares have not
been, and prior to an appropriate registration statement's becoming effective
will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Seller's
representations as expressed herein. The Seller acknowledges that it is able to
fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of the investment in the Shares.
(d) Legends. The Seller understands that the Shares may bear one or all of
the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(ii) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the
certificate so legended.
A certificate shall not bear such legends if in the opinion of counsel
reasonably satisfactory to the Buyer the securities represented thereby may be
publicly sold without registration under the Securities Act and any applicable
state securities laws.
(e) Restricted Securities. The Seller understands that the Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Buyer in a transaction not
involving a public offering and that under such laws and applicable regulations
such Shares may be resold without registration under the Securities Act only in
certain limited circumstances. The Seller acknowledges that the Shares must be
held indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(f) Accredited Investor. The Seller is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act.
Article 6
Representations and Warranties of the Buyer
The Buyer represents and warrants to the Seller as follows:
6.1. Organization and Standing of the Buyer. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has all required corporate power and authority to
enter into this Agreement and the other Transaction Documents, to perform all
of its agreements and obligations hereunder and thereunder in accordance with
their terms and to purchase the Acquired Assets from the Seller.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
shareholders required for the execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes, and the other Transaction Documents
when executed and delivered will constitute, the legal, valid and binding
obligation of the Buyer enforceable against the Buyer in accordance with their
terms, except as such validity, binding effect or enforcement may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by equitable principles relating to the availability of remedies.
6.3. Non-Contravention. The execution, delivery and performance by the
Buyer of this Agreement and the other Transaction Documents will not result in
any violation of or be in conflict with its Certificate of Incorporation or
By-Laws, or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to it, or be in conflict with or
constitute a default under any of the foregoing.
6.4. Government Consents, Etc. Except for the approvals referred to in
Section 5.12, no consent, approval or authorization of or registration,
designation, declaration or filing with any Governmental Entity, Federal or
other, on the part of the Buyer is required in connection with the purchase of
the Acquired Assets pursuant to this Agreement or the consummation of any other
transaction contemplated hereby.
6.5. Buyer's Capabilities. The Buyer intends to use the Acquired Assets as
part of a viable, ongoing business or businesses engaged in the development,
production and sale of MMICs. The Buyer has the managerial, operational and
financial capability to compete effectively in the development, production and
sale of MMICs for advanced DOD (as hereinafter defined) radar systems and is
eligible to receive the applicable DOD security clearances necessary for such
activities. The Buyer has adequate financing or financial resources available
to consummate the transactions contemplated by this Agreement.
6.6. Brokers. No finder, broker, agent or other intermediary has worked
for or on behalf of the Buyer in connection with the negotiation or
consummation of the transactions contemplated hereby.
6.7. Capital Stock. The authorized capital stock of the Buyer consists of
(a) 5,000,000 shares of Preferred Stock, $.001 par value, and (b) 25,000,000
shares of Common Stock, $.001 par value. As of the close of business on
December 31, 1997, 8,497,427 shares of Common Stock of the Buyer and no shares
of Preferred Stock of the Buyer were issued and outstanding. All of the
outstanding shares of capital stock of the Buyer are duly authorized, validly
issued, fully paid and nonassessable. No class of capital stock of the Buyer is
entitled to preemptive rights. No options, warrants or other rights to acquire
capital stock from the Buyer are outstanding, other than as set forth in the
Buyer SEC Reports (as hereinafter defined) or as set forth in Schedule 6.7
hereto. Except as set forth in the Buyer SEC Reports, there are no outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote or which are convertible into or exercisable for securities
having the right to vote with stockholders of the Buyer on any matter. The
Buyer SEC Reports or Schedule 6.7 hereto list, and the Buyer has delivered to
the Seller true and complete copies of, all agreements, contracts or
understandings, whether oral or written, relating to shares of capital stock of
the Buyer or options, warrants or other rights to acquire capital stock of the
Buyer (including, without limitation, any agreements, contracts or
understandings regarding registration rights), and all such agreements,
contracts and understandings are in full force and effect.
6.8. Authorization for Shares. The Buyer has taken all necessary action to
permit it to issue the number of Shares required to be issued pursuant to
Article 3. The Shares issued pursuant to Article 3 will, when issued, be duly
authorized, validly issued, fully paid, nonassessable and free of any
Encumbrance and no stockholder of the Buyer will have any preemptive right of
subscription or purchase in respect thereof. Assuming the accuracy of the
Seller's representations and warranties in Section 5.23 hereof, the Shares
will, when issued, be exempt from registration under the Securities Act and any
applicable state securities laws.
6.9. Reports and Financial Statements. The Buyer has filed all reports
required to be filed with the Securities and Exchange Commission (the "SEC")
since November 1, 1996 through the date hereof (collectively, the "Buyer SEC
Reports"), and has previously furnished or made available to the Seller true
and complete copies of all Buyer SEC Reports. None of the Buyer SEC Reports, as
of their respective dates, contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of the balance sheets (including the related
notes) included in the Buyer SEC Reports presents fairly, in all material
respects, the consolidated financial position of the Buyer and its subsidiaries
as of the respective dates thereof, and the other related statements (including
the related notes) included therein present fairly, in all material respects,
the results of operations, the changes in shareholders equity and cash flows of
the Buyer and its subsidiaries for the respective periods or as of the
respective dates set forth therein, all in conformity with generally accepted
accounting principles consistently applied during the periods involved, except
as otherwise noted therein and subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein. The Buyer has provided to the Seller true and correct copies
of the Buyer's unaudited consolidated statement of operations and statement of
cash flows for the nine months ended, and the Buyer's unaudited consolidated
balance sheet as of, September 27, 1997 (the "Buyer Unaudited Financial
Statements"). Such Buyer Unaudited Financial Statements present fairly in all
material respects the results of operations and cash flows for the nine months
ended, and the financial position of the Buyer and its subsidiaries as of,
September 27, 1997, all in conformity with generally accepted accounting
principles consistently applied during the period involved except as otherwise
noted therein and except for the absence of footnote disclosures, and subject
to normal year-end adjustments and any other adjustments described therein. All
of the Buyer SEC Reports, as of their respective dates, complied in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended.
6.10.Absence of Certain Changes or Events. During the period from
September 27, 1997 to the date of this Agreement, the business of the Buyer and
its subsidiaries has been conducted only in the ordinary course, consistent
with past practice, and neither the Buyer nor any subsidiary of the Buyer has
entered into any material transaction other than in the ordinary course,
consistent with past practice, and there has not been any change in the
condition (financial or otherwise), results of operations, assets, liabilities
or business of the Buyer other than changes arising in the ordinary course of
business consistent with past practices, none of which, individually or in the
aggregate, has had, or is reasonably expected to have, a material adverse
effect on the business, operations, assets, liabilities or financial condition
of the Buyer and its subsidiaries taken as a whole.
6.11. Registration Statements. Since the Buyer's Registration Statement on
Form S-1 dated December 13, 1993, and the amendments thereto, and the Buyer's
Registration Statement on Form S-3 dated August 4, 1995, and the amendments
thereto, the Buyer has not filed any registration statement with the SEC, other
than Registration Statements on Form S-8. The Buyer is eligible to file with
the SEC a Registration Statement on Form S-3 for shares of its Common Stock,
including the Shares.
6.12. Registration Rights Agreement. Attached as Exhibit E-1 hereto is a
true, complete and correct copy of the Registration Rights Agreement dated
May 17, 1991 between the Buyer and certain of its stockholders, including all
amendments thereto to date (as so amended, the "Registration Rights
Agreement"). The Registration Rights Agreement constitutes the legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, and the Buyer is in compliance with all terms and conditions
thereof. The number of Registrable Securities (as such term is defined in the
Registration Rights Agreement) outstanding on the date hereof is 461,059 shares
of Common Stock of the Buyer, all of which shares are owned of record by Lucent
Technologies, Inc., which is the sole Holder (as such term is defined in the
Registration Rights Agreement) under the Registration Rights Agreement. A total
of three demand registrations remain available to Holders under Section 2 of
the Registration Rights Agreement. The right of first offer set forth in
Section 16.3 of the Registration Rights Agreement has expired.
Article 7
Certain Regulatory Approvals
7.1. Department of Justice and Department of Defense. As promptly as
practicable, and in any event within two (2) business days following the
execution of this Agreement by the parties, the Seller shall notify the U.S.
Department of Justice (the "DOJ") and the U.S. Department of Defense ("DOD") of
the proposed transaction, in accordance with the terms of Section VI of the
Final Judgment; the Seller and the Buyer shall respond with reasonable
diligence and dispatch to any request for additional information made in
response to such notice; and the Seller shall promptly inform the Buyer of any
written notice of objection or non-objection or other material written
communications received from the DOJ or the DOD.
7.2. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. To the extent required in connection with the
acquisition by the Seller of the Shares, as promptly as practicable, and in any
event within ten (10) business days following the execution and delivery of
this Agreement by the parties, the Seller and the Buyer shall each prepare and
file any required notification and report form under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), in connection
with the transactions contemplated hereby; the Seller and the Buyer shall
request early termination of the waiting period thereunder; and the Seller and
the Buyer shall respond with reasonable diligence and dispatch to any request
for additional information made in response to such filings.
Article 8
Conduct Of Business Pending Closing
The Seller covenants and agrees that, from and after the date of this
Agreement and until the Closing, and to the extent the Seller is permitted
under the Final Judgment and Hold Separate Order to monitor or affect the
actions of the MMIC Business, except as otherwise specifically consented to or
approved by the Buyer in writing:
8.1. Full Access. The Seller shall afford to the Buyer and its authorized
representatives such access during normal business hours to all properties,
books, records, contracts and documents of the MMIC Business as the Buyer shall
reasonably request in connection with its review of the MMIC Business, and the
Seller shall furnish or cause to be furnished to the Buyer and its authorized
representatives all such information with respect to the MMIC Business as the
Buyer may reasonably request. Any such investigation shall be on reasonable
prior notice and shall be carried out in such a manner as to minimize any
disruption of the MMIC Business.
8.2. Carry on in Regular Course. Except as may be otherwise contemplated
by this Agreement or required by any of the documents listed in any Schedule to
this Agreement, the Seller shall carry on the MMIC Business in the ordinary
course substantially in the same manner as heretofore.
8.3. No General Increases. Except for any increase required under the
terms of any employment agreement or benefit plan referred to in Section 5.10
and any increase in compensation that will not constitute an Assumed
Obligation, the Seller shall not (i) grant any general or uniform increase in
the rates of pay of employees of the MMIC Business, except for increases in
salary or wages in the ordinary course operation of the MMIC Business
consistent with past practice, or (ii) grant any general, uniform or individual
increase in the benefits under any bonus or pension plan or other contract or
commitment for the benefit of any employee of the MMIC Business, or to increase
the compensation payable or to become payable to officers, key salaried
employees or representatives of the MMIC Business, or (iii) increase any bonus,
insurance, pension or other benefit plan, payment or arrangement made to, for
or with any such officers, key salaried employees or representatives.
8.4. Sale of Capital Assets. Except as may be otherwise contemplated by
this Agreement, the Seller shall not sell or otherwise dispose of any capital
assets of the MMIC Business with a book value or fair market value in excess of
$5,000 without written consent of Buyer.
8.5. Insurance. The Seller shall maintain insurance coverage for the MMIC
Business comparable to the insurance coverage currently in effect.
8.6. Preservation of Organization. Except as may be otherwise contemplated
by this Agreement, the Seller shall use reasonable efforts under the applicable
circumstances to keep the organization and material business relationships of
the MMIC Business intact in all material respects.
8.7. Compliance with Final Judgment. Except as may be otherwise permitted
by the DOJ or the DOD, the Seller shall use its reasonable efforts to comply in
all material respects with the terms of the Final Judgment and the Hold
Separate Order.
8.8. Advice of Change. The Seller shall advise the Buyer in writing,
promptly after becoming aware thereof, of any material change in the condition,
operations or assets of the MMIC Business.
8.9. No Shopping. Prior to any termination of this Agreement pursuant to
Article 15 hereof, the Seller shall not solicit or enter into any agreement
with respect to the sale of any substantial portion of the MMIC Business or of
the Acquired Assets, or any merger or other business combination of the Seller
(solely as it relates to the MMIC Business), to or with any Person other than
the Buyer.
Article 9
Conditions Precedent To Buyer's Obligations
The obligation of the Buyer to consummate the Closing is subject to the
satisfaction prior to or at the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Buyer):
9.1. Representations and Warranties. The representations and warranties
made by the Seller in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty), except to the
extent that such representations and warranties are no longer correct due to
the consummation prior to the Closing of transactions contemplated hereby.
9.2. Compliance with Agreement. The Seller shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation).
9.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
9.4. Regulatory Clearance.
(a) All filings required to be made with the DOJ and the DOD under
the Final Judgment shall have been completed, and all applicable time
periods for review under the Final Judgment shall have expired or have
been earlier terminated without any requests for further information, or
in the event of such a request for further information, all applicable
time periods for review under the Final Judgment shall have expired
without the objection of the DOJ or the DOD.
(b) All required filings under the HSR Act shall have been
completed, and all applicable time limitations under the HSR Act shall
have expired or have been earlier terminated without a request for
further information by the relevant federal authorities under the HSR
Act, or in the event of such a request for further information, all
applicable time limitations under the HSR Act shall have expired without
the objection of such federal authorities.
9.5. Intellectual Property Agreement. The Seller shall have entered into
the Intellectual Property Assignment, License and Sublicense Agreement in the
form of Exhibit A attached hereto (the "Intellectual Property Agreement"), and
the Intellectual Property Agreement shall be in full force and effect.
9.6. Supply Agreement. The Seller shall have entered into the Supply
Agreement in the form of Exhibit B attached hereto (the "Supply Agreement"),
and the Supply Agreement shall be in full force and effect.
9.7. Master Services Agreement. The Seller shall have entered into the
Master Services Agreement in the form of Exhibit C attached hereto (the "Master
Services Agreement"), any necessary consent or amendment from TI shall have
been obtained, and the Master Services Agreement shall be in full force and
effect.
9.8. Sublease Agreements. The Seller shall have entered into the Sublease
Agreements in the form of Exhibits D-1 and D-2 attached hereto with respect to
that portion of the MMIC Facilities specified therein (the "Sublease
Agreements"), the consent of TI, as lessor, shall have been obtained, and the
Sublease Agreements shall be in full force and effect.
9.9. Amendment to Registration Rights Agreement. The Seller shall have
entered into the Amendment to Registration Rights Agreement in the form of
Exhibit E-2 attached hereto (the "Amendment to Registration Rights Agreement")
and the Amended Registration Rights Agreement shall be in full force and
effect.
9.10. Non-Disclosure Agreement. The Seller shall have entered into the
Non-Disclosure Agreement in the form of Exhibit F attached hereto (the
"Non-Disclosure Agreement"), and the Non-Disclosure Agreement shall be in full
force and effect.
9.11. TI Amendment. TI shall have entered into an amendment to the
Intellectual Property and License Agreement dated as of July 11, 1997, as
amended, (the "TI IP Agreement"), in a form sufficient to permit the Seller to
enter into the Intellectual Property Agreement, including without limitation
such that the sublicense grants with respect to TI Licensed Intellectual
Property (as defined in the Intellectual Property Agreement) are consistent
with and not outside the scope of the TI IP Agreement (the "TI Amendment"), and
the TI Amendment shall be in full force and effect.
9.12. Voting Trust Agreement. To the extent requested by the DOJ, the
Seller shall have entered into a voting trust agreement with respect to the
Stock Portion, with such agreement to be in a form reasonably satisfactory to
the Seller and Buyer.
Article 10
Conditions Precedent To Seller's Obligations
The obligation of the Seller to consummate the Closing is subject to the
satisfaction at or prior to the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Seller):
10.1. Representations and Warranties. The representations and warranties
made by the Buyer in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty).
10.2. Compliance with Agreement. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation).
10.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
10.4. Regulatory Clearance.
(a) All filings required to be made with the DOJ and the DOD under
the Final Judgment shall have been completed, and all applicable time
periods for review under the Final Judgment shall have expired or have
been earlier terminated without any requests for further information, or
in the event of such a request for further information, all applicable
time periods for review under the Final Judgment shall have expired
without the objection of the DOJ or the DOD.
(b) All required filings under the HSR Act shall have been
completed, and all applicable time limitations under the HSR Act shall
have expired or have been earlier terminated without a request for
further information by the relevant federal authorities under the HSR
Act, or in the event of such a request for further information, all
applicable time limitations under the HSR Act shall have expired without
the objection of such federal authorities.
10.5. Intellectual Property Agreement. The Buyer shall have entered into
the Intellectual Property Agreement, and the Intellectual Property Agreement
shall be in full force and effect.
10.6. Supply Agreement. The Buyer shall have entered into the Supply
Agreement, and the Supply Agreement shall be in full force and effect.
10.7. Master Services Agreement. The Buyer shall have entered into the
Master Services Agreement, any necessary consent or amendment from TI shall
have been obtained, and the Master Services Agreement shall be in full force
and effect.
10.8. Sublease Agreements. The Buyer shall have entered into the Sublease
Agreements, the consent of TI, as lessor, shall have been obtained, and the
Sublease Agreements shall be in full force and effect.
10.9. Amendment to Registration Rights Agreement. The Buyer shall have
entered into the Amendment to Registration Rights Agreement, and the Amended
Registration Rights Agreement shall be in full force and effect.
10.10. Non-Disclosure Agreement. The Buyer shall have entered into the
Non-Disclosure Agreement, and the Non-Disclosure Agreement shall be in full
force and effect.
10.11. TI Amendment. TI shall have entered into the TI Amendment, and the
TI Amendment shall be in full force and effect.
10.12. Voting Trust Agreement. To the extent requested by the DOJ, the
Seller shall have entered into a voting trust agreement with respect to the
Stock Portion, with such agreement to be in a form reasonably satisfactory to
the Seller and Buyer.
Article 11
Employees and Employee Benefits
11.1. Hiring Employees.
(a) At the Closing, the Buyer will offer employment to all persons
who are MMIC Business employees at Closing (including employees on leave,
disability or workers compensation) or are subject to outstanding
employment offers from the MMIC Business at Closing, except for any
persons listed on Schedule 11.1 (as such schedule may be updated by the
Buyer at the Closing, provided that the total number does not exceed 32).
All such offers shall be for the same pay and comparable benefits as
those in effect at Closing. Such offers and the benefits to be provided
to the Assumed Employees shall recognize the date of hire and time of
service with the Seller for all purposes. All employees accepting such
offers are referred to in this Agreement as "Assumed Employees" and their
employment with the Buyer will be deemed to have commenced immediately
after 11:59 p.m., Dallas local time, on the Closing Date.
(b) The Buyer agrees that, for a period of 60 days after the Closing
Date, it will not cause any of the Assumed Employees hired by it to
suffer "employment loss" for purposes of the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. ss.ss.2101-2109, and related
regulations (the "WARN Act") if such employment loss could create any
liability for the Seller, unless the Buyer delivers notices under the
WARN Act in such a manner and at such a time that the Seller bears no
liability with respect thereto.
(c) Subject to the Seller having obtained the prior written consent
of the DOJ to rehire employees of the MMIC Business pursuant to this
Section 11.1(c), the Buyer may at any time up to ninety (90) days after
the Closing by written notice to the Seller cause the Seller to offer
employment to up to 32 (less the number of employees listed on Schedule
11.1, as such schedule may be updated by the Buyer at the Closing) of the
Assumed Employees, with such employees to be designated by the Buyer in
the notice. All such offers shall be for the same pay and comparable
benefits as in effect at the Closing. The persons accepting the Seller's
offers of employment are referred to herein as the "Rehired Employees".
In the event any persons designated by the Buyer for rehiring do not
accept the Seller's employment offer, if the Buyer within the next thirty
(30) days terminates such employees' employment and the Buyer is
responsible for severance to such employees consistent with Section
11.2(b) below, the Seller shall reimburse the Buyer for such severance.
In addition, in the event that by the 90th day after the Closing the
Seller has not obtained the prior written consent of the DOJ to rehire
employees of the MMIC Business pursuant to this Section 11.1(c), the
Buyer may by written notice to the Seller designate up to 32 (less the
number of employees listed on Schedule 11.1, as such schedule may be
updated by the Buyer at the Closing) of the Assumed Employees that the
Buyer intends to terminate within the next thirty (30) days. In the event
that the Buyer within such thirty (30) day period terminates such
employees' employment and the Buyer is responsible for severance to such
employees consistent with Section 11.2(b) below, the Seller shall
reimburse the Buyer for such severance.
11.2. Benefit Plans Generally.
(a) Liabilities Generally. Except as expressly provided in this
Agreement, Seller shall retain exclusive liability and responsibility for
providing any and all benefits due and payable to or in respect of all
employees of the MMIC Business and related participants and beneficiaries
under any ERISA Plan or Non-ERISA Plan in accordance with the terms of
such plans and applicable law.
(b) Benefits Maintenance. Commencing as of the Closing Date and
continuing through December 31, 1998 (the "Benefits Continuation
Period"), with respect to the Assumed Employees and dependents and
beneficiaries thereof, Buyer shall provide compensation, employee welfare
plans, stock-based incentive plans and other employee benefits which are
substantially comparable in the aggregate to the compensation paid by the
Seller, and the plans and other benefits provided (without application of
any exclusion for a pre-existing condition) by applicable ERISA and
Non-ERISA Plans, immediately prior to the Closing Date, valuing any
stock-based compensation, for this purpose, under any reasonable method;
provided, that nothing herein shall be construed to require the Buyer to
provide Assumed Employees with any pension benefits or retiree medical
benefits. During the Benefits Continuation Period, the Buyer shall
maintain severance, reduction-in-force and pay-in-lieu-of-notice benefits
for the Assumed Employees no less favorable than the severance,
reduction-in-force and pay-in-lieu of notice benefits provided to such
Assumed Employees by Seller immediately prior to the Closing Date and
disclosed on Schedule 5.10(a) or (b).
11.3 Savings Plan. The Seller will retain all liability and responsibility
for the disposition of interests under the Raytheon TI Systems Savings Plan
(the "Savings Plan"), with respect to those employees (or their beneficiaries)
of the MMIC Business who, as of the Closing Date, are participants in the
Savings Plan. The Seller agrees that it will cause the accounts in the Savings
Plan of all such participants to be fully vested as of the Closing Date.
Effective as of the Closing Date, Seller shall amend the Savings Plan if and as
necessary (i) to cause the active participation of the Assumed Employees
therein to cease as of the Closing Date, and (ii) to permit Assumed Employees
to elect to take distributions (subject to applicable law) of their accounts
thereunder and, if such Assumed Employees so elect, to roll them over, directly
or otherwise, in accordance with applicable law and regulations, to an
individual retirement account or to one or more defined contribution retirement
plans qualified under Section 401(a) of the Code (the "Buyer Defined
Contribution Plans") and maintained by Buyer or one of its subsidiaries, and
the Buyer Defined Contribution Plans shall accept such rollovers (including to
the extent practicable any plan loans).
11.4 Pension Plans. The Seller will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Employees Pension Plan and the Raytheon TI Systems Supplemental Pension Plan
(collectively, the "Pension Plans"), with respect to those employees (or their
beneficiaries) of the MMIC Business who, as of the Closing Date, are
participants in either of the Pension Plans. Effective as of the Closing Date,
Seller shall amend the Pension Plans to recognize as service with the Seller
for all plan purposes the service of the Assumed Employees with the Buyer, if
any, in the Benefits Continuation Period, to recognize as compensation paid by
the Seller any compensation paid the Assumed Employees by the Buyer for
services rendered in the Benefits Continuation Period, and to recognize, for
those Assumed Employees who have at least 15 years of service and are at least
age 50 as of the Closing Date, the Seller's "Bridge to Retirement" additional
service time benefit, provided the Buyer shall have timely complied with any
information request the Seller shall reasonably make to effect all such
recognitions. The Seller further agrees that it will cause the accrued benefit
of each such employee under the Pension Plans as of the Closing Date and
through the Benefits Continuation Period to be fully vested as of the Closing
Date.
11.5 Incentive Plans. Attached as Schedule 11.5 hereto is a description of
the Seller's internal sales and marketing incentive plans and retention
agreements (the "Incentive Plans"). The Buyer agrees to assume as part of the
Assumed Obligations the Seller's obligations under the Incentive Plans,
including with respect to the retention agreements Seller's obligations
for the current plan year. With respect to any amounts to be paid with respect
to 1997, the Seller will pay the amounts due (as set forth in Schedule 11.5)
without giving effect to any plan requirement that the Assumed Employees remain
employees of the Seller as of February 1, 1998. The Seller agrees to either
reimburse the Buyer in cash for all disbursements made by the Buyer in
connection with the Incentive Plans or to create an accrued liability on the
Closing Balance Sheet for the amount to be disbursed.
11.6 Stock Option Plan. Seller shall, if appropriate, cause the stock
option plans of Raytheon Company (the "Raytheon Stock Plans") to be amended and
to make adjustments and take actions (and Buyer shall take such actions as are
reasonably required to implement the same) with respect to options (including,
without limitation, incentive stock options) on Raytheon Company Common Stock
which are outstanding under the Raytheon Stock Plans immediately prior to the
Closing Date and which are held by Assumed Employees and are not vested as of
the Closing Date (the "Raytheon Options") to provide that, pursuant to the
equitable adjustment provisions of the applicable Raytheon Stock Plan, such
Raytheon Options will be converted into and represent (pursuant to a
methodology consistent with Section 424 of the Code, with respect to the values
of Raytheon Common Stock and Buyer Common Stock which are reasonably agreed to
by Buyer) the right to acquire from Buyer shares of Buyer Common Stock, with
such other amendments and adjustments proposed by Buyer as are reasonable and
appropriate consistent with Buyer's current stock option plan. These actions
and adjustments shall be made and become effective as soon as reasonably
practicable. Any liabilities or other obligations with respect to such
converted Raytheon Options shall be Assumed Obligations.
11.7 Accrued Vacation. The Seller agrees to pay the Assumed Employees, as
promptly as practicable after the Closing, an amount equal to their accrued
vacation as of the Closing, less any required withholding.
Article 12
Certain Covenants
12.1. Third Party Consents.
(a) To the extent that any agreement constituting part of the
Acquired Assets is not capable of being transferred by the Seller to the
Buyer pursuant to this Agreement without the consent, approval or waiver
of a third Person, and such consent is not obtained prior to the Closing,
or if such transfer or attempted transfer would constitute a breach
thereof or a violation of any law, rule or regulation in the absence of
obtaining such an approval, nothing in this Agreement will constitute a
transfer or an attempted transfer thereof. Each of the Buyer and the
Seller shall use reasonable efforts at its own expense to obtain any such
approvals.
(b) In the event that such consents, approvals and waivers referred
to in paragraph (a) are not obtained then the Seller and the Buyer will
each use reasonable efforts, each at its own expense, to (i) provide to
the Buyer the benefits and burdens of any such agreement, (ii) cooperate
in any reasonable and lawful arrangement designed to provide such
benefits and burdens to the Buyer without incurring any obligation to any
other Person other than to provide such benefits to the Buyer, including
without limitation the appointment of the Buyer as the agent of the
Seller for purposes of such agreement, and (iii) enforce, at the request
of the Buyer for the account of the Buyer, any rights of the Seller
arising from any such agreement.
12.2 Novation of Government Contracts.
(a) As soon as practicable following the Closing, the Buyer shall
prepare (with the Seller's assistance), in accordance with Federal
Acquisition Regulations Part 42, (P) 42.12 and any applicable agency
regulations or policies, a written request meeting the requirements of
the Federal Acquisition Regulations Part 42, as reasonably interpreted by
the Responsible Contracting Officer (as such term is defined in Federal
Acquisition Regulations Part 42, (P) 42.1202(a)), which shall be
submitted by Seller to each Responsible Contracting Officer, for the
United States Government (i) to recognize the Buyer as the Seller's
successor in interest to all the Acquired Assets constituting a
Government Contract; and (ii) to enter into a novation agreement (a
"Novation Agreement") in form and substance reasonably satisfactory to
the Buyer and the Seller and their respective counsel, pursuant to which,
subject to the requirements of the Federal Acquisition Regulations Part
42, all of Seller's right, title and interest in and to, and all of the
Seller's obligations and liabilities under, each such Government Contract
shall be validly conveyed, transferred and assigned and novated to the
Buyer by all parties thereto. The Seller shall provide to the Buyer
promptly any information regarding the Seller required in connection with
such request. The Seller and the Buyer shall each use all reasonable
efforts to obtain all consents, approvals and waivers required for the
purpose of processing, entering into and completing the Novation
Agreements with regard to any of the Government Contracts, including
responding to any requests for information by the United States
Government with regard to such Novation Agreements.
(b) In connection with obtaining the consents contemplated in
Section 12.2(a) hereof, the Seller shall not consent to any modification
of any Government Contract included in the Acquired Assets which would
adversely affect the rights of the Buyer under such Government Contract
without the prior written consent of the Buyer.
12.3. Access to Books and Records.
(a) The Buyer agrees to cooperate with and to make available to the
Seller such documents, books, records or information relating to the MMIC
Business as of the Closing Date as the Seller may reasonably require
after the Closing.
(b) The Buyer agrees to preserve and protect all books, records,
files and data referred to in paragraph (a) above for a period of six (6)
years after the Closing Date.
(c) The Buyer agrees not to destroy any files or records which are
subject to this Section 12.3 (i) for the period described in clause (b)
of this Section 12.3, and (ii) thereafter, without giving at least thirty
(30) days' notice to the Seller. Upon receipt of such notice, the Seller
may (A) cause to be delivered to it the files or records intended to be
destroyed, at the Seller's expense, or (B) notify the Buyer that the
Seller will pay the cost of storing and maintaining such files or records
(including any necessary costs of moving such files or records to a
location under control of the Seller).
12.4. Use of Raytheon TI Systems Name. The Buyer agrees that promptly
after the Closing Date it will cease using any references to the Seller,
Parent, TI or any of their respective Affiliates, including any such use in
connection with the use of existing supplies of labels, signs, letterhead and
other printed materials, except that the Buyer may use up existing stocks of
catalogs and other promotional materials so long as they are stickered so as to
indicate that the MMIC Business is no longer affiliated with the Seller.
12.5 Non-Solicitation. After the Closing, for a period of two years from
July 2, 1997, except as provided in Section 11.1(c), the Seller shall not (a)
solicit to hire any individual who, on July 2, 1997, was an employee of the
MMIC Business, or (b) hire any individual who on July 2, 1997, was an employee
of the MMIC Business unless (in case of clause (b)) such individual has a
written offer of employment from a third Person for a like position.
12.6 Compliance With Certain Agreements. After the Closing, the Buyer
agrees to be bound, insofar as it relates to the MMIC Business, by the
provisions of (i) the Settlement Agreement dated February 23, 1995 between
Westinghouse Electric Corporation and TI, but only to the extent included in
the Assumed Obligations, and (ii) the Supplemental Agreement, dated as of
August 28, 1997, between TI and the Seller.
12.7. Compliance With Final Judgment. After the Closing, the Buyer agrees
to be bound by the provisions of the Final Judgment.
12.8. Best Efforts and Mutual Cooperation. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. The parties hereto will cooperate with each other to obtain as
promptly as possible all consents, authorizations, orders or approvals of any
third party, whether private or a Governmental Entity, required in connection
with the transactions contemplated by this Agreement. The parties hereto agree
to coordinate and cooperate with one another in exchanging such information and
in executing and delivering such instruments as the others may request in
connection with all of the foregoing.
12.9. Move to North Building. Within one year after the Closing, the
Seller and the Buyer will cooperate to move the Acquired Assets located in the
Research East Building to an approximately 18,000 square foot facility located
in the North Building contiguous to Buyer's operations in the North Building.
The Buyer and the Seller will use reasonable efforts to effect this move in a
manner that does not unreasonably disrupt the operations of the Seller or the
Buyer. The Seller agrees to pay (up to an aggregate of $8,764,000) (a) the
Buyer's reasonable out-of-pocket expenses incurred in connection with the move
and (b) the cost of constructing demising walls and other improvements in the
North Building required to set up the Buyer's research and development
operations and separate the Buyer's business from the Seller's business, in
accordance with plans and specifications to be mutually agreed upon by the
parties. Subject to the terms of the Sublease Agreements, any leasehold
improvements resulting from such payments shall be deemed to be owned by the
Buyer as part of the Acquired Assets. As promptly as practicable after the date
of this Agreement, the Seller and the Buyer will designate appropriate
representatives to develop a timetable, budget and plans for the move and the
improvements and take other related actions.
12.10. Collection of Certain Accounts Receivable.
(a) After the Closing Date, the Buyer shall use reasonable efforts,
consistent with the Seller's current collection practices and procedures, to
collect all accounts receivable included in the Acquired Assets which are aged
90 days or more as of the Closing Date, including, without limitation, those
listed on Schedule 5.22 (collectively, the "Collection Receivables"). All
payments received by the Buyer from any customers obligated in respect of any
Collection Receivables shall be deemed to have been made in respect of, and
shall be applied to, the Collection Receivable of such customer bearing the
earliest date unless the customer has specified the particular account to which
a remittance pertains, in which case the credit shall be made to the account
specified.
(b) The Buyer will not accept any returns of defective products or give
any credit for defective products with respect to any products relating to the
Collection Receivables without the Seller's prior consent, which consent shall
not be unreasonably withheld. The Buyer may accept returns of products or give
credits for products relating to the Collection Receivables for reasons other
than the products being defective. For purposes of paragraph (c) below, (i) any
Collection Receivables relating to product returns or credits made in
compliance with the first sentence of this paragraph (b) shall be considered
unpaid at the end of the applicable Collection Period (as defined below) and
(ii) any Collection Receivables relating to product returns or credits made
pursuant to the second sentence of this paragraph (b) or made pursuant to the
first sentence of this paragraph (b) but without the Seller's consent, shall be
considered paid in full.
(c) In the event that any Collection Receivable or any portion thereof
(less applicable reserves attributable to Collection Receivables set forth on
the Closing Balance Sheet) is not paid by the first anniversary of the
recording of such Collection Receivable (the "Collection Period"), within ten
days after the end of any such Collection Period, the Buyer shall deliver to
the Seller a final statement setting forth all amounts collected by the Buyer
with respect to such Collection Receivable, and listing all Collection
Receivables (or portion thereof) remaining unpaid after the Collection Period,
after giving effect to the provisions of paragraph (b) above (the "Unpaid
Accounts"). Provided that the Buyer has complied with its obligations under
this Section 12.10, within five business days of the delivery of such statement,
the Seller will pay to the Buyer the balance of the Unpaid Accounts,
net of any reserve for uncollected accounts set forth on the Closing Balance
Sheet (as finally adjusted pursuant to Section 3.2) which has not been
previously applied to any Unpaid Account under this paragraph (c). Any amounts
collected by the Seller or the Buyer with respect to any Unpaid Accounts after
the Collection Period for such Unpaid Account shall be the property of the
Seller and the Seller may take such measures to enforce collection of the
unpaid items as the Seller shall deem necessary.
(d) In the event that the Buyer collects more with respect to the
Collection Receivables than the total amount attributable to the Collection
Receivables (net of any reserve) on the Closing Balance Sheet (as finally
adjusted pursuant to Section 3.2), the Buyer will remit to the Seller any such
excess amount.
12.11. Buyer's Business. Except as may be otherwise contemplated by this
Agreement or required by any of the documents listed in any Schedule to this
Agreement, the Buyer covenants and agrees that, from and after the date of this
Agreement and until the Closing, it shall carry on its business in the ordinary
course substantially in the same manner as heretofore conducted.
Article 13
Indemnity
13.1. Indemnification by the Seller.
(a) The Seller agrees to indemnify and hold the Buyer (and its
Affiliates, directors, officers, employees and agents, and each of the
heirs, executors, successors and assigns of the foregoing) harmless from
and with respect to any and all claims, liabilities, losses, damages,
costs and expenses (including without limitation the reasonable fees and
disbursements of counsel) (collectively, "Losses"), arising out of (i) any
breach by the Seller of any representation or warranty made by the Seller
in this Agreement, (ii) any breach by the Seller of any covenant,
obligation or undertaking made by the Seller in this Agreement or (iii)
the Excluded Liabilities.
(b) No action or claim for Losses pursuant to Section 13.1(a)(i)
above may be brought or made unless such action or claim (a "Claim") has
been specified in reasonable detail in a written notice from the Buyer to
the Seller on or before the one year anniversary of the Closing, except
for Claims arising out of any breach of the Seller of Section 5.17, which
must be made on or before July 9, 1999, or Claims arising out of any
breach of the Seller of Section 5.19, which must be made on or before the
expiration of any applicable statute of limitations period.
(c) The Buyer shall not be entitled to indemnification under Section
13.1(a)(i) above except to the extent that the cumulative amount of
Losses arising from Claims asserted under Section 13.1(a)(i) exceeds
$100,000, and then only to the extent of such excess. In addition, in no
event shall the aggregate liability of the Seller for Losses under
Section 13.1(a)(i) exceed ten percent (10%) of the Purchase Price (as
finally adjusted pursuant to Section 3.2) except in the case of Losses
arising from any breach by the Seller of Section 5.17 ("Environmental
Claims"), for which the maximum amount payable by the Seller shall be
$10,000,000, or arising from fraud.
13.2. Indemnification by the Buyer.
(a) The Buyer agrees to indemnify and hold the Seller (and its
Affiliates, directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of the foregoing) harmless from and with
respect to any and all Losses arising out of (i) any breach by the Buyer of any
representation or warranty made by the Buyer in this Agreement, (ii) any breach
by the Buyer of any covenant, obligation or undertaking made by the Buyer in
this Agreement (including the assumption referred to in Article 2), or (iii)
the operation of the MMIC Business or the use of the Acquired Assets in the
operation thereof after the Closing Date.
(b) No action or claim for Losses pursuant to Section 13.2(a)(i)
above may be brought or made unless such action or claim (a "Claim") has been
specified in reasonable detail in a written notice from the Seller to the Buyer
on or before the one year anniversary of the Closing.
(c) The Seller shall not be entitled to indemnification under
Section 13.2(a)(i) above except to the extent that the cumulative amount of
Losses arising from Claims asserted under Section 13.2(a)(i) exceeds $100,000,
and then only to the extent of such excess. In addition, in no event shall the
aggregate liability of the Seller for Losses under Section 13.2(a)(i) exceed
ten percent (10%) of the Purchase Price (as finally adjusted pursuant to
Section 3.2) except in the case of Losses arising from any breach by the Buyer
of Sections 6.7 or 6.8 or arising from fraud.
13.3. Indemnification Procedures.
(a) In the event that any party hereto (an "Indemnified Party")
desires to make a claim against another party hereto (the "Indemnifying
Party", which term shall include all Indemnifying Parties if there be
more than one) in connection with any action, suit, proceeding or demand
at any time instituted against or made upon it for which it may seek
indemnification hereunder (a "Third-Party Claim"), the Indemnified Party
shall promptly notify the Indemnifying Party of such Third-Party Claim
and of its claims of indemnification with respect thereto; provided,
however, that the failure to provide such notice shall not release the
Indemnifying Party from any obligation under this Article 13 except to
the extent such Indemnifying Party is prejudiced by such failure. Upon
receipt of such notice from the Indemnified Party, the Indemnifying Party
shall be entitled to participate in the defense of such Third-Party
Claim, and assume the defense of such Third-Party Claim, and in the case
of such an assumption the Indemnifying Party shall have the authority to
negotiate, compromise and settle such Third-Party Claim; provided, that
(i) the Indemnifying Party shall not be entitled to settle any such
Third-Party Claim without the consent of the Indemnified Party unless as
part of such settlement the Indemnified Party is released from all
liability with respect to such Third-Party Claim and (ii) the Indemnified
Party shall cooperate with the Indemnifying Party in connection with the
defense of such Third Party Claim, and provide all information possessed
by the Indemnified Party relevant to the defense or settlement of such
Third Party Claim.
(b) The Indemnified Party shall retain the right to employ its own
counsel and to participate in the defense of any Third-Party Claim, the
defense of which has been assumed by an Indemnifying Party pursuant
hereto, but the claimant shall bear and shall be solely responsible for
its own costs and expenses in connection with such participation.
13.4 Scope of Indemnity. Except as provided in Article 14, each of the
Seller and the Buyer acknowledges that, except for equitable relief, including
specific performance, its sole and inclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant to
the indemnification provisions of this Article 13.
13.5 Waiver of Statutory Claims. The Buyer hereby waives and releases the
Seller from any and all Losses, known or unknown, it may have under CERCLA (as
defined in Article 17) or any other statutes relating to environmental matters
now or hereafter in effect or any other statute if the assertion of a right
under such statute would circumvent the intended effect of Section 13.4. The
Seller hereby waives and releases the Buyer from any and all Losses, known or
unknown, it may have under CERCLA or any other statutes relating to
environmental matters now or hereafter in effect or any other statute if the
assertion of a right under such statute would circumvent the intended effect of
Section 13.4.
Article 14
Tax Matters
14.1. General. The Seller shall remain responsible for all Income Taxes
(as defined in Article 17) of the Seller payable in connection with the
operation of the MMIC Business prior to the Closing. The Seller shall also
remain responsible for the filing of all related Tax Returns (as defined in
Article 17).
14.2. Cooperation on Tax Matters; Conduct of Proceedings.
(a) The Buyer and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
preparation and filing of Tax Returns pursuant to this Article 14 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to such preparation and filing and to any audit, litigation or
other proceeding relating thereto and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
(b) The Seller shall be responsible for defending any audit,
litigation or other proceeding with respect to any Taxes of the Seller
for which the Seller is wholly or partially responsible for payment
pursuant to this Article 14 and shall have the authority to negotiate,
compromise and settle any such audit, litigation or other proceeding.
14.3. Allocation of Transfer and Property Taxes. (a) All excise, sales,
use, value added, registration stamp, recording, documentary, conveyancing,
franchise, property, transfer, gains and similar Taxes, levies, charges and
fees including any deficiencies, interest, penalties, additions to Tax or
additional amounts excluding any Income Taxes (collectively, "Transfer Taxes")
incurred in connection with the transactions contemplated by this Agreement
shall be borne by Seller. Buyer and Seller shall use reasonable efforts to
minimize the amount of all Transfer Taxes and shall cooperate in providing each
other with any appropriate resale exemption certifications and other similar
documentation. The party that is required by applicable law to make the
filings, reports or returns and to handle any audits or controversies with
respect to any applicable Transfer Taxes shall do so, and the other party shall
cooperate with respect thereto as necessary.
(b) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Acquired Assets for a taxable
period which includes (but does not end on) the Closing Date (collectively, the
"Apportioned Obligations") shall be apportioned between Seller and Buyer based
on the number of days of such taxable period which fall on or before the
Closing Date (this and any other tax period which includes one or more days
falling on or before the Closing Date, a "Pre-Closing Tax Period") and the
number of days of such taxable period after the Closing Date (a "Post-Closing
Tax Period"). Seller shall be liable for the proportionate amount of such taxes
that is attributable to the Pre-Closing Tax Period, and Buyer shall be liable
for the proportionate amount of such taxes that is attributable to the
Post-Closing Tax Period. Upon receipt of any ▇▇▇▇ for real or personal property
taxes relating to the Acquired Assets, each of Seller and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which each
is entitled under this Section together with such supporting evidence as is
reasonably necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within 30 days after delivery
of such statement. In the event that either Seller or Buyer shall make any
payments for which it is entitled to reimbursement under this Section, the
other party shall make such reimbursement promptly but in no event later than
ten (10) days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement.
14.4. Allowable Taxes. (a) For purposes of this Section, "Allowable Tax"
shall mean the allocable share of any Tax of Seller or any of its Affiliates
which is an allowable cost under the Federal Acquisition Regulation, 48 CFR
Chapter 1, and associated regulations and agreements between Seller and any
U.S. governmental entity, allocated based on Seller's existing finance policy
(as it is in effect on the date hereof).
(b) If Seller has paid or reimbursed Buyer for any Allowable Tax
which is attributable to a Pre-Closing Tax Period, Buyer agrees to repay
to Seller promptly upon receipt any portion of such Allowable Tax that
Buyer or any of its Affiliates is ultimately able to recover from the
United States government.
(c) If Buyer or any of its Affiliates receives a refund with respect
to an Allowable Tax that is attributable to a Pre-Closing Tax Period,
Buyer shall pay to Seller the amount of such refund reduced by the
amount, if any, that Buyer will be required to pay to the United States
government or suffer by reason of offset in accordance with the Federal
Acquisition Regulation, 48 CFR Chapter 1, and associated regulations and
agreements between Seller and any U.S. governmental entity. If Seller
receives a refund after the Closing Date with respect to an Allowable Tax
that is attributable to a Pre-Closing Tax Period, Seller will pay to
Buyer the amount, if any, which Buyer will be required to pay to the U.S.
government, or suffers by reason of an offset, in accordance with the
foregoing regulations.
(d) Seller and Buyer agree to cooperate with respect to the
calculation of any amounts payable pursuant to this Section and to give
each other written notice of events reasonably likely to result in the
increase or decrease of any Allowable Tax attributable to a Pre-Closing
Tax Period.
14.5. Scope of Article 14.
(a) Notwithstanding the provisions of Article 13, the provisions of
this Article 14 (and not Article 13) shall govern the allocation of
responsibility between the Seller and the Buyer for Taxes of the MMIC
Business.
(b) Claims under this Article 14 may be made by the Buyer and the
Seller at any time prior to the expiration of the statute of limitations
applicable to the Tax matter to which the Claim relates.
Article 15
Termination
This Agreement may be terminated by either the Buyer or the Seller in
writing, without liability to the terminating party on account of such
termination (provided the terminating party is not otherwise in default or in
breach of this Agreement), if (a) the Closing shall not have occurred on or
before January 26, 1998, other than as a consequence of the intentional breach
or the intentional default by the terminating party, or (b) the DOJ or DOD
notify the Seller of their objection to the Buyer as a purchaser of the MMIC
Business. This Agreement may be terminated at any time prior to the Closing by
mutual written consent of the Seller and the Buyer. In the event of the
termination and abandonment of this Agreement by the Seller or the Buyer, as
herein provided, written notice thereof shall be given to the other party and
this Agreement shall terminate without any further action of the parties
hereto. If this Agreement is terminated as provided herein: (i) each party will
redeliver all documents, work papers and other material of the other party or
parties relating to the transactions contemplated hereby including such
memoranda, notes, lists, records or other documents compiled or derived from
such material, whether so obtained before or after the execution hereof, to the
party furnishing the same; (ii) all information received by any party hereto
with respect to the business of the other parties or their affiliated companies
shall remain subject to the terms of the Confidentiality Agreement (as defined
in Article 17); and (iii) no party shall have any liability or further
obligation to any other party to this Agreement except as provided by this
Article 15, and except that any termination of this Agreement pursuant to the
first sentence of this Article 15 shall not relieve a defaulting or breaching
party from any liability to the other party hereto. In addition, the provisions
of Article 18 shall survive any termination of this Agreement.
Article 16
Confidentiality
16.1 Confidentiality Agreement. Any and all information disclosed by the
Buyer to the Seller or by the Seller to the Buyer as a result of the
negotiations leading to the execution of this Agreement, or in furtherance
thereof, which information was not already known to the Seller or to the Buyer,
as the case may be, shall be subject to the Confidentiality Agreement, dated as
of August 15, 1997, between the Buyer and the Seller (the "Confidentiality
Agreement"), all of the provisions of which are incorporated into this Section
16.1 by this reference. Notwithstanding the foregoing, the Confidentiality
Agreement shall terminate upon the Closing.
16.2. Classified Information. Buyer acknowledges that Know-How (as defined
in the Intellectual Property Agreement) and other intellectual property to be
disclosed to Buyer pursuant to this Agreement and/or the Intellectual Property
Agreement may be considered as classified information by the United States
Government and nothing in this Agreement or the Intellectual Property Agreement
shall require Seller to disclose classified information to Buyer until such
time as Buyer has received necessary clearances from the United States
Government to receive same.
Article 17
Definitions
As used herein the following terms not otherwise defined have the
following respective meanings:
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "control" (including the terms "controlled by" and
"under common control with") means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect
a majority of the board of directors or similar body governing the affairs of
such Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Encumbrance" means all liens, security interests, pledges, charges,
mortgages, conditional sales agreements, title retention agreements and other
encumbrances.
"Environmental Law" means any applicable Federal, state, local or foreign
law, treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, agreement or governmental restriction, each as in effect on
or prior to the Closing Date, relating to the environment or to any Hazardous
Substance.
"GAAP" means generally accepted accounting principles which are consistent
with the principles promulgated or adopted by the Financial Accounting
Standards Board and its predecessors, in effect for the applicable fiscal year.
"Government Contract" means (i) any contract, agreement, lease or
instrument relating to the MMIC Business between Seller and any Governmental
Entity and (ii) any contract, agreement, lease or instrument relating to the
MMIC Business entered into by the Seller as subcontractor (at any tier) in
connection with a contract between another Person and any Governmental Entity.
"Governmental Entity" means any government or any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency, Federal, state, local, transnational or
foreign.
"Hazardous Substance" means any substance, pollutant, contaminant,
chemical, waste or material, including petroleum, its derivatives, by-products,
and other hydrocarbons, that is listed, identified in, or regulated under any
applicable Federal, state, local or foreign law, treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, agreement or
governmental restriction.
"Income Taxes" means any Taxes based upon or related to income, including
any Taxes calculated in whole or in part based upon net revenues.
"Indebtedness" as applied to any Person, means all indebtedness of such
Person to any other Person for borrowed money, whether current or funded, or
secured or unsecured and all such Indebtedness of any other Person which is
directly or indirectly guaranteed by such Person or which such Person has
agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which it has otherwise assured against loss, but not including the
endorsement of checks and similar instruments.
"Knowledge of the Seller" or "to the Seller's knowledge" means and is
limited to the actual knowledge of the following persons: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Material Adverse Effect" means any material adverse effect on the
operations, assets or financial condition of the MMIC Business taken as a
whole.
"MMIC Business Intellectual Property" shall have the meaning therefor set
forth in the Intellectual Property Agreement.
"Non-Income Taxes" means any Taxes other than Income Taxes.
"Permitted Encumbrances" means Encumbrances that (i) arise out of Taxes
not in default and payable without penalty or interest or the validity of which
is being contested in good faith by appropriate proceedings, (ii) are
mechanics', carriers', workers', repairmen's, or other similar liens that do
not, individually or in the aggregate, have a Material Adverse Effect, (iii) in
connection with any agreement or instrument constituting part of the Acquired
Assets, relate to restrictions on transfer embodied in the terms of such
agreement or instrument, (iv) represent the rights of customers, suppliers and
subcontractors in the ordinary course of business under contracts or under
general principles of commercial law, (v) are referred to in Section 2.4 of the
Intellectual Property Agreement or (vi) that individually and in the aggregate
could not reasonably be expected to interfere with the use of the Acquired
Assets in the conduct of the normal business operations of the MMIC Business.
"Person" means any corporation, association, partnership, limited
liability company, organization, business, individual, government or political
subdivision thereof or governmental agency.
"Tax" Any federal, state, provincial, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"Tax Return" Any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
Article 18
General
18.1 Survival of Representations and Warranties. Each of the
representations and warranties of the parties hereto contained in this
Agreement shall survive the Closing and shall expire on the last day, if any,
on which a claim for indemnification for breach thereof may be made pursuant to
Article 13.
18.2. Expenses. Each party shall pay its own expenses and costs incidental
to the preparation of this Agreement and to the consummation of the
transactions contemplated hereby.
18.3. Assigns. This Agreement may not be assigned in whole or in part by
either party hereto without the prior written consent of the other party.
Notwithstanding the foregoing, (i) at the Closing, the Buyer may, pursuant to
written notice to the Seller, assign its rights hereunder to acquire the
Acquired Assets, to assume the Assumed Obligations and to enter into the
Intellectual Property Agreement, the Master Services Agreement, the Supply
Agreement, the Sublease Agreements and the Non-Disclosure Agreement to any
wholly-owned subsidiary of the Buyer (provided that (x) no such assignment
shall relieve the Buyer of any of its obligations hereunder, (y) both the Buyer
and such assignee shall be parties to the Non-Disclosure Agreement and (z) at
the Closing, the Buyer shall execute and deliver to the Seller a Guaranty
Agreement in the form of Exhibit G attached hereto), (ii) at the Closing, the
Buyer may, pursuant to written notice to the Seller, assign its rights
hereunder to acquire those Acquired Assets consisting of capital equipment to a
lessor of its choosing in connection with a lease agreement to be entered into
as of the Closing Date between the Buyer and such lessor, and (ii) either party
may assign this Agreement to any successor in interest (whether by sale,
merger, consolidation or otherwise) to all or substantially all of such party's
business. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns.
18.4. Entire Agreement, Etc. This Agreement (including the Schedules and
Exhibits and the Confidentiality Agreement) contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof and shall not be amended except by a written
instrument hereafter signed by each of the parties hereto. EXCEPT AS SET FORTH
IN ARTICLE 5, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION OR WARRANTY WITH
RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO
THE SALE OF THE ACQUIRED ASSETS HEREUNDER OR THE MMIC BUSINESS.
18.5. Waiver of Certain Damages. EACH OF THE SELLER AND THE BUYER TO THE
FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO PUNITIVE OR MULTIPLE DAMAGES BASED UPON, OR ARISING OUT OF, THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
18.6. Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
18.7. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws (and not the choice-of-law rules)
of the State of New York.
18.8. Notices. All notices, requests, payments, instructions or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Seller, to:
Raytheon TI Systems, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy sent contemporaneously to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, to:
TriQuint Semiconductor, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent contemporaneously to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
18.9. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
18.10. Section Headings. All enumerated subdivisions of this Agreement are
herein referred to as "section" or "subsection." The headings of sections or
subsections are for reference only and shall not limit or control the meaning
thereof.
18.11. Public Statements or Releases. The parties hereto each agree that
prior to the Closing no party to this Agreement shall make, issue or release
any public announcement, statement or acknowledgment of the existence of, or
reveal the status of, this Agreement or the transactions provided for herein,
without first obtaining the consent of the other party hereto. Nothing
contained in this Section 18.11 shall prevent any party from making such public
announcements as such party may consider necessary in order to satisfy such
party's legal obligations, provided that such disclosing party shall to the
extent practicable give prior notice to the other party of the contents of, and
requirement for, such disclosure.
18.12. Disclosure in Schedules. For purposes of this Agreement, with
respect to any matter that is clearly disclosed in any portion of the
Disclosure Schedule in such a way as to make its relevance to the information
called for by another Section of this Agreement readily apparent, such matter
shall be deemed to have been included in the Disclosure Schedule in response to
such other Section, notwithstanding the omission of any appropriate
cross-reference thereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as an instrument under seal as of the day and year first above written.
RAYTHEON TI SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Controller
TRIQUINT SEMICONDUCTOR, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇
Title: Executive Vice President