Exhibit 2.1
===========
SHARE PURCHASE AGREEMENT
by and among
STANDARD MICROSYSTEMS CORPORATION,
SMSC GMBH
and
THE SHAREHOLDERS OF
OASIS SILICONSYSTEMS HOLDING AG
dated as of March 30, 2005
TABLE OF CONTENTS
PREAMBLE .......................................................... 8
ARTICLE I DEFINITIONS, INTERPRETATION ............................ 9
1.1 Definitions .................................................. 9
1.2 Interpretation ............................................... 14
1.3 Headings ..................................................... 15
1.4 Exhibits ..................................................... 15
1.5 Monetary Amounts ............................................. 15
1.6 Payment Modalities ........................................... 15
1.7 Default Interest ............................................. 15
1.8 Calculation of Interest ...................................... 15
ARTICLE II SALE AND PURCHASE; LOCK-UP; TERMINATION OF OASIS
STOCK OPTIONS; GRANT OF SMSC RESTRICTED STOCK AWARDS AND
CASH BONUS AWARDS ................................................. 16
2.1 Sale and Purchase ............................................ 16
2.2 Purchase Price ............................................... 16
2.3 Lock-up ...................................................... 16
2.4 Share Certificates ........................................... 17
2.5 Taxes ........................................................ 17
2.6 Termination of OASIS Stock Options; Grant of Restricted
Stock Awards by SMSC .......................................... 17
2.7 Issue of SMSC Stock Options to Certain Shareholders .......... 18
ARTICLE III INITIAL CONSIDERATION ................................ 18
3.1 Initial Consideration ........................................ 18
3.2 Escrow ....................................................... 19
ARTICLE IV CONTINGENT CONSIDERATION ............................... 20
4.1 Contingent Consideration ..................................... 20
4.2 Allocation of Contingent Consideration ....................... 21
4.3 Earn-Out Calculation ......................................... 21
4.4 Payment Date ................................................. 23
ARTICLE V CLOSING ................................................ 23
5.1 Date and Place of Closing .................................... 23
5.2 Closing Actions .............................................. 23
5.3 Termination .................................................. 27
ARTICLE VI REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS ............................................... 27
6.1 Legal Organization of Certain Shareholders
and the Group ................................................ 28
6.2 Ownership of Shares .......................................... 30
6.3 Authorizations of the Shareholders ........................... 31
6.4 Effects of Transactions Contemplated under this Agreement .... 31
6.5 Accounting and Financial Documents, Liabilities .............. 32
6.6 Management of the Companies since December 31, 2003 .......... 33
6.7 Real Estate .................................................. 34
6.8 Movable Property and Fixed Assets ............................ 34
6.9 Intellectual Property ........................................ 35
6.10 Loans ....................................................... 39
6.11 Inventory ................................................... 39
6.12 Off-Balance Sheet Undertakings .............................. 39
6.13 Contracts ................................................... 40
6.14 Insurance ................................................... 42
6.15 Relations with the Shareholders ............................. 42
6.16 Commercial Relations ........................................ 42
6.17 Non-US Labor Matters ........................................ 42
6.18 US Labor Matters ............................................ 45
6.19 Permits, Compliance with Laws ............................... 48
6.20 Tax, Social Security, Customs ............................... 48
6.21 Litigation .................................................. 50
6.22 No Insolvency ............................................... 50
6.23 Bank Accounts and Signature Powers .......................... 50
6.24 Intermediaries .............................................. 51
6.25 Private Placement of Consideration Shares ................... 51
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SMSC ............... 51
7.1 Legal Organization of SMSC ................................... 51
7.2 Authorizations of SMSC ....................................... 51
7.3 Available Funds .............................................. 52
7.4 Consideration Shares ......................................... 52
7.5 SEC Reports .................................................. 52
7.6 Financial Statements ......................................... 52
7.7 No Material Adverse Change ................................... 53
ARTICLE VIII INDEMNIFICATION ...................................... 53
8.1 Notification of Potential Claims ............................. 53
8.2 Cure Period .................................................. 53
8.3 Indemnification by the Shareholders .......................... 53
8.4 Third Party Claims ........................................... 54
8.5 Survival of Representations and Warranties
of the Shareholders .......................................... 54
8.6 Limitations on Shareholders' Liability ....................... 55
8.7 No Joint Liability; Rights of Shareholders ................... 58
8.8 Infineon Indemnity ........................................... 58
8.9 Tax Indemnity ................................................ 59
8.10 IP Indemnity ................................................. 61
8.11 Sardis Indemnity ............................................. 61
8.12 Indemnification by SMSC ...................................... 62
8.13 Exclusion of Further Remedies ................................ 62
8.14 Willful Default .............................................. 63
ARTICLE IX COVENANTS ............................................. 63
9.1 Cooperation .................................................. 63
9.2 Undertaking not to Compete or Hire Staff;
Non-Solicitation of Customers ................................ 63
9.3 Publicity; Disclosure; Confidentiality ....................... 64
9.4 Obligations of the Shareholders concerning IP Rights ......... 65
9.5 Employee Matters ............................................. 65
ARTICLE X GENERAL PROVISIONS ..................................... 66
10.1 Investigations ............................................... 66
10.2 Substitution and Assignment .................................. 66
10.3 Severability ................................................. 66
10.4 Notices and Communications ................................... 66
10.5 Costs and Expenses ........................................... 68
10.6 Governing Law ................................................ 68
10.7 Management Shareholders' Representative ...................... 69
10.8 Entire Agreement; Amendments and Waivers ..................... 69
10.9 Set-off; Retention ........................................... 70
10.10 No Benefit to Third Parties; ................................ 70
10.11 Limited Claims of SMSC Germany .............................. 70
10.12 Joint and Several Liability of SMSC ......................... 70
ARTICLE XI ........................................................ 73
11.1 Arbitration Agreement ........................................ 73
LIST OF EXHIBITS
Exhibit A ............ Ownership of OASIS Shares
Exhibit B ............ Ownership of OASIS Stock Options
Exhibit C ............ OASIS Group of Companies
Exhibit D ............ Escrow Agreement
Exhibit 2.6(a)(i) .... Termination Agreement I
Exhibit 2.6(a)(ii) ... Termination Agreement II
Exhibit 2.6(b)(i) .... Terms and Conditions of the Restricted Stock Awards
Exhibit 2.6(b)(ii) ... Sample Cash Bonus Agreement
Exhibit 2.7(b) ....... Terms and Conditions of the SMSC Stock Options
Exhibit 4.1 .......... Earn-Out Targets
Exhibit 4.3(b) ....... Business Plan of OASIS Group
Exhibit 5.2(a)(ii) ... Key Members of Management and Key Employees
Exhibit 5.2(f) ....... Deed of Transfer
Exhibit 5.2(g) ....... Designated Bank Accounts of Shareholders
Exhibit 6.1(e) ....... Shareholding or Interest in Other Legal Entity
Exhibit 6.1(h) ....... Corporate Matters Not Yet Registered or Recorded
Exhibit 6.1(i)(A) .... Articles of Association, Bylaws or Partnership Agreements
of the Companies
Exhibit 6.2(a)(i) .... Oasis Shares Held by Third Parties
Exhibit 6.2(a)(ii) ... Companies with Share Certificates
Exhibit 6.2(b)(i) .... Shares Owned by Third Parties
Exhibit 6.2(b)(ii) ... Restrictions on Transfer
Exhibit 6.2(b)(iii) .. Third Party Rights in the Companies or the Shares
Exhibit 6.2(b)(iv) ... Stock Appreciation Rights, Phantom Stock or Profit
Participation Rights
Exhibit 6.3(a) ....... Approval by Members of OSS LLC
Exhibit 6.4 .......... Effects of Transactions
Exhibit 6.4(iii) ..... Agreements with Change-of-Control Clause
Exhibit 6.5(a) ....... Financial Statements and Management Accounts
Exhibit 6.5(c) ....... List of Liabilities of Companies
Exhibit 6.5(d) ....... Changes of Accounting Principles or Practices
Exhibit 6.6(a) ....... Transactions Outside of the Ordinary and Usual Course of
Business
Exhibit 6.6(b) ....... Material Adverse Changes
Exhibit 6.6(d) ....... Certain Payment Obligations; Guarantees; Contributions
Exhibit 6.6(e) ....... Agreements or Transactions with Shareholders or
Affiliates
Exhibit 6.6(g) ....... Certain Undertakings
Exhibit 6.7(b)(i) .... List of all Lease Agreements concerning Real Estate
Exhibit 6.7(b)(ii) ... Inappropriateness of Real Property
Exhibit 6.7(b)(iii) .. Copies of Lease Agreements
Exhibit 6.8 .......... Lease Agreements concerning Moveable Property
Exhibit 6.9(a) ....... List of Owned Intellectual Property
Exhibit 6.9(c) ....... List of Licensed Intellectual Property
Exhibit 6.9(f) ....... Outstanding Registration and Renewal Fees
Exhibit 6.9(g) ....... Persons Contributing to Owned Intellectual Property
Exhibit 6.9(h) ....... Compensation Obligations under German Employee Invention
Act
Exhibit 6.9(i) ....... Infringements of Intellectual Property of Third Parties
Exhibit 6.10 ......... List of Loans Granted by the Companies
Exhibit 6.12(i) ...... Contingent Finance Liabilities
Exhibit 6.12(ii) ..... Guarantees or Security Interests
Exhibit 6.12(iii) .... Hedging Activities
Exhibit 6.13(b) ...... List of Certain Contracts of the Companies
Exhibit 6.13(c) ...... List of Certain Customer Contracts of the Companies
Exhibit 6.13(d) ...... List of Certain Licensing, Supply, Manufacturing and
Distribution Contracts of the Companies
Exhibit 6.14 ......... List of Insurance Policies
Exhibit 6.15 ......... List of Relations with Shareholders
Exhibit 6.16(a)(i) ... Customer and Supplier Agreements Concluded with a Waiver
of General Terms and Conditions
Exhibit 6.16(a)(ii) .. General Terms and Conditions of Sale
Exhibit 6.17(b) ...... Copies of Standard Employment Agreements
Exhibit 6.17(d) ...... List of Employee Benefit Plans
Exhibit 6.17(e) ...... List of Agreements or Understandings between Non-US
Companies and Employees
Exhibit 6.18(b) ...... Comprehensive List of INC's Company Plans
Exhibit 6.18(l) ...... US Proprietary Information Agreement
Exhibit 6.19(a) ...... Public Law Approvals
Exhibit 6.19(b) ...... Non-Compliances with Law
Exhibit 6.20(b) ...... List of Certain Persons
Exhibit 6.20(c) ...... List of Tax Inspections or Inquiries
Exhibit 6.20(h) ...... Fair Market Value of INC Shares
Exhibit 6.21(a) ...... Litigation
Exhibit 6.23(a) ...... List of Bank Accounts and Authorized Persons
Exhibit 6.23(b) ...... List of Signature Powers
Exhibit 6.24 ......... List of Agreements with Intermediaries and Advisors
This SHARE PURCHASE AGREEMENT ("Agreement") is entered into by
Standard Microsystems Corporation,
having its business address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
("SMSC"),
and
SMSC GmbH,
registered with the commercial register at the local court in
Munich under HRB 70731 and having its business address at
▇▇▇▇▇▇▇▇ ▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
("SMSC Germany"),
on the one hand,
and
Mr. (▇▇▇▇) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, born October 4, 1958 and residing at
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, born April 7, 1966 and residing at ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
▇▇. ▇▇▇▇▇▇ ▇▇▇▇, born May 9, 1961 and residing at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, born October 20, 1958 and residing at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
▇▇. ▇▇▇▇ ▇▇▇▇▇▇, born July 31, 1970 and residing at ▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
OSS Holdings LLC, having its business address at 1120 South
Capital of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇.▇.▇.
("OSS LLC");
-------
Yazaki Corporation, registered with the Tokyo Legal Affairs
Bureau and having its business address at ▇-▇-▇▇, ▇▇▇▇,
▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇
("Yazaki");
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, born August 3, 1938 and residing at
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇; and
Deutsche Effecten- und Wechsel-Beteiligungsgesellschaft AG,
registered with the commercial register at the local court in
▇▇▇▇ under HRB 8401 and having its business address at
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
("DEWB")
(each a "Shareholder" and collectively, the "Shareholders"),
----------- ------------
on the other hand.
SMSC, SMSC Germany and the Shareholders are collectively referred
to as "Parties" and each a "Party".
PREAMBLE
--------
WHEREAS, OASIS SiliconSystems Holding AG ("OASIS") is a German
stock corporation (Aktiengesellschaft), having its registered seat in Karlsruhe,
Germany, which is registered with the commercial register at the local court in
Karlsruhe under HRB 9503. OASIS has a share capital (Grundkapital) of Euro
("EUR") 10,000,000, which is divided into 10,000,000 no-par value ordinary
bearer shares (the "OASIS Shares").
WHEREAS, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is the owner of 1,759,876 OASIS
Shares, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ is the owner of 507,656 OASIS Shares, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
is the owner of 507,656 OASIS Shares, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ is the owner of
507,656 OASIS Shares, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ is the owner of 101,531 OASIS Shares, OSS
LLC is the owner of 3,384,375 OASIS Shares, Yazaki is the owner of 356,250 OASIS
Shares, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is the owner of 1,125,000 OASIS Shares and DEWB is
the owner of 1,750,000 OASIS Shares. The exact ownership structure of OASIS is
shown in Exhibit A.
WHEREAS, 530,726 stock options granting the right to acquire
newly issued no-par value ordinary bearer shares of OASIS (the "OASIS Stock
Options") have been outstanding and held by employees, members of the management
board and directors of the OASIS Group (as defined below) (the "OASIS
Optionholders"). The exact ownership structure, issue date, number of shares per
option, exercise price and expiration date of the OASIS Stock Options are shown
in Exhibit B.
WHEREAS, OASIS is the parent company of a group of companies
engaged in the conception, development, engineering, sale, marketing and
distribution of hardware and software products, in particular, of integrated
circuits in the sectors multimedia and network applications, and, directly or
indirectly, owns the interests in the legal entities as set out in the corporate
group chart attached hereto as Exhibit C. OASIS and the legal entities set out
in Exhibit C are collectively referred to herein as the "Companies" or the
"OASIS Group", and each of them individually as a "Company".
WHEREAS, SMSC is a stock corporation under the laws of Delaware
with its business address in ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
WHEREAS, SMSC Germany is a wholly-owned subsidiary of SMSC.
WHEREAS, SMSC Germany wishes to purchase 100% of the OASIS Shares
from the Shareholders, and the Shareholders wish to sell 100% of the OASIS
Shares to SMSC Germany.
WHEREAS, SMSC wishes to assume joint and several liability
(gesamtschuldernische Haftung) for all obligations of SMSC Germany under this
Agreement.
WHEREAS, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇,
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, OSS LLC, Yazaki, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and DEWB entered into a Shareholders' Agreement dated December 14, 2000 (the
"Shareholders' Agreement"). -----------------------
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
---------
DEFINITIONS, INTERPRETATION
---------------------------
SECTION 1.1 Definitions.
The following terms shall have the following meanings when used
in this Agreement:
"AB" shall have the meaning specified in Section 6.1(d)(iv).
"Affiliate" shall mean "verbundenes Unternehmen" within the
meaning of Section 15 of the German Stock Corporation Act
(Aktiengesetz).
"Agreement" shall have the meaning specified in the introductory
paragraph hereof.
"Business Day" shall mean any day on which banks are open for
business in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.▇., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇.
"Business Information" shall have the meaning specified in
Section 9.3(b).
"Cash Bonus Awards" shall have the meaning specified in Section
2.6(a).
"Cash Consideration" shall have the meaning specified in Section
2.2.
"Closing" shall have the meaning specified in Section 5.1.
"Code" shall have the meaning specified in Section 6.18(c).
"Company" and "Companies" shall have the meanings specified in
the Preamble of this Agreement.
"Company IP" shall mean all Intellectual Property that is used or
held for use in connection with the business of the Companies.
"Company Plans" shall have the meaning specified in Section
6.18(b).
"Consideration Shares" shall have the meaning specified in
Section 2.2.
"Contingent Consideration" shall have the meaning specified in
the Section 2.2.
"Contract Value" shall have the meaning specified in Section
6.13(b)(i).
"Copyrights" shall have the meaning specified in the definition
of "Intellectual Property".
"Deed of Transfer" shall have the meaning specified in Section
5.2(f).
"DEM" shall have the meaning specified in Section 6.1(d)(i).
"DEWB" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Earn-Out Accounts" shall have the meaning specified in Section
4.3(a)(i).
"Earn-Out Calculation" shall have the meaning specified in
Section 4.3(a)(ii).
"Earn-Out Date" shall have the meaning specified in Section
4.3(a)(i).
"Earn-Out Gross Margin" shall have the meaning specified in
Exhibit 4.1.
"Earn-Out Period" shall have the meaning specified in Section
4.3(a)(i).
"Earn-Out Revenues" shall have the meaning specified in Exhibit
4.1.
"Earn-Out Shareholders" shall have the meaning specified in
Section 4.1.
"Earn-Out Targets" shall have the meaning specified in Section
4.1.
"Employee Data Package" shall have the meaning specified in
Section 6.17(a).
"ERISA" shall have the meaning specified in Section 6.18(b)(iii).
"ERISA Affiliate" shall have the meaning specified in Section
6.18(d).
"Escrow Accounts" shall have the meaning specified in Section
3.2(a)(ii).
"Escrow Agent" shall have the meaning specified in Section
3.2(a).
"Escrow Agreement" shall have the meaning specified in Section
3.2(b).
"Escrow Cash" shall have the meaning specified in Section
3.2(a)(i).
"Escrow Deposits" shall have the meaning specified in Section
3.2(a)(ii).
"Escrow Shares" shall have the meaning specified in Section
3.2(a)(ii).
"EUR" shall have the meaning specified in the Preamble to this
Agreement.
"Financial Statements" shall have the meaning specified in
Section 6.5(a).
"German GAAP" shall have the meaning specified in Section 4.3(b).
"INC" shall have the meaning specified in Section 6.1(d)(i).
"Initial Consideration" shall have the meaning specified in
Section 2.2.
"Intellectual Property" shall mean all intellectual property
rights and industrial property rights in any jurisdiction, if and to the extent
legally protected as intellectual property or industrial property under
applicable laws in such jurisdiction (excluding, however, any know how or trade
secrets), whether owned or held for use under license, whether registered or
unregistered, including such rights in and to: (i) trademarks, trade dress,
service marks, certification marks, logos, trade names and corporate names
(collectively, "Trademarks"); (ii) patents and any and all divisions,
continuations, continuations-in-part, reissues, continuing patent applications,
reexaminations, and extensions thereof, any counterparts claiming priority
therefrom, as well as utility models, certificates of invention and certificates
of registration (collectively, "Patents"); (iii) copyrights in and to writings
and other works of authorship ("Copyrights"); (iv) software (including source
code, object code, application programming interfaces, databases and other
software-related specifications and documentation) (collectively, "Software");
(v) domain names; (vi) mask works; (vii) topographies of micro electronic
semiconductor products; and (viii) Urheberpersonlichkeitsrechte and comparable
rights in non-German jurisdictions (such as droit moral); in each case,
including any registrations of, applications to register, and renewals and
extensions of any of the foregoing with or by any governmental authority in any
jurisdiction.
"KK" shall have the meaning specified in Section 6.1(d)(v).
"Liabilities" shall have the meaning specified in Section 6.5(c).
"License Fees" shall have the meaning specified in Section
6.9(b).
"Lien" or "Liens" shall have the meaning specified in Section
2.1(a).
"Licensed Intellectual Property" shall mean all Company IP other
than the Owned Intellectual Property.
"Lock-up" shall have the meaning specified in Section 2.3.
"Lock-up Period" shall have the meaning specified in Section 2.3.
"Losses" shall have the meaning specified in Section 8.3(a).
"Management Accounts" shall have the meaning specified in Section
6.5(a).
"Management Shareholders' Representative" shall have the meaning
specified in Section 10.7(a).
"Margin-Based Contingent Consideration" shall have the meaning
specified in Exhibit 4.1.
"Material Adverse Change" shall mean a material (wesentlich)
adverse change in the condition (financial or otherwise), business,
properties, assets or results of operations of the relevant group of
companies taken as a whole, which is not a result of changes in
circumstances affecting the semiconductor industry as a whole.
"Non-US Companies" shall have the meaning specified in Section
6.17(a).
"OASIS" shall have the meaning specified in the Preamble to this
Agreement.
"OASIS Group" shall have the meaning specified in the Preamble to
this Agreement.
"OASIS Optionholders" shall have the meaning specified in the
Preamble to this Agreement.
"OASIS Shares" shall have the meaning specified in the Preamble
to this Agreement.
"OASIS Stock Options" shall have the meaning specified in the
Preamble to this Agreement.
"OSS" shall have the meaning specified in Section 6.1(d)(i).
"OSS LLC" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Owned Intellectual Property" shall mean that portion of the
Company IP that is owned by any of the Companies; provided that
Urheberpersonlichkeitsrechte and comparable rights in non-German
jurisdictions (such as droit moral) of members of the Staff of any of
the Companies that cannot be assigned to any of the Companies under
applicable law shall be expressly excluded from this definition. For
the purpose of this definition, Intellectual Property shall be
considered "owned" by any of the Companies if such Company holds
either (i) full and exclusive title or (ii) with respect to Copyrights
which are non-assignable under the applicable law only, the exclusive,
world-wide, perpetual and unrestricted right to use and exploit such
Copyrights. The term "Owned Intellectual Property" shall also include
Intellectual Property that is co-owned by any of the Companies,
provided that in this context, "co-ownership" means that the
respective Company holds title in Intellectual Property not alone, but
jointly with one or more third parties; for the avoidance of doubt,
except as specified in clause (ii) above, an individual or entity
which only holds a license or other right to use the respective
Intellectual Property is not considered a "co-owner".
"Parties" and "Party" shall have the meanings specified in the
introductory paragraph of this Agreement.
"Patents" shall have the meaning specified in the definition of
"Intellectual Property".
"PBGC" shall have the meaning specified in Section 6.18(d).
"Relevant Shareholders" shall have the meaning specified in
Section 8.4.
"Representing Shareholder" and "Representing Shareholders" shall
have the meanings specified in the third introductory paragraph of
Article VI.
"Restricted Stock Awards" shall have the meaning specified in
Section 2.6(a).
"Revenue-Based Contingent Consideration" shall have the meaning
specified in Exhibit 4.1.
"Sardis" shall have the meaning specified in Section 5.2(a)(iv)
"SEC" shall have the meaning specified in Section 7.5.
"Securities Act" shall have the meaning specified in Section
6.25.
"Share Consideration" shall have the meaning specified in Section
2.2.
"Shareholder" and "Shareholders" shall have the meanings
specified in the introductory paragraph of this Agreement.
"Shareholders' Agreement" shall have the meaning specified in the
Preamble to this Agreement.
"Shares" shall have the meaning specified in Section 6.2(a).
"SISYS" shall have the meaning specified in Section 6.1(d)(iii).
"SMSC" shall have the meaning specified in the introductory
paragraph of this Agreement.
"SMSC Germany" shall have the meaning specified in the
introductory paragraph of this Agreement.
"SMSC Reports" shall have the meaning specified in Section 7.5.
"SMSC Shares" shall have the meaning specified in Section 2.2.
"SMSC Stock Options" shall have the meaning specified in Section
2.7(a).
"Software" shall have the meaning specified in the definition of
"Intellectual Property".
"Staff" shall have the meaning specified in Section 6.17(a).
"Subsidiary" or "Subsidiaries" shall have the meaning specified
in Section 6.1(d).
"Taxes" or "Tax" shall have the meaning specified in Section
6.20(a).
"Termination Agreement I" shall have the meaning specified in
Section 2.6(a).
"Termination Agreement II" shall have the meaning specified in
Section 2.6(a).
"Third Party Claim" shall have the meaning specified in Section
8.4.
"Total Purchase Price" shall have the meaning specified in
Section 2.2.
"Trademarks" shall have the meaning specified in the definition
of "Intellectual Property".
"Trade Secrets" shall mean all know-how, business, technical and
customer information, information on members of Staff of any of the
Companies and information on work organisation, logistics and methods
that is used or held for use in the business, if and to the extent it
is not publicly known and protected in the respective jurisdiction
either (i) in the U.S. under federal or state statutory or common law,
(ii) in Germany under Section 17 of the German Act against Unfair
Competition (Gesetz gegen den unlauteren Wettbewerb) or other
statutory law, or (iii) in other jurisdictions under statutory or
common law.
"Trading Day" shall mean any day on which shares are traded on
the NASDAQ National Market.
"USD" shall have the meaning specified in Section 2.2.
"Yazaki" shall have the meaning specified in the introductory
paragraph of this Agreement.
SECTION 1.2 Interpretation.
In this Agreement (including the Preamble and the Exhibits),
unless the context otherwise requires,
(a) references to any German legal concept shall, in respect of
any jurisdiction other than the Federal Republic of Germany, be deemed to refer
to the equivalent concept in such jurisdiction or, where there is no equivalent
concept, to that which most closely approximates to the German legal concept in
such jurisdiction;
(b) where a term or phrase in German has been added in
parentheses after an English term or phrase, the German term or phrase shall be
decisive for the purposes of interpretation of the English term or phrase
whenever such term or phrase is used in this Agreement; and
(c) where all or part of any Exhibit has been attached in the
German language together with an English convenience translation, only the
German-language version shall be decisive for the purposes of this Agreement.
SECTION 1.3 Headings.
The headings in this Agreement shall be disregarded for the
purposes of interpreting this Agreement.
SECTION 1.4 Exhibits.
The Exhibits to this Agreement shall form an integral part of
this Agreement.
SECTION 1.5 Monetary Amounts.
For the purposes of determining whether a monetary limit or
threshold contained in Articles VI and/or VIII and expressed in EUR has been
reached or exceeded, any relevant amount expressed in a currency other than EUR
shall be translated into EUR at the European Central Bank fixing rates published
shortly after 2.15 p.m. (German time) on the date hereof.
SECTION 1.6 Payment Modalities.
All amounts owed under or in connection with this Agreement shall
be paid free of costs and charges in immediately available funds by wire
transfer with value on the relevant due date (mit Wertstellung zum jeweiligen
Falligkeitstag).
SECTION 1.7 Default Interest.
Unless stipulated otherwise in this Agreement, amounts which have
become due and payable (zur Zahlung fallig) under this Agreement and which are
not paid on the due date (Falligkeitstag) shall bear interest from (and
including) the due date until (but excluding) the date of receipt of payment
(receipt of payment being determined by reference to the date of value (Tag der
Wertstellung)) at the rate of four (4) percentage points above the base interest
rate (Basiszinssatz) within the meaning of Section 247 of the German Civil Code
(Burgerliches Gesetzbuch). The right of any Party to claim further damages for
delay (Verzugsschaden) shall remain unaffected.
SECTION 1.8 Calculation of Interest.
Unless stipulated otherwise in this Agreement, interest payable
under or in connection with this Agreement shall be calculated on the basis of
actual days elapsed, a 30-day month and a 360-day year.
ARTICLE II
----------
SALE AND PURCHASE; LOCK-UP; TERMINATION OF OASIS STOCK OPTIONS; GRANT OF
SMSC RESTRICTED STOCK AWARDS AND CASH BONUS AWARDS
------------------------------------------------------------------------
SECTION 2.1 Sale and Purchase.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the Shareholders hereby sells, and shall at Closing (as
defined) transfer to SMSC Germany, and SMSC Germany hereby purchases, and shall
accept at Closing the transfer from such Shareholder of, all right, title and
interest (Eigentum und samtliche sich aus der Aktionarsstellung ergebenden
Rechte) in and to such number of the OASIS Shares as is specified in Exhibit A
opposite the name of such Shareholder, free and clear of all liens, pledges,
charges, mortgages, security interests, easements, encumbrances, restrictions,
rights in rem and similar rights to the benefit of third parties of every kind
and description ("Liens") (frei von Rechten Dritter).
(b) Any dividends of OASIS for fiscal years up to December 31,
2003 which have not been declared and distributed by December 31, 2004 as well
as any dividends for the fiscal years starting January 1, 2004 and January 1,
2005 shall be sold and transferred together with the OASIS Shares and shall
thus, upon the transfer of the OASIS Shares to SMSC Germany, belong to SMSC
Germany.
(c) The Shareholders hereby approve the sale and transfer of the
OASIS Shares to SMSC Germany and expressly and irrevocably waive all Liens,
preemptive rights, rights of first refusal, call options, put options, bring
along rights, liquidation preference rights or similar rights they may have with
respect to any or all of the OASIS Shares under the articles of association of
any of the Companies, under the Shareholders' Agreement, under any other
agreement or by law with respect to this Agreement and the transactions
contemplated hereunder. The waiver pursuant to the preceding sentence shall be
subject to the condition subsequent (auflosende Bedingung) that the Agreement is
terminated pursuant to Section 5.3(a) or otherwise.
SECTION 2.2 Purchase Price.
The aggregate purchase price (the "Total Purchase Price") for the
OASIS Shares shall consist of (i) initial consideration in the aggregate amount
of U.S. Dollars ("USD") 112,831,511 (in words: one hundred and twelve million
eight hundred and thirty-one thousand five hundred and eleven U.S. Dollars) (the
"Initial Consideration"), (ii) contingent consideration (the "Contingent
Consideration") in the aggregate amount of up to USD 20,000,000 (in words:
twenty million U.S. Dollars) and (iii) an amount of USD 172,619 payable by SMSC
Germany to OASIS in accordance with Section 5.2(j). The Contingent Consideration
shall be subject to the achievement of certain performance goals pursuant to
Section 4.1 in connection with Exhibit 4.1. The Initial Consideration and the
Contingent Consideration shall be paid partially in cash (the "Cash
Consideration") and partially by the issuance and delivery of shares (the "Share
Consideration") of SMSC common stock, par value USD 0.10 per share ("SMSC
Shares"), credited as fully paid and ranking equally with all other shares
issued in the capital of SMSC (the "Consideration Shares").
SECTION 2.3 Lock-up.
During a lock-up period applicable to a Shareholder's
Consideration Shares in accordance with Section 3.1(b) and Section 4.2(b) (each
such period, a "Lock-up Period"), such Shareholder may not, directly or
indirectly, (i) sell, transfer, pledge, hypothecate or otherwise dispose of, or
(ii) engage in short sales, derivative transactions, hedging transactions or
other transactions or arrangements having the purpose or effect of reducing such
Shareholder's economic risk of holding, such Consideration Shares, or agree to
do any of the foregoing ("Lock-up"). It is expressly understood and agreed that
the foregoing shall preclude any transaction which reasonably could be expected
to result in or lead to a sale or other disposition by a third party of
beneficial interests in such Shareholder's Consideration Shares. It is further
expressly understood and agreed that the foregoing shall not preclude any
Shareholder from engaging in pure currency hedging transactions that do not
involve or affect the Consideration Shares in any way whatsoever. Each
Shareholder agrees and consents to the entry of stop transfer instructions with
SMSC's transfer agent and registrar against the transfer of such Shareholder's
Consideration Shares except in compliance with the foregoing restrictions.
SECTION 2.4 Share Certificates.
Certificates representing Consideration Shares shall bear
customary restrictive legends evidencing the restrictions contained in Section
2.3 of this Agreement as well as any restrictions arising under U.S. securities
laws. Any certificate held by a Shareholder shall, at the request of such
Shareholder, be exchanged for a certificate without such legends if, in the
reasonable opinion of counsel to SMSC, all applicable restrictions have ceased
to apply and the Consideration Shares represented by such certificate may be
sold and transferred freely without limitation. SMSC acknowledges that the
Shareholders may wish to dispose of all or part of the Consideration Shares
immediately following the end of the applicable Lock-up Period or such later
time as any applicable transfer restrictions under U.S. securities laws shall
terminate. Accordingly, if requested by any Shareholder a reasonable time in
advance of the end of such period or such later date, SMSC will use reasonable
efforts to arrange for the preparation of unlegended certificates in respect of
such Shareholder's shares in time to facilitate such disposal. The Shareholders
acknowledge that SMSC will not apply for, and will not bear the cost of, the
registration of the Consideration Shares.
SECTION 2.5 Taxes.
Each of the Shareholders shall be responsible for all Taxes (as
defined) and duties, brokerage fees and all other costs and expenses in respect
of any subsequent dealings in the Consideration Shares issued to him pursuant to
this Agreement.
SECTION 2.6 Termination of OASIS Stock Options; Grant of
Restricted Stock Awards by SMSC.
(a) As of the date hereof, certain OASIS Optionholders have
entered into an agreement with OASIS and SMSC in the form as set forth in
Exhibit 2.6(a)(i) (the "Termination Agreement I") or, in case such Oasis
Optionholders are members of Staff of INC, in the form as set forth in Exhibit
2.6(a)(ii) (the "Termination Agreement II"), under which they have agreed,
subject to the occurrence of the Closing and the issuance to them of restricted
SMSC Shares under the 2005 Restricted Stock Bonus Agreements (the "Restricted
Stock Awards") or, as the case may be, the award to them of cash bonus
entitlements (the "Cash Bonus Awards") under a cash bonus agreement, to
terminate their OASIS Stock Options with effect as of the date hereof and not to
exercise their OASIS Stock Options until and including the date hereof. ▇▇.
▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ and OSS LLC hereby
undertake vis-a-vis SMSC to use all reasonable efforts to procure that all other
OASIS Optionholders enter into termination agreements substantially in the form
of the Termination Agreement I as soon as reasonably practicable after the date
hereof. The Restricted Stock Awards shall be issued as of Closing and shall be
evidenced by the 2005 Restricted Stock Bonus Agreements to be entered into by
SMSC and the relevant OASIS Optionholders within thirty (30) days following the
Closing. The Restricted Stock Awards and the Cash Bonus Awards were allocated in
mutual agreement between SMSC and the senior management of OASIS to the OASIS
Optionholders and certain other members of the Staff of any of the Companies and
shall be subject to a Lock-up Period of three (3) years commencing on the date
hereof, with 25% vesting on the first anniversary of such date, 25% vesting on
the second anniversary of such date, and 50% vesting on the third anniversary of
such date.
(b) The terms and conditions of the Restricted Stock Awards are
attached hereto as Exhibit 2.6(b)(i). A sample cash bonus agreement is attached
hereto as Exhibit 2.6(b)(ii).
SECTION 2.7 Issuance of SMSC Stock Options.
(a) SMSC shall grant 1,100,000 employee stock options for SMSC
Shares (the "SMSC Stock Options") as of Closing, which were allocated in mutual
agreement between SMSC and senior management of OASIS and form part of the
relevant employment or service agreements with members of the Staff of any of
the Companies. The SMSC Stock Options shall be issued under the 2005 Inducement
Stock Option and Restricted Stock Plan and shall vest over a period of five (5)
years commencing on the date of their issuance, with 20% vesting each year. The
SMSC Stock Options shall be evidenced by stock option agreements to be entered
into by SMSC and the relevant members of Staff referred to above within thirty
(30) days following the Closing.
(b) The terms and conditions of the SMSC Stock Options are
attached hereto as Exhibit 2.7(b).
ARTICLE III
-----------
INITIAL CONSIDERATION
---------------------
SECTION 3.1 Initial Consideration.
(a) The Initial Consideration payable to each of the Shareholders
shall be as follows:
Shareholder Cash Consideration Share Consideration
(in USD)
No. of representing
Consideration USD
Shares value
=========== =================== ============================
1. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8,804,656 424,014 7,204,006
2. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 2,539,802 122,312 2,078,076
3. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 2,539,802 122,312 2,078,076
4. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 2,539,802 122,312 2,078,076
5. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 507,959 24,462 415,614
6. OSS LLC 16,932,022 815,412 13,853,850
7. Yazaki Corp. 0 197,903 3,362,374
8. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 18,133,533 0 0
9. DEWB 25,631,363 243,231 4,132,500
(b) The number of Consideration Shares to be issued and delivered
as part of the Initial Consideration payable to each Shareholder has been
calculated by dividing the USD value of the Share Consideration forming part of
the Initial Consideration payable to such Shareholder as set forth in Section
3.1(a) by the weighted average daily closing price of the SMSC Shares on the
NASDAQ National Market for the thirty (30) Trading Days (as defined) ending on
(and including) March 10, 2005. The Consideration Shares paid as Initial
Consideration to DEWB and Yazaki shall be subject to a Lock-up Period of one
year from and after the date hereof. The Consideration Shares paid as Initial
Consideration to ▇▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ and
OSS LLC shall be subject to a Lock-up Period of four (4) years commencing on the
date hereof, with 25% of such Consideration Shares being automatically released
from such Lock-up at the end of each such year.
SECTION 3.2 Escrow.
(a) A certain portion of the Initial Consideration payable to
each Shareholder shall, in accordance with the provisions of this Section 3.2
and the Escrow Agreement, serve as escrow for the claims of SMSC against such
Shareholder under or in connection with this Agreement. The following table sets
forth for each Shareholder (i) the amount of Cash Consideration to be placed in
escrow, (ii) the number of Consideration Shares to be placed in escrow, and
(iii) the percentage of such Shareholder's Initial Consideration which will thus
be placed in escrow:
Shareholder Cash Share Consideration Percentage of
Consideration Initial
in escrow Consideration
in escrow
No. of representing
Consideration USD
USD Shares value
========== ============= =========================== =============
1. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 0 235,560 4,002,166 25%
2. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 0 67,950 1,154,470 25%
3. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 0 67,950 1,154,470 25%
4. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0 67,950 1,154,470 25%
5. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 0 13,590 230,893 25%
6. OSS LLC 0 453,000 7,696,468 25%
7. Yazaki Corp. 0 19,790 336,237 10%
8. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,813,353 0 0 10%
9. DEWB 0 243,231 4,132,500 13.88%
At Closing, SMSC shall, on behalf of SMSC Germany,
(i) pay for the account of each Shareholder who, pursuant to the
above table, has to deliver cash into escrow the cash amount set forth in the
column headed "Cash Consideration in escrow" next to his name in the above table
(the "Escrow Cash"), and
(ii) deliver for the account of each Shareholder who, pursuant to
the above table, has to deliver Consideration Shares into escrow the number of
Consideration Shares set forth in the column headed "No. of Consideration
Shares" next to his name in the above table (the "Escrow Shares") to JPMorgan
Chase Bank, N.A. (the "Escrow Agent"), who shall hold such Escrow Cash and
Escrow Shares in separate escrow accounts and escrow deposits for each
Shareholder (the "Escrow Accounts" and the "Escrow Deposits", respectively). The
Escrow Shares shall be delivered by SMSC to the Escrow Agent in certificated
form in the names of the relevant Shareholders. Each Shareholder (other than ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇) has delivered to the Escrow Agent an executed stock power
endorsed in blank in respect of the Escrow Shares to be delivered into escrow
for such Shareholder's account.
(b) The Escrow Accounts and the Escrow Deposits have been
established pursuant to an escrow agreement among the Parties and the Escrow
Agent, a copy of which is attached hereto as Exhibit D (the "Escrow Agreement").
The Escrow Accounts and the Escrow Deposits shall be maintained for a period of
eighteen (18) months from the date hereof and the Escrow Shares and the Escrow
Cash delivered or paid into escrow for the account of each Shareholder shall be
available during that time to SMSC to satisfy claims against such Shareholder
under or in connection with this Agreement.
ARTICLE IV
----------
CONTINGENT CONSIDERATION
------------------------
SECTION 4.1 Contingent Consideration.
The Contingent Consideration shall be payable only to ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇
▇▇▇▇▇▇ and OSS LLC (the "Earn-Out Shareholders"). It shall be payable only if
and to the extent that the targets set forth in Exhibit 4.1 (the "Earn-Out
Targets") are achieved.
SECTION 4.2 Allocation of Contingent Consideration.
(a) Of the Contingent Consideration payable pursuant to this
Article IV, 70% shall be paid in the form of Cash Consideration and 30% shall be
paid in the form of Share Consideration. The Contingent Consideration shall be
allocated among the Earn-Out Shareholders as follows: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall
receive 26% of the Contingent Consideration, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ shall receive 7.5%
of the Contingent Consideration, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ shall receive 7.5% of the
Contingent Consideration, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall receive 7.5% of the
Contingent Consideration, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ shall receive 1.5% of the Contingent
Consideration and OSS LLC shall receive 50% of the Contingent Consideration.
For illustrative purposes, the following sets forth the
allocation of the Contingent Consideration in the event that the maximum amount
of USD 20 million were payable by SMSC on behalf of SMSC Germany:
Earn-Out Shareholder Cash Consideration Share Consideration
(in USD) (in USD)
==================== ================== ===================
1. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 3,640,000 1,560,000
2. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 1,050,000 450,000
3. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 1,050,000 450,000
4. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 1,050,000 450,000
5. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 210,000 90,000
6. OSS LLC 7,000,000 3,000,000
(b) The number of Consideration Shares to be issued and delivered
to each Earn-Out Shareholder as part of the Contingent Consideration payable to
such Earn-Out Shareholder shall be calculated by dividing the USD amount of the
Share Consideration forming part of the portion of the Contingent Consideration
payable to such Earn-Out Shareholder as set forth in Section 4.2(a) by the
weighted average daily closing price of the SMSC Shares on the NASDAQ National
Market for the thirty (30) Trading Days ending on (and including) the Earn-Out
Date. The Consideration Shares paid as part of the Contingent Consideration
shall be subject to a Lock-up Period of three (3) years commencing on the
Earn-Out Date, with one third of such Consideration Shares being automatically
released from the Lock-up under this Section 4.2(b) at the end of each such
year.
SECTION 4.3 Earn-Out Calculation.
(a) SMSC shall submit to each of the Earn-Out Shareholders no
later than on April 30, 2006:
(i) a set of audited pro forma interim consolidated financial
statements (konsolidierter Zwischenabschluss) of OASIS
(the "Earn-Out Accounts"), consisting of a consolidated
balance sheet (Konzernbilanz) as of February 28, 2006,
24:00 hours (the "Earn-Out Date") and a consolidated
profit-and-loss statement (Konzerngewinn- und
Verlustrechnung) for the period beginning March 1, 2005
and ending on the Earn-Out Date (the "Earn-Out Period");
and
(ii) a calculation of the Earn-Out Revenues (as defined) and
the Earn-Out Gross Margin (as defined), a determination
of the extent to which the Earn-Out Targets have been
achieved and a calculation of the amount of the
Contingent Consideration due to each Earn-Out Shareholder
on the basis of the Earn-Out Accounts (the "Earn-Out
Calculation").
(b) The Earn-Out Accounts shall be prepared by SMSC and shall be
audited by SMSC's auditor. The Earn-Out Calculation shall be prepared by SMSC
and shall be reviewed by SMSC's auditor. The Earn-Out Accounts shall be prepared
in accordance with the applicable generally accepted accounting rules and
principles (Grundsatze ordnungsgema(beta)er Buchfuhrung und Rechnungslegung) in
Germany ("German GAAP") in a manner consistent both in form and substance with
the Financial Statements (as defined) and the Management Accounts (as defined).
In particular, the same consolidation principles, capitalization and
depreciation methods, election rights, valuation principles (in particular with
regard to inventory) and the same line items shall be applied and used in the
Earn-Out Accounts as were applied and used in the preparation of the Financial
Statements and the Management Accounts, in each case to the extent they are in
accordance with German GAAP. If the principles set forth in the preceding
sentences are not applicable to a particular matter, such matter shall be
accounted for in accordance with German GAAP applicable to companies like OASIS.
For the purposes of the preparation of the Earn-Out Accounts, all sales
(Umsatzerlose) generated by SMSC or any Affiliates of SMSC during the period
from March 1, 2005 to February 28, 2006 which relate to the business of the
OASIS Group as currently envisaged under its business plan attached hereto as
Exhibit 4.3(b) shall be deemed to have been generated by OASIS. The costs and
expenses of the audit of the Earn-Out Accounts and the review of the Earn-Out
Calculation shall be solely borne by SMSC.
(c) The Earn-Out Shareholders hereby acknowledge that the
Earn-Out Accounts and the Earn-Out Calculation and all information related
thereto constitute "Business Information" within the meaning of Section 9.3(b).
(d) The audited Earn-Out Accounts and the reviewed Earn-Out
Calculation shall be final and binding on the Earn-Out Shareholders, SMSC and
SMSC Germany for the determination of the amount of the Contingent Consideration
payable pursuant to Section 4.1, unless any of the Earn-Out Shareholders within
a period of three (3) months after submission of the audited Earn-Out Accounts
and the reviewed Earn-Out Calculation pursuant to Section 4.3(a) files a
statement of claim with the competent arbitration organization in accordance
with Article 11 (i) requesting payment from SMSC and/or SMSC Germany of an
amount of Contingent Consideration which is higher than the amount payable
pursuant to the audited Earn-Out Accounts and the reviewed Earn-Out Calculation
and (ii) alleging that the audited Earn-Out Accounts and/or the reviewed
Earn-out Calculation do not comply with the rules, principles and procedures set
forth in Section 4.3(b).
SECTION 4.4 Payment Date.
If pursuant to the Earn-Out Calculation any Contingent
Consideration is payable to the Earn-Out Shareholders in accordance with Section
4.1, SMSC shall pay on behalf of SMSC Germany such Contingent Consideration to
the Earn-Out Shareholders in accordance with Section 4.2 within ten (10)
Business Days (as defined) following April 30, 2006.
ARTICLE V
---------
CLOSING
-------
SECTION 5.1 Date and Place of Closing.
The consummation of the transactions contemplated by this
Agreement, as set forth in Section 5.2 below (the "Closing") shall take place at
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, Main Tower, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇(▇▇▇▇)▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ (or such other place as the
Parties may mutually agree upon in writing), on the date hereof immediately
after the execution of this Agreement by all parties hereto.
SECTION 5.2 Closing Actions.
At the Closing, the Parties shall take, or cause to be taken, the
following actions in the following order:
(a) The Shareholders shall deliver to SMSC:
(i) unconditional and irrevocable resignation letters by all
members of the supervisory board (Aufsichtsrat) of OASIS
and OSS with effect as of the date hereof;
(ii) the executed employment agreements and service agreements
with the key members of management and key employees set
forth in Exhibit 5.2(a)(ii);
(iii) for each of the Companies certificates of incorporation
and good standing or, as the case may be, certified
commercial register extracts, dated no later than ten
(10) Business Days prior to the date hereof;
(iv) the final invoice of Sardis Capital Limited ("Sardis") to
OASIS setting forth the aggregate amount of the fees and
expenses due and payable by OASIS to Sardis at Closing in
connection with the transactions contemplated under this
Agreement.
(b) OSS LLC shall deliver to SMSC a secretary's certificate of
OSS LLC certifying that the execution and performance of this Agreement and the
transactions contemplated hereunder have been duly authorized by all necessary
corporate or other action.
(c) Yazaki shall deliver to SMSC a secretary's certificate of
Yazaki certifying that the execution and performance of this Agreement and the
transactions contemplated hereunder have been duly authorized by all necessary
corporate or other action.
(d) SMSC shall deliver to the Shareholders a secretary's
certificate of SMSC certifying that the execution and performance of this
Agreement and the transactions contemplated hereunder have been duly authorized
by all necessary corporate or other action and attaching the relevant corporate
authorities, including a copy of the resolution of the board of directors of
SMSC authorizing the execution and delivery by SMSC of this Agreement and all
related agreements and the performance by SMSC of all its obligations
thereunder.
(e) Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall
provide evidence to SMSC that their spouses have consented to the execution and
performance of this Agreement and the transactions contemplated hereunder by
their respective husbands.
(f) The Shareholders and SMSC Germany shall execute the deed of
transfer, in the form of Exhibit 5.2(f), providing for the transfer of 100% of
the OASIS Shares from the Shareholders to SMSC Germany (the "Deed of Transfer"),
and the Deed of Transfer shall be retained by ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (or his legal
adivsors) and delivered to SMSC Germany only in accordance with Section 5.2(k).
(g) SMSC Germany shall pay to each Shareholder (such payment to
be made to the bank account designated for such Shareholder in Exhibit 5.2(g))
an amount equal to the Cash Consideration forming part of the Initial
Consideration payable to such Shareholder pursuant to Section 2.2 less the
amount of the Escrow Cash payable for the account of such Shareholder as set
forth in Section 3.2(a).
(h) SMSC shall pay on behalf of SMSC Germany the amount of the
Escrow Cash payable for the account of each Shareholder pursuant to Section
3.2(a)(i) into such Shareholder's Escrow Account and deliver the Escrow Shares
deliverable for the account of each Shareholder pursuant to Section 3.2(a)(ii)
to the Escrow Agent in accordance with Section 3.2(a).
(i) SMSC Germany shall pay on behalf of OASIS to Sardis an amount
of USD 1,737,116 as set forth in the final invoice of Sardis delivered by the
Shareholders pursuant to Section 5.2(a)(iv). Such payment shall be made to the
following bank account of Sardis:
United States Dollars (USD) Account
Account Number: 0485915700
Dresdner Bank AG
Sort Code (Bankleitzahl): 850 800 00
IBAN: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
SWIFT Code: ▇▇▇▇▇▇▇▇▇▇▇
(j) SMSC Germany shall pay to OASIS on behalf of the Shareholders
an amount of USD 172,619. Such payment shall be made to the following account of
OASIS:
United States Dollars (USD) Account
Account Number: ▇▇▇▇▇▇▇
Deutsche Bank, Karlsruhe
Sort Code (Bankleitzahl): 660 700 04
SWIFT Code: ▇▇▇▇▇▇▇▇▇▇▇.
The amount payable by SMSC pursuant to this Section 5.2(j)
constitutes the aggregate amount of the fees and expenses already paid to Sardis
by OASIS prior to the Closing. Such payment is being made for the purpose of
excluding any risk that the payment of such fees and expenses could constitute a
repayment of capital (Einlagenruckgewahr).
(k) Upon ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or the relevant Shareholder having
received:
(i) written confirmation from the following banks that the
following amounts have been credited to the bank account
designated for each Shareholder in Exhibit 5.2(g):
Bank Shareholder USD
==== =========== ===
1. Deutsche Bank ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8,804,656
2. Deutsche Bank ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 2,539,802
3. Deutsche Bank ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 2,539,802
4. Deutsche Bank ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 2,539,802
5. Deutsche Bank ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 507,959
6. Citibank OSS LLC 16,932,022
7. UBS ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 16,320,180
8. Deutsche Bank DEWB 25,631,363
and
(ii) written confirmation from the Escrow Agent that the
following amounts have been credited to the Escrow
Accounts designated in the Escrow Agreement for the
following Shareholders:
Shareholder USD
=========== ===
1. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,813,353
and
(iii) written confirmation from the Escrow Agent that the
following number of SMSC Shares have been physically
delivered to the Escrow Agent for the account of the
following Shareholders:
Shareholder No. of
SMSC Shares
=========== ===========
1. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 235,560
2. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 67,950
3. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 67,950
4. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 67,950
5. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 13,590
6. OSS LLC 453,000
7. Yazaki Corp. 19,790
8. DEWB 243,231
and
(v) written confirmation from Dresdner Bank AG that an amount
of USD 1,737,116 has been credited to the bank account of
Sardis designated in Section 5.2(i);
and
(vi) written confirmation from Deutsche Bank that an amount of
USD 172,619 has been credited to the bank account of
OASIS designated in Section 5.2(j);
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall deliver, or shall instruct his legal advisors to
deliver, the Deed of Transfer to SMSC Germany, and SMSC shall, simultaneously
(Zug-um-Zug), deliver to the following Shareholders the following number of SMSC
Shares:
Shareholder No. of SMSC Shares
=========== ==================
1. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 188,454
2. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 54,362
3. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 54,362
4. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 54,362
5. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 10,872
6. OSS LLC 362,412
7. Yazaki Corp. 178,113
Such SMSC Shares shall be delivered by SMSC to each Shareholder
in certificated form registered in the name of the relevant Shareholder.
SECTION 5.3 Termination.
(a) This Agreement shall automatically terminate if the Closing
does not commence on, and has not been completed within two (2) days of, the
date hereof.
(b) If this Agreement is terminated in accordance with Section
5.3(a), this Agreement shall become null and void, except that (i) the terms and
provisions of this Section 5.3 and Section 9.3 and Articles X and XI shall
remain in full force and effect and (ii) any termination of this Agreement shall
not relieve any Party hereto from liability for any breach of its obligations
hereunder.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
--------------------------------------------------
The Shareholders, acting severally, hereby represent to SMSC in
the form of an independent guarantee (selbstandiges Garantieversprechen) within
the meaning of Section 311(1) of the German Civil Code that the representations
and warranties set forth in the Sections referred to in (i) through (v) below
with respect to each Representing Shareholder (as defined below) are correct as
of the date hereof:
(i) Each of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇
▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇: The
representations and warranties contained in Sections
6.1(d) through 6.25;
(ii) OSS LLC: The representations and warranties contained in
Sections 6.1(c) through 6.25;
(iii) Yazaki: The representations and warranties contained in
Sections 6.1(b), 6.1(d) through (i), 6.2, 6.3, 6.15 and
6.25;
(iv) ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇: The representations and warranties
contained in Sections 6.1(d) and (e), 6.2, 6.3 and 6.15;
and
(v) DEWB: The representations and warranties contained in
Sections 6.1(a), 6.1(d) through (i), 6.2, 6.3, 6.5, 6.9,
6.15, 6.21, 6.22 and 6.25 without any qualification as to
DEWB's knowledge (unless otherwise expressly stated in
the relevant representation or warranty), and all other
representations and warranties contained in Sections 6.4
through 6.24 only to the best knowledge of DEWB.
The scope and content of each representation and warranty of the
Shareholders contained in this Article VI as well as the Shareholders' liability
arising thereunder shall be exclusively defined by the provisions of this
Agreement. No representation and warranty of the Shareholders shall be construed
as a guarantee within the meaning of Sections 443 or 444 of the German Civil
Code (Garantie fur die Beschaffenheit der Sache).
It is hereby expressly agreed that (i) where any of the
representations and warranties contains a reference to the term "Shareholder",
"Representing Shareholder" or "Shareholders" (or any related term or derivation
thereof), each Shareholder who pursuant to the first introductory paragraph of
this Article VI is representing that a certain representation and warranty is
correct (each such Shareholder, a "Representing Shareholder", and together, the
"Representing Shareholders") is only representing the correctness of such
representation and warranty with regard to himself (and not with regard to any
of the other Shareholders), and (ii) where any of the representations and
warranties contains any reference to the term "OASIS Shares" or "Shares" (or any
related term or derivation thereof), each Shareholder who pursuant to the first
introductory paragraph of this Article VI is representing the correctness of the
relevant representation and warranty is only representing the correctness of
such representation and warranty with regard to the OASIS Shares sold by him
under this Agreement (and not with regard to any other OASIS Shares).
SECTION 6.1 Legal Organization of Certain Shareholders and the
OASIS Group.
(a) DEWB is a stock corporation (Aktiengesellschaft) duly
incorporated and validly existing under German law.
(b) Yazaki is a Japanese stock corporation (kabushiki kaisha)
duly formed and validly existing under Japanese law.
(c) OSS LLC is a limited liability company duly formed and
validly existing under the laws of Texas.
(d) OASIS is a stock corporation (Aktiengesellschaft) duly
incorporated and validly existing under German law and has all corporate powers
to conduct its business as presently conducted. OASIS holds shares in the
following companies (each a "Subsidiary" and together the "Subsidiaries"):
(i) OASIS holds 54.88% of the issued and outstanding shares
(Aktien) of the share capital (Grundkapital) of OASIS
SiliconSystems AG, Karlsruhe, Germany ("OSS"), a German
stock corporation registered with the Commercial Register
of the local court in Karlsruhe under HRB 7882, which has
a stated share capital of Deutsche ▇▇▇▇ ("DEM") 110,805,
divided into 22,161 registered shares (Namensaktien) with
a nominal value of DEM 5 each. OASIS holds 12,161 shares
in OSS. The remaining 10,000 shares in OSS are held by
OASIS Silicon Systems Inc., Austin, Texas, U.S.A.
("INC").
(ii) OASIS holds 100% of the issued and outstanding shares of
capital stock of INC, a Texas corporation with its
business address at 1120 South Capital of ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, U.S.A., which
has a total of 4,162,186 shares issued and outstanding.
(iii) OASIS holds 100% of the share capital (Stammkapital) of
Silicon Systems GmbH Multimedia Engineering, Karlsruhe,
Germany, a German limited liability company (GmbH)
registered with the commercial register of the local
court in Karlsruhe under HRB 7423 ("SISYS"), which has a
registered share capital of DEM 50,000, divided into five
shares with nominal values of DEM 26,000, DEM 7,500, DEM
7,500, DEM 7,500 and DEM 1,500.
(iv) OASIS holds 100% of the capital stock of OASIS Silicon
Systems AB, Gothenburg, Sweden, a Swedish Aktiebolag
registered with Patent - och Registeringsverket under
number 556626-2548 ("AB"), which has a registered share
capital of SEK 1,000,000, divided into 1,000 shares with
a nominal value of SEK 1,000 each.
(v) OASIS holds 100% of the issued and outstanding shares of
capital stock of OASIS Silicon Systems K.K., Yokohama,
Japan, a Japanese Kabushiki Kaisha registered with
Yokohama District Legal Affairs Bureau under ID number
▇▇▇▇-▇▇-▇▇▇▇▇▇ ("KK"), which has a registered share
capital of Yen 10,000,000, divided into 200 shares with a
nominal value of Yen 50,000 each.
(e) Each of the Subsidiaries has the legal form, the share
capital and the number of issued and outstanding shares as set forth in Section
6.1(d) and is duly incorporated or formed and validly existing under the laws of
its jurisdiction of incorporation or formation and has all corporate powers to
conduct its business as presently conducted. Except as set forth in Exhibit C or
in Exhibit 6.1(e), no Company holds any shareholding or interest (Beteiligung)
of any kind in any other legal entity, partnership, joint venture or trust
(Treuhand) or has an obligation to acquire such a shareholding or interest.
(f) None of the Companies is a party to any control agreement
(Beherrschungsvertrag), profit and loss transfer agreement
(Gewinnabfuhrungsvertrag) or any other group agreement (Unternehmensvertrag)
within the meaning of Sections 291 et seq. of the German Stock Corporation Act
or to any similar agreement.
(g) The corporate bodies of each of the Companies operate in a
regular fashion, and all corporate decisions have in all material respects been
taken in accordance with the laws, regulations or internal rules applicable to
each of the Companies, and all such decisions are binding on each of the
respective Companies.
(h) Except as otherwise disclosed in Exhibit 6.1(h), all of the
registers (including, where applicable, the commercial registers and
shareholders' registers), accounting books and corporate records of each of the
Companies have been and continue to be regularly maintained, and give in all
material respects a correct account of the activities of such Company as
required by law, regulations or internal rules. Except as otherwise disclosed in
Exhibit 6.1(h), no resolutions have been passed by the shareholders of the
Companies, or by the management, supervisory board or other body of the
Companies, and no measures have been taken, that have not been reported in the
respective minute books to the extent required by law, or, where required by
law, have not been registered with the commercial registers of the Companies.
(i) Exhibit 6.1(i)(A) contains true and correct copies of the
articles of association and bylaws of each Company of the OASIS Group, and no
resolutions have been passed to amend the same.
(j) OASIS Silicon Systems Japan Inc., a Texas corporation which
was fully owned by INC, with former business address at 1120 South Capital of
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, U.S.A., has never
conducted any business activities and has no Liabilities and was dissolved with
effect as of February 8, 2005 without creating any Liabilities for INC except
for costs which did not exceed an amount of USD 2,000 and have not yet been
paid.
SECTION 6.2 Ownership of Shares.
(a) The OASIS Shares and the shares and other equity interests
held by the Companies in the Subsidiaries (as set forth in Section 6.1(d) and
Exhibit C) (together with the OASIS Shares, the "Shares") are duly authorized,
validly issued, fully paid and non-assessable. The Shareholders are the sole and
unrestricted legal and (except as otherwise disclosed in Exhibit 6.2(a)(i))
beneficial owners of the OASIS Shares as set forth in Exhibit A. Except as
otherwise disclosed in Exhibits 6.2(b)(i) to (iii), the Companies are the
unrestricted legal and beneficial owners of the shares held by them in the
Subsidiaries as set forth in Section 6.1(d). Except as set forth in Exhibit
6.2(a)(ii), no share certificates have been issued by the Companies with respect
to the Shares.
(b) Except as otherwise disclosed in Exhibit 6.2(b)(i) the Shares
are owned by the Shareholders or the Companies, as the case may be, free and
clear of any Liens (frei von Rechten Dritter), and, as of Closing, there will be
no restrictions on transfer except as set forth in Exhibit 6.2(b)(ii). Except
for the Shares and the OASIS Stock Options and except as set forth in Exhibit
6.2(b)(iii), there are no (i) other existing shareholdings or interests of any
kind of any third party in any of the Companies (including silent partnerships
(stille Gesellschaften), sub-participations in the capital stock of any Company
or similar agreements), (ii) outstanding options, warrants, purchase rights,
pre-emptive rights, bring-along rights, rights of first refusal or other
contracts or commitments that could require the Shareholder or the Companies to
sell, transfer, or otherwise dispose of any Shares or other interest in any of
the Companies (other than those set forth in the Shareholders' Agreement), or
(iii) conversion rights, exchange rights, or other contracts or commitments that
require the Shareholders or any of the Companies to issue or create new shares.
Except as listed in Exhibit 6.2(b)(iv), none of the Companies has issued any
stock appreciation rights, phantom stock, profit participation or similar
rights. The OASIS Stock Options set forth in Exhibit B represent all currently
outstanding stock options under any and all stock option programs of OASIS. As
of the date hereof (and subject to any obstacles to validity
(Wirksamkeitshindernisse) within the sphere of SMSC and affecting the validity
of the Termination Agreement I or, as the case may be, the Termination Agreement
II), all rights relating to 496,600 OASIS Stock Options are terminated. No
capital in respect of any Shares has been repaid to any shareholder whether in
cash or in assets, open or hidden. There has not been any hidden contribution in
kind (verdeckte Sacheinlage) with respect to any of the Companies.
(c) There are no (i) outstanding obligations of the Companies to
repurchase, redeem or acquire any Shares or other equity interests or securities
or (ii) voting trust or other trust agreements or understandings to which the
Shareholders are a party affecting the Shares, other than the Shareholders'
Agreement.
SECTION 6.3 Authorizations of the Shareholders.
(a) The execution and performance by the Representing Shareholder
of this Agreement and all other agreements contemplated hereunder and to which
such Representing Shareholder is a party are within such Representing
Shareholder's powers as a natural person or legal entity and have, in the case
of such Representing Shareholder being a legal entity, been duly authorized by
all necessary corporate or other action on the part of such Representing
Shareholder and no other authorization is required for performance of this
Agreement by such Representing Shareholder, including all actions contemplated
on Closing. Without limiting the generality of the foregoing, the execution and
performance of this Agreement have been approved by a majority of the members of
OSS LLC, which approval is attached hereto as Exhibit 6.3(a), and all
Shareholders that are members of OSS LLC hereby approve execution and
performance of this Agreement by OSS LLC.
(b) All approvals and consents of any governmental authority or a
third party which is required by the Representing Shareholder for the execution
and performance of this Agreement and all other agreements contemplated
hereunder, including, in particular, all spousal consents required under
Sections 1365 et seq. or 1423 of the German Civil Code have been obtained.
(c) To the extent that a Representing Shareholder is a legal
entity, the execution and performance of this Agreement and all other agreements
contemplated under this Agreement by such Representing Shareholder neither
violate the articles of association or by-laws of such Representing Shareholder
nor any applicable decision by any court or governmental authority binding on
such Representing Shareholder. As of the date hereof there is no lawsuit or
regulatory investigation pending (or, to the best knowledge of such Representing
Shareholder, threatened) against such Representing Shareholder before any court,
arbitrator or governmental authority which in any manner challenges or seeks to
prevent, alter or materially delay the transactions contemplated under this
Agreement.
SECTION 6.4 Effects of Transactions Contemplated under this
Agreement.
Except as otherwise disclosed in Exhibit 6.4, the execution and
performance of this Agreement and the transactions contemplated under this
Agreement will not affect the legal status of any of the Companies or its rights
and obligations vis-a-vis third parties or give rise to any of the following
events:
(i) any violation by any of the Companies of any legal,
regulatory or statutory provisions, agreements or
obligations;
(ii) any loss or, to the best knowledge of the Representing
Shareholder, challenge of bonuses, exemptions
(Vergunstigungen), rebates or discounts in favor of any
of the Companies;
(iii) any shortening of the term (Laufzeitverkurzung) of,
extraordinary termination (Sonderkundigungsrecht) of, or
significant modification to, any agreement to which any
of the Companies is a party, by the respective
counter-party to such agreement, including any
employment, service, lease, supply or distribution
agreement, except for those agreements containing a
change-of-control clause, a complete and accurate list of
which is set forth in Exhibit 6.4(iii);
(iv) any of the Companies being required to repay early any
loans or other kind of financing granted to such Company;
(v) any obligation on the part of any of the Companies to pay
a bonus, severance payment, License Fee (as defined) or
indemnity to any member of the Staff of any of the
Companies;
(vi) any material modification, suspension or withdrawal of
any permits granted under public law to any of the
Companies;
(vii) to the best knowledge of the Representing Shareholder,
any entitlement for any party to be released from its
obligations under the terms of any guarantee, comfort
letter or other similar document issued as a security or
in support of any obligation of any of the Companies;
(viii) any registration or imposition of a Lien on any assets of
any of the Companies; or
(ix) any forfeiture or termination or entitlement for any
party to forfeit or terminate any Company IP (as defined)
or cause the impairment of the rights of any of the
Companies or SMSC or SMSC Germany to use, sell or license
any Company IP, in each case as currently being used,
sold or licensed.
SECTION 6.5 Accounting and Financial Documents; Liabilities.
(a) A true, complete and accurate copy of the German language
consolidated audited financial statements (Konzernabschlu(beta)) (balance sheet,
income statement, notes on the accounts and auditor's report) of OASIS and its
consolidated subsidiaries for the fiscal year ending on December 31, 2003 (the
"Financial Statements") and of the consolidated management accounts (balance
sheet, income statement) of OASIS and its consolidated subsidiaries for the
fiscal year ending on December 31, 2004 (the "Management Accounts") is attached
hereto as Exhibit 6.5(a).
(b) Except as otherwise disclosed in the Financial Statements,
the Financial Statements have been prepared in accordance with German GAAP and
such accounting principles have been applied consistently and without change
with respect to the preceding years (Bilanzkontinuitat). The Financial
Statements have been certified without qualification by OASIS' auditors and
present a factually accurate picture of the net assets, financing and results of
operations (vermitteln ein den tatsachlichen Verhaltnissen entsprechendes Bild
der Vermogens-, Finanz- und Ertragslage) of OASIS and its consolidated
subsidiaries taken as a whole in accordance with German GAAP as of December 31,
2003. All reserves, provisions or accruals contained in the Financial Statements
have been made in accordance with German GAAP.
(c) All transactions conducted by the Companies have been duly
recorded in their books and accounting records to the extent required pursuant
to German GAAP or other applicable local accounting provisions and regulations.
Without limiting the scope of the representation made in Section 6.5(b) above
and except as set forth in Exhibit 6.5(c), to the best knowledge of the
Representing Shareholder, at December 31, 2003, the Companies had not incurred,
assumed or guaranteed any liabilities or debts of any nature (whether due,
fixed, contingent or otherwise) ("Liabilities") that were material to the
business of the Companies taken as a whole and were not reflected or expressly
provisioned against in the balance sheet as of December 31, 2003 included in the
Financial Statements. Except as otherwise disclosed in Exhibit 6.5(c), since
December 31, 2003, the Companies have not incurred, assumed or guaranteed any
Liabilities other than Liabilities incurred, assumed or guaranteed in the
ordinary course of business.
(d) Except as otherwise disclosed in Exhibit 6.5(d), the
Management Accounts have been prepared by OASIS in accordance with German GAAP
in consistency with past practice. In particular, since December 31, 2003
(except as disclosed in Exhibit 6.5(d)) none of the Companies has changed any of
the accounting principles or practices used by it in the past, including with
respect to valuation methods and depreciation rules. The consolidated balance
sheet as of December 31, 2004 included in the Management Accounts reflects all
Liabilities of any of the Companies as of December 31, 2004 (to the extent
required to be reflected under German GAAP) and contains all reserves,
provisions and accruals (to the extent required to be reflected under German
GAAP). To the best knowledge of the Representing Shareholder, the Management
Accounts present a factually accurate picture of the net assets, financing and
results of operations (vermitteln ein den tatsachlichen Verhaltnissen
entsprechendes Bild der Vermogens-, Finanz- und Ertragslage) of OASIS and its
consolidated subsidiaries taken as a whole in accordance with German GAAP as of
December 31, 2004.
(e) The provision for all license fees, royalties or similar
payment obligations for the use of Intellectual Property payable to third
parties in the aggregate amount of EUR 1,569,535 which forms part of the "other
reserves" (sonstige Ruckstellungen) shown in the consolidated balance sheet of
OASIS as at December 31, 2003, which is included in the Financial Statements,
has been made in accordance with German GAAP. The provision for the same
obligations in the aggregate amount of EUR 2,650,059 which forms part of the
"other reserves" shown in the consolidated balance sheet of OASIS as at December
31, 2004, which is included in the Management Accounts, has also been made in
accordance with German GAAP.
(f) As of the date hereof, the Companies have net cash (i.e. cash
(Kassenbestand und Guthaben bei Kreditinstituten und Schecks) and short-term
investments in securities (Wertpapiere des Umlaufvermogens) less borrowings
(Darlehensverbindlichkeiten)) in an aggregate market value of at least EUR 15.5
million.
SECTION 6.6 Management of the Companies since December 31, 2003.
Since December 31, 2003:
(a) except as otherwise disclosed in Exhibit 6.6(a), the business
of the Companies taken as a whole has been carried out in the ordinary and usual
course of business consistent with past practice;
(b) except as otherwise disclosed in Exhibit 6.6(b), there has
not been any Material Adverse Change, or, to the Representing Shareholder's best
knowledge, any development which is reasonably likely to cause a Material
Adverse Change of the OASIS Group taken as a whole;
(c) none of the Companies has terminated any business
relationship that is material to the business of any such Company;
(d) except as otherwise disclosed in Exhibit 6.6(d), none of the
Companies (i) has entered into any agreement which involves payment obligations
of a Company in excess of EUR 100,000 in the individual case or in the aggregate
per fiscal year, (ii) incurred any capital expenditure or guarantee in excess of
EUR 100,000, (iii) disposed of or encumbered any of its tangible or intangible
long-term assets (Anlagevermogen) or shares in excess of EUR 100,000, or (iv)
contributed services or assets (Einlage von Dienstleistungen oder
Vermogensgegenstanden) into another Company, a joint venture or another third
party company, with an (residual) individual value in excess of EUR 25,000 or
aggregate value in excess of EUR 100,000;
(e) none of the Companies has, whether in cash or in assets, made
any distribution of profits or reserves to, or permitted any withdrawals by, or,
except as otherwise disclosed in Exhibit 6.6(e), made any other payments to, or
entered into any agreement or transaction with, its shareholders or any
Affiliate thereof, and neither the shareholders of any of the Companies nor the
Shareholders have passed any shareholders' resolution in this respect;
(f) none of the Companies has become a party to any merger,
divestiture of a business (in whole or in part) or a company, spin-off agreement
or a similar transaction; and
(g) except as otherwise disclosed in Exhibit 6.6(g), none of the
Companies has undertaken to do any of the matters listed in paras. (a) to (f)
above.
SECTION 6.7 Real Estate.
(a) None of the Companies owns any real property.
(b) Exhibit 6.7(b)(i) sets forth a complete and accurate list of
all leases pursuant to which the Companies lease real property. Each of the
Companies has valid and enforceable leases or sub-leases, as the case may be,
with respect to the real property that is leased to such Company. Except as
otherwise disclosed in Exhibit 6.7(b)(ii), the real property leased by the
Companies is appropriate and sufficient for purposes of conducting their
respective businesses as currently being conducted. True, complete and accurate
copies of each such lease or sub-lease have been provided to SMSC and are
attached hereto as Exhibit 6.7(b)(iii).
(c) The business conducted by the Companies on the leased real
property is duly authorized by the applicable lease agreements. No event or
condition exists, or to the best of the Representing Shareholder's knowledge, is
alleged by any other party, to have occurred or exist, which constitutes a basis
for a termination for cause (au(beta)erordentliches Kundigungsrecht) of any such
agreements and no notice of termination with respect to any of the lease
agreements listed in Exhibit 6.7(b)(i) has been served on any of the Companies.
SECTION 6.8 Movable Property and Fixed Assets.
All moveable property, installations and equipment reflected in
the Financial Statements as assets of the Companies as at December 31, 2003 are
owned by the Companies as of the date hereof, except for deletions, disposals,
replacements and additions in the ordinary course of business. All moveable
property, installations and equipment used by the Companies or necessary to
operate the Companies (i) is either fully owned by the Companies free from any
Liens, with the exception of statutory liens (gesetzliche Pfandrechte) (except
if continuing due to misconduct by any of the Companies) and retention of title
(Eigentumsvorbehalt) arising in the ordinary course of business (im gewohnlichen
Geschaftsbetrieb), or (ii) is used or retained by the Companies under the terms
of a valid and enforceable lease agreement listed in Exhibit 6.8, except for any
lease agreements with an annual rent of less than EUR 5,000; provided that the
aggregate amount of such annual rent payments does not exceed EUR 50,000.
SECTION 6.9 Intellectual Property.
(a) Exhibit 6.9(a) sets forth a complete and accurate list of the
following categories of Owned Intellectual Property (as defined): (i) all
registered Trademarks (as defined) and applications for Trademark registrations
and material unregistered Trademarks (excluding any product names which are not
registered as Trademarks); (ii) domain names; (iii) all Patents (as defined) and
Patent applications; (iv) all registered Copyrights (as defined), mask works
registered in the U.S. and topographies of micro electronic semiconductor
products registered in countries other than the U.S.; (v) Software which is
either (x) currently distributed by any of the Companies as products or
incorporated in products or (y) used internally by any of the Companies and
which is material for the business of the corresponding Company as currently
conducted; and in each case specifying, as applicable: (i) the category of such
Intellectual Property (as defined), (ii) the owner(s) of such Intellectual
Property, (iii) the jurisdictions in which such Intellectual Property has been
registered, or in which an application for such issuance or registration has
been filed, and (iv) the registration or application numbers. Except as provided
in Exhibit 6.9(a), one or more of the Companies are the sole and exclusive legal
and beneficial owners of all right, title and interest in and to the Owned
Intellectual Property listed in Exhibit 6.9(a). If and to the extent that one of
the Companies is the co-owner of: (1) any Intellectual Property listed in
Exhibit 6.9(a); or (2) any designs, specifications, application programming
interfaces, documentation, datasheets or application notes (to the extent they
are Intellectual Property) relating to products currently distributed or sold by
any of the Companies; such co-ownership is expressly indicated in Exhibit
6.9(a), specifying (i) the name of the co-owner(s) and (ii) any agreements (if
any) between the respective Company and the co-owner(s) on the terms and
conditions of the joint ownership.
(b) The Owned Intellectual Property listed in Exhibit 6.9(a) and
all material unregistered Copyrights that are comprised within the Owned
Intellectual Property each are free and clear of any Liens (excluding any
obligation to pay license fees, royalties or similar contractual payment
obligations for the use of Intellectual Property payable to third parties
("License Fees")) and, subject to the agreements listed in Exhibit 6.9(c), none
of the Companies has entered into any agreement with any third party (or has
taken any other measure that could constitute an agreement) resulting in any
other material condition or restriction limiting the use of the Owned
Intellectual Property listed in Exhibit 6.9(a) or any material unregistered
Copyright that are comprised within the Owned Intellectual Property. This
Section 6.9(b) does not contain any warranties with regard to the infringement
of any third party Intellectual Property, which is exclusively dealt with in
Section 6.9(i).
(c) Exhibit 6.9(c) sets forth a complete and accurate list of (i)
all agreements under which the Companies use or have the right to use any
Licensed Intellectual Property (as defined) which is either (x) incorporated in
the products currently distributed or currently planned to be distributed by any
of the Companies or (y) required for material business processes of the
Companies and cannot be replaced or worked around within a reasonable time and
at reasonable costs, in each case excluding commercially available standard
Software, and (ii) all agreements under which the Companies have expressly
granted to others the right to use any of the Owned Intellectual Property listed
in Exhibit 6.9(a) and such Company IP which is licensed to any of the Companies
under the agreements listed under (i) above, but excluding all non-exclusive
licenses or sublicenses granted to (x) customers of any of the Companies in the
ordinary course of business in connection with the sale or lease of Software,
hardware or other products of the Companies solely for the purpose of using such
Software, hardware or other products, and (y) distributors in distribution
agreements, solely for the purpose of selling or leasing any of the Companies'
software, hardware or other products; in each case indicating (A) the parties to
the agreement; (B) the category of Company IP that is licensed (in and/or out),
with a summary description of the relevant Company IP; (C) the corresponding
License Fees paid by the Companies in 2004 or the applicable License Fees paid
by third parties to the Companies in 2004, respectively; and (D) whether the
license is exclusive or non-exclusive. All agreements listed in Exhibit 6.9(c)
are valid and enforceable, except as otherwise indicated therein. The Companies'
use of the Licensed Intellectual Property under the agreements listed in Exhibit
6.9(c) is in accordance with such agreements. This Section 6.9(c) does not
contain any warranties with regard to the infringement of any third party
Intellectual Property, which is exclusively dealt with in Section 6.9(i). On the
date hereof, OASIS has provided SMSC with true, complete and accurate copies
(which have been initialled by OASIS and SMSC for identification purposes) of
all agreements listed in Exhibit 6.9(c), and all such agreements accurately
reflect all obligations of any of the Companies to pay (whether past, present or
future) any License Fees or other consideration in respect of the rights granted
to the Companies thereunder. Other than the License Fees payable (i) to the
persons, and (ii) under the agreements listed in Exhibit 6.9(c), the Companies
have no Liabilities to pay License Fees to any person as of the date hereof,
with the exception of License Fees payable for the use of any commercially
available standard Software.
(d) The business of the Companies as currently conducted does not
require the use of any Intellectual Property other than the Owned Intellectual
Property and the Licensed Intellectual Property; provided that any infringements
of rights of third parties are exclusively subject to Section 6.9(i).
(e) To the extent any of the Companies is the owner of the
Software source code contained in any Software products that have been
distributed by any of the Companies, (i) the material portions of such source
codes have not been made available to any third parties (other than to members
of the Staff of any of the Companies) without imposing reasonable
confidentiality obligations on such third parties; and (ii) the Companies have
issued reasonable instructions to their members of the Staff in order to
safeguard and adequately document such source codes.
(f) Unless otherwise set out in Exhibit 6.9(f), the Companies
have paid all necessary registration and renewal fees for and have taken
reasonable steps to protect and validly maintain the Owned Intellectual Property
listed in Exhibit 6.9(a). Unless otherwise set out in Exhibit 6.9(f), (i) there
is currently no pending litigation or other proceeding, (ii) in the last five
(5) years there has been no litigation or other proceeding threatened in
writing, and (iii) in the last five (5) years, to the best knowledge of the
Representing Shareholder, no litigation or other proceedings has been threatened
other than in writing, which involves any of the Companies with respect to the
Company IP or challenges the validity or enforceability of, or contests any of
the Companies' rights with respect to, any of the Owned Intellectual Property
listed in Exhibit 6.9(a) or any material unregistered Copyrights that are
comprised within the Owned Intellectual Property. In the last five (5) years,
the Companies have not received from any third party (x) any written assertion
or claim challenging the validity or enforceability of, or contesting any of the
Companies' rights with respect to, any of the Owned Intellectual Property listed
in Exhibit 6.9(a) or any material unregistered Copyrights that are comprised
within the Owned Intellectual Property or any agreement listed in Exhibit 6.9(c)
relating to such Owned Intellectual Property, and (y) to the best knowledge of
the Representing Shareholder, any such assertion or claim explicitly other than
in writing. In case of co-owned Intellectual Property, this Section 6.9(f) is
limited (A) with regard to registration and renewal fees as described in the
first sentence of this Section 6.9(f) to payments for which the Companies are
responsible in relation to the respective co-owners and (B) with regard to
litigation and proceedings to such litigation and proceedings in which any of
the Companies is a party or, if none of the Companies is a party, any litigation
or proceedings of which, to the best of his or her knowledge, the Representing
Shareholder is aware of, and (C) with regard to threats to those threats
directed to any of the Companies or, if such threats have not been directed to
any of the Companies, such threats of which, to the best of his or her
knowledge, the Representing Shareholder is aware of.
(g) With respect to members of the Staff of any of the Companies
who fall under the German Employee Invention Act (Gesetz uber
Arbeitnehmererfindungen), each of the Companies has claimed all service
inventions (Diensterfindungen) of which such Company has been notified by means
of an unlimited claim (unbeschrankte Inanspruchnahme) and the Patents relating
thereto are listed in Exhibit 6.9(a). With regard to all members of the Staff of
any of the Companies, independent contractors, agents, representatives,
consultants or other third parties named as inventors in the Patents listed in
Exhibit 6.9(a) who do not fall under the German Employee Invention Act and all
other members of Staff of any of the Companies who may develop inventions and
all independent contractors, agents, consultants or other third parties that
currently work for any of the Companies with the intention to develop
inventions, the Companies have undertaken the necessary steps to either (i)
become, and have become, the sole and exclusive owner of such inventions and all
Patents related thereto or (ii) acquire the exclusive right to exercise all
economic rights in such inventions and all Patents related thereto. Except for
the persons set out in Exhibit 6.9(g), there are no further persons (including
members of Staff of any of the Companies, independent contractors, agents,
consultants or other third parties) who have contributed to the inventions
covered by Patents listed in Exhibit 6.9(a). To the extent any Software listed
in Exhibit 6.9(a) or other material Owned Intellectual Property has been
developed by any member of the Staff of any of the Companies in the execution of
his or her respective duties and/or following the instructions given by the
respective Company, such Company has secured valid assignments of the legal
rights or (to the extent these rights are non-assignable under the applicable
statutory law) has acquired the exclusive right to exercise all economic rights
(alle vermogensrechtlichen Befugnisse) in such Software or other material Owned
Intellectual Property. As far as Software listed in Exhibit 6.9(a) or other
material Owned Intellectual Property was created by independent contractors,
agents, consultants or other third parties for the Companies, the Companies have
secured valid assignments of the legal rights or otherwise acquired the
exclusive right to exercise all economic rights in such Software or other
material Owned Intellectual Property. In case Intellectual Property is co-owned
by any of the Companies, the foregoing applies in relation to the partial
ownership interest of the respective Company only.
(h) Except as set out in Exhibit 6.9(h), the Companies are not
under any obligation to pay compensation to any current or former member of the
Staff of any of the Companies under the German Employee Invention Act. Except as
provided in Exhibit 6.9(h), no member of the Staff of any of the Companies has
asserted any payment claims in respect of any of the Owned Intellectual Property
in addition to the remuneration expressly agreed in the applicable employment or
service contract and, as of the date hereof, no member of the Staff of any of
the Companies is entitled to any such additional payment claim.
(i) Except as disclosed in Exhibit 6.9(i), to the best knowledge
of the Representing Shareholder, neither the use or exploitation of any
Intellectual Property nor the conduct and operations of the business in the
manner currently conducted by the Companies or as conducted by the Companies at
any time in the past, or the provision of services therein, infringes upon,
violates or conflicts, or has infringed upon or violated in the past five (5)
years, in any way any Intellectual Property of any third party. Except as set
out in Exhibit 6.9(i), there is no pending or threatened written assertion or
claim and there has been no written assertion or claim in the last five (5)
years that any of the Companies' use or exploitation of any Intellectual
Property or the conduct or operations of the business of the OASIS Group
infringes upon or violates in any way the Intellectual Property of any third
party. None of the Companies is, or within the last five (5) years has been, a
party to any litigation or other proceeding, which involves a claim of
infringement of any Intellectual Property of any person. To the best knowledge
of the Representing Shareholder, no such assertion or claim has been explicitly
made other than in writing in the last five (5) years and no such litigation or
other proceeding has been explicitly threatened in the last five (5) years other
than in writing. To the best knowledge of the Representing Shareholder, except
as provided in Exhibit 6.9(i) there are no infringements by any third party of
any material Owned Intellectual Property or any breaches by any third party of
any licenses or other agreements involving any material Owned Intellectual
Property.
(j) None of the Companies has given or received within the last
three (3) years any written notice of default or of any event which with the
lapse of time would constitute a default under any material agreement relating
to the Company IP, and, to the best knowledge of the Representing Shareholder,
no such notice has been explicitly given or received orally during such time.
None of the Companies is in default with regard to any material agreement
relating to the Company IP, nor, to the best knowledge of the Representing
Shareholder, is any other person in default with respect to any such material
agreement.
(k) Each of the Companies has taken reasonable measures to
protect the confidentiality of its Trade Secrets, including appropriate
confidentiality obligations in agreements under which any of the Companies
licenses or otherwise discloses any of its material Trade Secrets to third
parties. Except for those Trade Secrets used pursuant to the agreements listed
in Exhibit 6.9(c), none of the Companies is restricted by license agreements,
cooperation agreements, sale or transfer agreements or any other agreements,
including oral agreements, to (i) enforce any statutory or common law rights it
may have against the misappropriation or misuse of its material Trade Secrets by
any third party, (ii) license or transfer its material Trade Secrets to third
parties or (iii) otherwise use any of its material Trade Secrets. Except as set
forth in Exhibit 6.9(c) there are no agreements in which any of the Companies
licenses in or out any material Trade Secrets. To the best knowledge of the
Representing Shareholder, none of the Companies is currently misappropriating or
misusing or has in the past five (5) years misappropriated or misused any third
party Trade Secrets. Within the last five (5) years, none of the Companies has
received any written assertion or claim alleging any misappropriation or misuse
of third party Trade Secrets by any of the Companies, and to the best knowledge
of the Representing Shareholder, within the last five (5) years, none of the
Companies has received any such assertion or claim explicitly other than in
writing. To the best knowledge of the Representing Shareholder, no third party
is misappropriating or misusing any of the Companies' material Trade Secrets or
violating any confidentiality obligation it may have with regard to any of the
Companies' material Trade Secrets.
SECTION 6.10 Loans.
A complete and accurate list of all outstanding loans extended by
any of the Companies to any individual or any legal entity, stating the nominal
amount, the interest rate, the date of disbursement and the outstanding amounts
of principal and interest thereon as of the date hereof, is attached hereto as
Exhibit 6.10. As of the date hereof, there are no outstanding loans by any of
the Companies to any Shareholder, employee or former employee of any of the
Companies, except as otherwise disclosed in Exhibit 6.10.
SECTION 6.11 Inventory.
As of the date hereof, the inventory (Vorrate) of the Companies
is owned by the Companies free from any Liens, subject only to statutory liens
(except if continuing due to misconduct by any of the Companies) and retentions
of title in the ordinary course of business. Such inventory is free of defects
which would have been detected in the course of regular inspections by the
Companies had such Company complied with its obligation pursuant to Section 377
of the German Commercial Code (Handelsgesetzbuch).
SECTION 6.12 Off-Balance Sheet Liabilities.
Except as reflected in the Management Accounts or disclosed in
Exhibit 6.12(i), as of the date hereof none of the Companies has any contingent
finance liabilities (Verbindlichkeiten aus schwebenden Finanzgeschaften)
pursuant to finance lease agreements or foreign exchange transactions or
financial engineering or otherwise. Except as reflected in the Management
Accounts or disclosed in Exhibit 6.12(ii), none of the Companies has granted any
guarantees (in any form whatsoever, including as a comfort letter) or security
interest (Sicherheiten) with regard to, or assumed any liability for, the
performance of obligations or liabilities of third parties (other than other
Companies) which are still outstanding and, to the best knowledge of the
Representing Shareholder, there has been no guarantee or security interest
extended or liability assumed by any third party with regard to, or for the
performance of, obligations or liabilities of the Companies which are still
outstanding. Except as set forth in Exhibit 6.12 (iii), none of the Companies is
participating in any hedging operations, interest rate or currency exchange rate
swaps or agreements of similar speculative nature. Except as disclosed in this
Section 6.12 or Exhibits 6.12(i) to (iii), to the best of the Representing
Shareholder's knowledge, as of the date hereof none of the Companies has any
material off-balance sheet liabilities (nicht bilanzwirksame
Zahlungsverpflichtungen). For the purposes of the preceding sentence, (A)
"off-balance sheet liabilities" shall not include (i) liabilities for defective
or faulty products or services or (ii) liabilities arising in the ordinary
course of business, and (B) "material" shall mean (i) any off-balance sheet
liabilities in an amount of more than EUR 200,000 per individual case or (ii) in
case of any such liabilities with a fixed term extending beyond one year
(Dauerschuldverhaltnisse), any such liabilities in an amount of more than EUR
50,000 per year or (iii) any such liabilities below these individual threshold
amounts which in the aggregate exceed the amount of (A) EUR 500,000 (in case of
one-time liabilities) or (B) EUR 250,000 per year (in case of any such
liabilities with a fixed term extending beyond one year). For the avoidance of
doubt, nothing in this Section 6.12 shall limit the applicability of Section
6.21(a) with respect to liabilities for defective or faulty products or services
of the Companies in accordance with the terms of such Section 6.21(a).
SECTION 6.13 Contracts.
(a) All contracts or undertakings to which any of the Companies
is a party or is, to the best knowledge of the Representing Shareholder, an
explicit third-party beneficiary (echter oder unechter Vertrag zu Gunsten
Dritter), are valid, binding and enforceable (durchsetzbar). The content of such
contracts (Vertragsinhalt) is not contrary to any legal or regulatory
provisions, public policy or any judicial or administrative decisions. None of
the Companies and, to the best knowledge of the Representing Shareholder, none
of the counter-parties is, or has been, in any material breach of any such
contract or undertaking.
(b) With the exception of (A) those contracts listed in Exhibit
6.13(b), (B) employment and service agreements with members of the Staff of any
of the Companies, (C) license agreements with respect to Intellectual Property,
and (D) the agreements listed in Exhibit 6.6(d), the Companies are not a party
to any verbal or written contracts which fall within one of the following
categories:
(i) contracts with a total consideration payable under such
contract by any Company or by the respective
counter-party (the "Contract Value") in excess of EUR
100,000 calculated on the date hereof (except for any
falling under (ii) below);
(ii) contracts whose remaining fixed term is greater than six
(6) months and with a Contract Value in excess of EUR
50,000 per calendar year;
(iii) contracts (x) whose remaining fixed term exceeds one (1)
year or (y) which are unlimited in time and may only be
terminated by the Companies which are a party thereto
with more than three (3) months' notice and/or with
payment of an indemnity, except in each case for
contracts with a Contract Value per calendar year of less
than EUR 5,000; provided that the aggregate amount of
payments under such contracts does not exceed EUR 50,000;
(iv) contracts providing for agent's fees (Maklerlohn),
introductory fees (Vermittlungsgebuhr) or similar fees to
be paid by any of the Companies in return for business
brought to the relevant Company;
(v) contracts relating to the sharing of the profits of any
Company or contracts which provide for a remuneration by
reference to, or on the basis of, profits or turnover of
such Company;
(vi) contracts providing for the payments of commission fees
(Provisionen) by any of the Companies;
(vii) contracts or undertakings under whose terms one or more
of the Companies is bound to refrain from carrying out or
to restrict certain activities of its current business,
or to refrain from competing;
(viii) contracts pursuant to which a Company has granted
exclusive rights to third parties;
(ix) contracts which have not been concluded on arm's length
terms (wie zwischen unabhangigen Dritten);
(x) consulting contracts (Beratervertrage) except to the
extent they have been concluded with professional
advisers such as lawyers, tax advisers and accountants in
the ordinary course of the relevant Company's business;
(xi) contracts that relate to the acquisition of other
entities or businesses, except for all contracts
concerning the contribution and the transfer to OASIS of
any shares of OSS, INC and SISYS in the year 2000;
(xii) joint venture, partnership or shareholders' agreements
other than those agreements which are disclosed elsewhere
in this Agreement; and
(xiii) any licensing agreement with regard to Intellectual
Property with Renesas Technology Corp.
(c) Exhibit 6.13(c) is a complete and accurate list of all verbal
or written customer agreements or purchase orders of the Companies with a fixed
Contract Value in excess of EUR 100,000 which (i) are still outstanding, or (ii)
have been concluded within the past six (6) months.
(d) Exhibit 6.13(d) is a complete and accurate list of all verbal
or written license, supply, manufacturing and distribution agreements of the
Companies with a fixed and still outstanding Contract Value in excess of EUR
25,000, except for license agreements with respect to Intellectual Property that
are listed in Exhibit 6.9(c).
SECTION 6.14 Insurance.
Exhibit 6.14 contains a complete and accurate list of all of the
Companies' current insurance policies, setting forth the type of insurance, the
insurer, the term and notice period, the insured amount, the annual premium and
any caps or deductibles. The Companies' current insurance policies are valid
and, in the view of a prudent businessperson, provide adequate coverage with
regard to the risks to which they relate. The corresponding premiums for such
insurance policies have been paid timely by the Companies.
SECTION 6.15 Relations with the Shareholders.
Except as otherwise disclosed in Exhibit 6.15, neither the
Representing Shareholder nor any of his or its Affiliates:
(i) holds, either together or separately, in whole or in
part, any property, assets or rights whatsoever, which
any Company currently uses or of which any Company is a
beneficiary for purposes of carrying out all or part of
their business; or
(ii) is a creditor or debtor of the Companies as a result of
any agreement or undertaking whatsoever (except as a
result of their employment by, or their service as board
members or managing directors of, any of the Companies).
SECTION 6.16 Commercial Relations.
(a) Except as disclosed in Exhibit 6.16(a)(i) all sales to
customers and all supply agreements concluded by any of the Companies within the
past five (5) years have been concluded without an explicit waiver by such
Company of its relevant general terms and conditions. Complete and accurate
copies of the general terms and conditions of all Companies are attached as
Exhibit 6.16(a)(ii). None of the Companies is party to any agreements which
oblige it in the future to accept unilaterally imposed purchase prices.
(b) None of the Companies has been informed in writing, or, to
the best knowledge of the Representing Shareholder, orally, of any intent on the
part of its suppliers or customers to terminate or reduce their business
relationship, where such termination or reduction would significantly adversely
affect the relevant Company's ability to supply, its ability to sell or its
financial position.
SECTION 6.17 Non-US Labor Matters.
(a) The employee data package provided by OASIS to SMSC on the
date hereof and initialled by them for identification purposes (the "Employee
Data Package") sets forth a complete and accurate list of all employees,
officers and directors, including managing directors (Geschaftsfuhrer) and
members of the management board (Mitglieder des Vorstands), including persons
who are on any form of leave (e.g., maternity leave (Mutterschutz), parental
leave (Elternzeit)) and including apprentices (Auszubildende) (collectively, the
"Staff") of all Companies, containing for each such member of the Staff of
OASIS, OSS, SISYS, AB and KK (collectively, the "Non-US Companies") complete and
accurate information with respect to the basic employee data set forth in the
Employee Data Package, and, to the extent applicable, indicating any special
status under applicable employment protection laws (i.e., handicapped
(Schwerbehinderte), persons on maternity or parental leave, works council
members (Betriebsratsmitglieder)) of which, to the best knowledge of the
Representing Shareholder, any of the Non-US Companies is aware of.
(b) Exhibit 6.17(b) contains complete and accurate copies of the
standard employment agreements concluded by any of the Non-US Companies. No
employment agreement concluded with a member of the Staff of any of the Non-US
Companies by any of the Non-US Companies or currently being negotiated
materially deviates from such standard employment agreements. The Employee Data
Package contains complete and accurate copies of all service agreements
(Dienstvertrage) concluded with current managing directors and members of the
management board of the Non-US Companies, including, in particular, members of
the Non-US Companies' management as well as any outstanding offers of service
agreements made by any Non-US Company. The Employee Data Package contains
complete and accurate copies of all agreements concluded with independent
contractors (freie Mitarbeiter).
(c) No works council (Betriebsrat) exists or has ever existed in
any of the Non-US Companies. None of the Non-US Companies is subject to
collective bargaining agreements with unions (Tarifvertrage) or shop agreements
(Betriebsvereinbarungen) and no such agreement is currently being negotiated by
any Non-US Company.
(d) Exhibit 6.17(d) sets forth a complete and accurate list of
all employee benefit plans and any other type of pension, retirement, life
insurance, deferred compensation, bonus, incentive, fringe benefits (e.g.,
company cars), advantages in kind (including low and no interest loans),
severance, disability benefits, medical care benefits, vacation benefits
(Urlaubsgeld), profit sharing, stock purchase or stock option schemes, company
saving plans or employee funds or similar plans or programs (whether by
agreement or company practice (Betriebliche Ubung)) awarded to all of the Staff
of any of the Non-US Companies, certain categories thereof or any individual
thereof by which the Non-US Companies are bound. The Non-US Companies have
complied and currently comply in each case in all material respects with all
applicable obligations concerning such plans and programs and all accruals with
respect thereto have been made in the Financial Statements and the Management
Accounts as required by German GAAP and Section 6a of the German Income Tax Act.
(e) Exhibit 6.17(e) sets forth a complete and accurate list of
agreements or company practices between or by a Non-US Company and any of the
members of Staff of any of the Non-US Companies or independent contractors
concerning severance, termination, confidentiality, non-compete,
change-of-control or retention (Bleibepramie) which have not yet been discharged
by the Non-US Companies (except for any confidentiality obligations thereunder).
(f) Except as a direct result of the conclusion of Termination
Agreement I and Termination Agreement II and except for the employment
agreements and the service agreements with the key members of management and key
employees set forth in Exhibit 5.2(e)(ii), neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby,
will (i) oblige the Non-US Companies to grant to any current or former member of
their Staff or any current or former independent contractor or consultant any
increased or modified benefit or payment; (ii) increase the amount of
compensation due to any such member of their Staff or such independent
contractor or consultant (iii) accelerate the vesting, payment or funding of any
compensation, stock-based benefit, incentive or other benefit granted by any of
the Non-US Companies.
(g) None of the Non-US Companies has officially notified its
Staff in writing or otherwise of any intent or commitment (whether or not
legally binding) to create or implement any additional employee benefit plan or
to amend, modify or terminate any plans or programs as described in Section
6.17(d) of this Agreement, except for immaterial amendments to any such plans or
programs that will not result in an increase in the annual costs in respect of
such plan or program incurred or to be incurred by any of the Non-US Companies.
(h) As of the date hereof, there is no general labor dispute,
strike or work stoppage or other concerted labor activity against any Non-US
Company pending or (to the best of the Representing Shareholder's knowledge)
threatened. The Representing Shareholder is not aware of any existing or
imminent general labor disputes involving the employees of the Non-US Companies'
main suppliers which may significantly affect the Non-US Companies' financial or
economic situation and prospects.
(i) The Employee Data Package sets forth all undertakings,
obligations and agreements of any Non-US Company made vis-a-vis or with former
members of Staff of the Non-US Companies, which have not yet been fully
discharged (except for any confidentiality obligations thereunder) or
terminated.
(j) None of the Non-US Companies has made any still applicable
undertakings in connection with any collective dismissal of employees of the
Non-US Companies.
(k) All of the Non-US Companies are now and have been in the past
in compliance in all material respects with all individual employment
agreements, service agreements, independent contractor agreements and consulting
agreements and applicable labor laws.
(l) None of the employees specified as "key employees" in the
Employee Data Package who are in employment or service with any of the Non-US
Companies as of the date hereof has resigned, or, to the best knowledge of the
Representing Shareholder, made known to the management of the respective Non-US
Company his or her intention to resign, within the six months preceding such
date.
(m) The accruals for obligations of the Non-US Companies under
any plan or program as described in Section 6.17(d) of this Agreement or for
benefits granted to individual members of Staff of any of the Non-US Companies
and former members of Staff of any of the Non-US Companies as well as any
current or former independent contractor or consultant of the relevant date were
reflected in the Financial Statements and the Management Accounts in accordance
with German GAAP. The Non-US Companies have effected all increases in pension,
survivor, disability and medical care benefits as required under applicable laws
and regulations.
(n) There are no pending or, to the best of the Representing
Shareholder's knowledge, threatened complaints, investigations or law suits, in
each case regarding alleged breaches of contract, company practices
(betriebliche Ubungen), applicable laws or regulations, against any of the
Non-US Companies relating to any employment or human resources related issues,
including benefits, employment, wages, compensation, termination, discrimination
and safety, by any individual, employee representative body or association or
governmental authority, and there were no such complaints, investigations or law
suits in the past five years pending or, to the best of the Representing
Shareholder's knowledge, threatened.
(o) None of the Non-US Companies uses or has used any leased
employees (Leiharbeitnehmer), and there are no complaints, actions, claims or
proceedings pending or, to the best knowledge of the Representing Shareholder,
threatened to be brought, by any such person or any governmental body to
reclassify such leased employee or any independent contractor or consultant as a
regular employee of any Non-US Company.
SECTION 6.18 US Labor Matters.
(a) The Employee Data Package provided by the Shareholders to
SMSC prior to the date hereof sets forth a complete and accurate list of all
Staff of all Companies, containing for each member of the Staff of INC complete
and accurate information with respect to the basic employee data set forth in
the Employee Data Package, and, to the extent applicable, indicating any special
status under applicable employment protection laws (e.g., disability leave).
(b) Exhibit 6.18(b) sets forth a complete and accurate list with
respect to INC of:
(i) each employment, severance, separation, termination,
consulting, confidentiality, non-compete,
change-of-control, retention or other agreement, policy,
arrangement or understanding between INC and any of the
members of Staff of INC, independent contractors, former
members of Staff of INC (solely in the case of such
former members of Staff of INC, only to the extent INC
has any obligation or liability that has not been fully
discharged or terminated) as well as any outstanding
offers of employment made by INC;
(ii) deferred compensation, profit sharing, gain sharing,
stock option, stock bonus, executive compensation,
executive perquisites, executive supplemental retirement
or any other long-term incentive or equity based plan,
policy or agreement (such as stock appreciation rights or
phantom stock, incentive and company savings schemes) to
which INC is a party; and
(iii) any "employee benefit plan" as defined in Section 3(3) of
the U.S. Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not subject to ERISA, or
any undertakings in connection with pension, retirement,
early retirement or health insurance plans, insofar as
the Staff of INC concerned are entitled to receive
advantages in addition to those provided for by law
(collectively referred to as "Company Plans").
(c) The Employee Data Package contains true, complete and
accurate copies of (i) the Company Plans (and, if applicable, the trust
agreements or other funding arrangements) and all amendments thereto and any
written interpretations thereof (or, with respect to any such amendment or
interpretation that is not in writing, a written description of the material
terms thereof); (ii) the summary plan descriptions of such Company Plans, (iii)
the most recent determination letter, if any, of the U.S. Internal Revenue
Service relating to each Company Plan intended to qualify under Section 401(a)
of the U.S. Internal Revenue Code of 1986, as amended (the "Code") and no event
or condition has occurred or exists since the date of such letter that could be
reasonably expected to result in disqualification of any such Company Plan; (iv)
the most recent Internal Revenue Service Form 5500 filing, if applicable; (v)
the most recent financial statement, if applicable; and (vi) the most recent
actuarial report, if applicable. Each Company Plan has been administered in, and
is in, compliance with its terms and with the requirements of applicable law,
including ERISA, the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, the Health Insurance Portability and Accountability Act of 1996, as
amended, and the Code, except for any failures to be in such compliance that
individually or in the aggregate would not reasonably be expected to result in a
materi al liability to INC.
(d) Neither INC nor any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with INC would be deemed to
be a "single employer" within the meaning of Section 4001(b) of ERISA, has
incurred any liability pursuant to Title I or Title IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating to
employee benefit plans and no condition exists that presents a risk to INC or
any ERISA Affiliate of INC of incurring any such liability (other than liability
for benefits or premiums payable to the Pension Benefit Guaranty Corporation
("PBGC") arising in the ordinary course that are not yet due), or after the date
hereof, SMSC or any of its Affiliates. Neither INC nor any ERISA Affiliate of
INC contributes or has ever been required to contribute to any "multi-employer
plan" as defined in Section 3(37) of ERISA. There are no Company Plans that are
"employee pension benefit plans" (as defined in Section 3(2) of ERISA) as to
which INC may incur any liability under Section 302 or Title IV of ERISA or
Section 412 of the Code.
(e) With respect to each Company Plan that is a "welfare plan"
(as defined in Section 3(1) of ERISA), INC has no obligation to provide health,
life insurance, or death benefits (whether or not insured) with respect to
current or former members of Staff of INC after retirement or other termination
of employment or service, other than as required under Section 4980B of the
Code, and each such Company Plan may be amended or terminated at any time
without incurring liability thereunder.
(f) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, either alone or in
combination with another event (whether contingent or otherwise) will (i)
entitle any current or former member of Staff or consultant of INC to any
increased or modified benefit or payment; (ii) increase the amount of
compensation due to any such member of Staff of INC, independent contractor or
consultant; (iii) accelerate the vesting, payment or funding of any
compensation, stock-based benefit, incentive or other benefit; (iv) result in
any "parachute payment" under Section 280G of the Code (whether or not such
payment is considered to be reasonable compensation for services rendered); or
(v) cause any compensation to fail to be deductible under Section 162(m) or any
other provision of the Code.
(g) INC has not officially notified the Staff of INC in writing
or otherwise of any intent or commitment (whether or not legally binding) to
create or implement any additional employee benefit plan or to amend, modify or
terminate any Company Plan, except for immaterial amendments to any Company Plan
that will not result in a material increase in the annual costs in respect of
such plan incurred or to be incurred by INC.
(h) Neither is INC subject to collective bargaining agreements
with unions nor are such agreements currently negotiated by INC. As of the date
hereof, there is no general labor dispute, strike or work stoppage or other
concerted labor activity against INC pending or, to the best of the Representing
Shareholder's knowledge, threatened. The Representing Shareholder is not aware
of any existing or imminent general labor disputes involving the employees of
INC's main suppliers which may significantly affect INC's financial or economic
situation and prospects.
(i) INC is now and has been in the past in compliance in all
material respects with all individual employment, independent contractor or
consultant agreements and applicable labor laws.
(j) None of the employees specified as "key employees" in the
Employee Data Package who are in employment or service with INC as of the date
hereof has resigned, or made known his or her intention to resign to the
management of INC, within the six months preceding such date.
(k) The accruals for obligations of INC under any Company Plan or
benefits granted to individual members of Staff of INC and former members of
Staff of INC reflected on the Financial Statements and Management Accounts for
fiscal years 2003 and 2004 were as of December 31, 2003 and December 31, 2004,
respectively, determined in accordance with US GAAP. INC has effected all
increases in pension, survivor, disability and medical care benefits as required
under applicable laws and regulations.
(l) All present members of Staff of INC have executed the
proprietary information agreement set forth in Exhibit 6.18(l).
(m) All members of the Staff of INC have acknowledged receipt and
agreement with the current employee handbook in their respective locations.
(n) INC complies and has complied in the past with the Federal
Family Medical Leave Act and its rules and regulations relating to the
facilities and employees of INC. None of the members of the Staff of INC are on
disability leave.
(o) With respect to any Company Plan, within the past five years
INC:
(i) has not materially reduced or restricted any employee
benefits or terminated any Company Plan; and
(ii) has made all contributions or premium payments to the
extent legally (i.e., by statute or by contract)
required.
(p) There are no pending, or to the best knowledge of the
Representing Shareholder threatened, complaints, investigations or law suits, in
each case regarding alleged breaches of applicable laws or regulations, against
INC relating to any unfair labor practice, employment or human resources related
issues, including benefits, employment, wages, compensation, termination,
discrimination and safety, by any individual, governmental authority or private
agency, and there were no such complaints, investigations or law suits in the
past five years.
(q) INC has verified the U.S. employment eligibility of all
members of the Staff employed by INC in accordance with the Immigration and
Nationality Act of 1952 and the Immigration Reform and Control Act of 1986. No
members of the Staff employed by INC who are authorized for employment under
non-immigrant employment visas are out of status, have been out of status, or
are at imminent risk of being out of status.
(r) Except as otherwise disclosed by the Shareholders to SMSC in
writing prior to the date hereof, INC has no leased employees, consultants or
independent contractors, and there are no complaints, actions, claims or
proceedings pending or, to the best knowledge of the Representing Shareholder,
threatened to be brought, by any such person or any governmental body to
reclassify such leased employee, consultant or independent contractor as a
regular employee of INC.
SECTION 6.19 Permits, Compliance with Laws.
(a) Except as disclosed in Exhibit 6.19(a), all public law
approvals, authorizations, consents, certifications and permits
(offentlich-rechtliche Genehmigungen) required under applicable law for the
businesses, activities and assets of each of the Companies have been obtained
and are in full force and effect, and the businesses and activities of the
Companies are carried out in accordance with such approvals, authorizations,
consents, certifications and permits.
(b) Except as set forth on Exhibit 6.19(b), each of the Companies
is in compliance, and in the past five years has complied in all material
respects with, all applicable laws and regulations and judgments and orders of
courts, arbitrators or other judicial or regulatory authority applicable to it
or its property.
SECTION 6.20 Tax, Social Security, Customs.
(a) Each of the Companies has timely paid and discharged all
taxes, and charges accessory to taxes (Steuern und steuerliche Nebenleistungen
within the meaning of Section 3 of the German Tax Code (Abgabenordnung) and any
comparable taxes and additions thereto under the laws of any non-German
jurisdiction), withholdings (including payroll withholdings), public charges and
contributions (Beitrage und Gebuhren), arrears, advance payments and social
security contributions (Sozialversicherungsbeitrage and comparable charges under
the laws of any non-German jurisdiction), surcharges, and penalties for US tax
purposes (in each case principal and interest) owed by them (on their own behalf
or on behalf of third parties) pursuant to applicable laws and regulations
(collectively referred to as "Taxes").
(b) Each of the Companies has filed within the applicable
deadlines all Tax and Tax-related declarations, notices, returns and reports as
required by applicable laws and regulations. To the best knowledge of the
Management Shareholders' Representative and the persons referred to in Exhibit
6.20(b), such declarations, notices, returns and reports are complete and
correct, except for the recording of the tax book values of OASIS in INC and,
possibly, in OSS. Except for VAT, none of the Companies is currently the
beneficiary of any extension of time to file any Tax or Tax-related return. None
of the Companies is subject to Taxes, via permanent establishment or otherwise,
in any jurisdiction other than the ones in which it is currently filing income
Tax returns. All Tax relevant transactions and events have been duly documented
in the books and records of the Companies and all bookkeeping and relevant
business records (not including a transfer pricing documentation) have been
properly prepared and retained and are available for all periods, in each case
as required by applicable laws and regulations. There are no Liens on any of the
assets of the Companies that arose in connection with any failure (or alleged
failure) to pay any Taxes.
(c) Except as set forth on Exhibit 6.20(c), none of the Companies
is the subject of any Tax audit, any comparable measures under the laws of any
non-German jurisdiction, any dispute with any Tax, customs, or social security
authority as well as any similar body which may give rise to Taxes, or has
received any pending request for information from any such authority or any such
similar body. To the best knowledge of the Representing Shareholders, no such
Tax audits, comparable measures or disputes are imminent, threatened or likely
to be threatened. None of the Companies is or has been subject to any litigation
or any formal objection procedure (Einspruchsverfahren) including similar
proceedings under the laws of any non-German jurisdiction, in each case with
respect to Taxes.
(d) None of the Companies has benefited from any fiscal advantage
or favorable Tax regime in exchange for undertakings or obligations by which it
is still bound or shall incur any additional Tax burden after December 31, 2004
as a result of obtaining any fiscal advantage or favorable Tax regime, in either
case other than those under generally applicable income Tax laws and
regulations. None of the Companies has received any subsidies that may be, or
may become, repayable following the date hereof.
(e) None of the Companies has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(f) The claims for Tax refunds have not been overstated in the
Financial Statements or the Management Accounts.
(g) None of the Companies is a party to any Tax allocation or Tax
sharing agreement with the exception that a fiscal unity between the Companies
may exist for VAT purposes. Except in relation to the tax audit referred to in
No. 1 of Exhibit 6.20(c), there is no pending or threatened dispute or claim
concerning any Tax liability related to a consolidated Tax return or fiscal
unity that included any Company.
(h) None of the shares of OASIS in INC are tainted shares which
do not qualify for the 95 % capital gains exemption within the meaning of
Section 8b(2) of the German Corporate Income Tax Act (Korperschaftsteuergesetz).
Any shares of OASIS in INC are recorded in the draft restated tax balance sheet
of OASIS as of December 31, 2000, which is attached hereto as Exhibit 6.20(h),
at a value equal to their fair market value (Teilwert) as of December 14, 2000,
and, for the purpose of a restructuring following the date hereof and involving
the sale or contribution of the shares in INC to a U.S. entity, such value, as
set forth on Exhibit 6.20(h), has to be recognized by the German Tax authorities
as the correct value under currently applicable tax laws and regulations after
the filing of a restated tax balance sheet of OASIS showing the value mentioned
in Exhibit 6.20(h).
SECTION 6.21 Litigation.
Except for litigation relating to labor law, Intellectual
Property or Tax:
(a) except as otherwise disclosed in Exhibit 6.21(a), none of the
Companies is involved in any way whatsoever in any pending (rechtshangig) or, to
the best knowledge of the Representing Shareholder, is likely to become involved
in any administrative (to the extent it is contentious), judicial or arbitral
proceedings. To the best knowledge of the Representing Shareholder, no
Shareholder or member of any Shareholder is involved in such proceeding against
any other Shareholder or member of any other Shareholder in relation to the
Companies.
(b) No administrative (to the extent it is based on a contentious
proceeding), judicial or arbitral decisions have been rendered against any of
the Companies which will materially affect the financial or economic situation
and prospects of the OASIS Group taken as a whole.
SECTION 6.22 No Insolvency.
None of the Companies is, or has been in the past, the subject of
any bankruptcy, insolvency or similar proceedings opened or initiated by the
competent courts, or of a judgment of dissolution, and there do not exist any
reasons justifying such a procedure or judgment concerning any of the Companies.
None of the Companies is over-indebted or is, or is expected to be, unable to
pay its debts, when they become due.
SECTION 6.23 Bank Accounts and Signature Powers.
(a) Exhibit 6.23(a) sets forth a complete and accurate list of
the bank accounts and safe deposit boxes (▇▇▇▇▇▇(beta)▇▇▇▇▇▇) opened in any
Company's name, with the names of those persons authorized to operate such
accounts or who have access to such boxes.
(b) Exhibit 6.23(b) sets forth a complete and accurate list of
all powers of attorney (Vollmachten) granted by the Companies for purposes other
than the operation of bank accounts, with details of powers so granted and the
positions occupied by the beneficiaries.
SECTION 6.24 Intermediaries.
Except as set forth on Exhibit 6.24, none of the Companies has
concluded any agreements with any intermediaries or advisors whatsoever which
would bind one of the Companies to pay, either directly or indirectly, any
remuneration, commissions or fees as a result of the signature of this
Agreement, or the performance of the transaction contemplated hereby.
SECTION 6.25 Private Placement of Consideration Shares.
To the extent a Representing Shareholder receives Consideration
Shares, such Representing Shareholder is acquiring such shares for investment
purposes and not with a view to distribution or transfer, it being understood
that, subject to the restrictions contained in Sections 2.3, 3.1(b) and the
following sentence, the power to dispose of Consideration Shares is within such
Representing Shareholder's discretion. The Consideration Shares will be issued
without registration under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and each Representing Shareholder may only transfer the
Consideration Shares pursuant to an effective registration statement or an
applicable exemption from registration under the Securities Act.
ARTICLE VII
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REPRESENTATIONS AND WARRANTIES OF SMSC
--------------------------------------
SMSC hereby represents and warrants to the Shareholders in the
form of an independent guarantee (selbstandiges Garantieversprechen within the
meaning of Section 311(1) of the German Civil Code) that the representations and
warranties set forth in this Article VII are correct as of the date hereof. The
scope and content of each representation and warranty of SMSC contained in this
Article VII as well as SMSC's liability arising hereunder shall be exclusively
defined by the provisions of this Agreement. No representation and warranty of
SMSC shall be construed as a guarantee within the meaning of Sections 443 and
444 of the German Civil Code.
SECTION 7.1 Legal Organization of SMSC and SMSC Germany.
(a) SMSC is a corporation duly incorporated and validly existing
and in good standing under the laws of the State of Delaware.
(b) SMSC Germany is a limited liability company (Gesellschaft mit
beschrankter Haftung) duly incorporated and validly existing under German law.
SECTION 7.2 Authorizations of SMSC and SMSC Germany.
(a) The execution and performance by SMSC and by SMSC Germany of
this Agreement and of all other agreements contemplated hereunder are within
SMSC's and SMSC Germany's corporate powers and have been duly authorized by all
necessary corporate action.
(b) The execution and performance by SMSC and by SMSC Germany of
this Agreement and of all other agreements contemplated hereunder require no
approval or consent by any governmental authority.
(c) The execution and performance by SMSC and by SMSC Germany of
this Agreement and of all other agreements contemplated hereunder do not (i)
violate the certificate of incorporation or by-laws of SMSC or SMSC Germany,
respectively, or (ii) violate any applicable law or decision by any court or
governmental authority binding on SMSC or SMSC Germany.
SECTION 7.3 Available Funds.
SMSC and SMSC Germany will have sufficient immediately available
funds to enable them to pay the Initial Consideration and the Contingent
Consideration as set forth herein.
SECTION 7.4 Consideration Shares.
The Consideration Shares to be issued and delivered to the
Shareholders as part of the Initial Consideration and the Contingent
Consideration in accordance with Section 4.2 have been duly authorized by all
necessary corporate action and, upon issuance, will be validly issued shares of
common stock with a par value of USD 0.10 each, credited as fully paid and
nonassessable, in the capital of SMSC ranking equally with the other shares
issued in SMSC which trade on NASDAQ under the symbol "SMSC" and not subject to
or issued in violation of any purchase option, pre-emptive or other similar
rights. Such Consideration Shares will be subject to statutory and contractual
transfer restrictions, which will restrict private and public placements of the
Consideration Shares and permit such placements only after release from the
Lock-up and in accordance with the release schedules set forth in Sections
3.1(b) and 4.2(b).
SECTION 7.5 SEC Reports.
Since January 1, 2002, SMSC has filed all material forms,
reports, statements and other documents required to be filed by it with the SEC,
including (a) all annual reports on Form 10-K, (b) all quarterly reports on Form
10-Q, (c) all proxy statements relating to meetings of stockholders (whether
annual or special), (d) all material current reports on Form 8-K, and (e) all
other material reports, schedules, registration statements or other documents
required to be filed with the U.S. Securities and Exchange Commission ("SEC").
All of the documents filed by SMSC with the SEC during such period, including
all exhibits contained or incorporated by reference in such documents and as
amended to date, are collectively referred to as the "SMSC Reports". The SMSC
Reports (i) have been prepared in all material respects in accordance with the
requirements of the Securities Act or the U.S. Securities Exchange Act of 1934,
as amended, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 7.6 Financial Statements.
The audited financial statements and unaudited interim financial
statements (including the related notes and schedules) of SMSC and its
consolidated subsidiaries included or incorporated by reference in the SMSC
Reports were prepared in accordance with generally accepted accounting
principles in the United States applied on a consistent basis during the periods
reflected therein and fairly present the consolidated financial position of SMSC
and its consolidated subsidiaries as of the dates indicated and its consolidated
results of operations and cash flows for the periods then ended, subject, in the
case of any unaudited interim financial statements, to normal year-end
adjustments.
SECTION 7.7 No Material Adverse Change.
Since the date as of which information is given in the SMSC
Reports, there has not been any Material Adverse Change, or, to the best of
SMSC's knowledge, any development which is reasonably likely to cause a Material
Adverse Change of SMSC and its subsidiaries taken as a whole, other than as
disclosed in the SMSC Reports.
ARTICLE VIII
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INDEMNIFICATION
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SECTION 8.1 Notification of Claims.
SMSC shall notify the relevant Shareholder or the Management
Shareholders' Representative (as defined below), as the case may be, in writing
of any claim being asserted by SMSC or SMSC Germany against any Shareholder
under or in connection with this Agreement, describing in reasonable available
detail the nature of the claim and to the extent possible a good faith estimate
of the amount involved.
SECTION 8.2 Cure Period.
If any of the representations and warranties contained in
Sections 6.1 to 6.25 is partially or wholly incorrect, SMSC shall give each
Representing Shareholder the opportunity to put, within a period of 30 (thirty)
days after receipt of the relevant notification pursuant to Section 8.1, SMSC
and, at the request of SMSC, SMSC Germany and/or the respective entity of the
OASIS Group, in the position in which they would have been had such
representation and warranty been correct (Naturalrestitution).
SECTION 8.3 Indemnification by the Shareholders.
(a) If the Representing Shareholders fail to cure such
incorrectness of a representation and warranty in accordance with Section 8.2 or
if such incorrectness cannot be cured, the Representing Shareholders shall
indemnify (Schadensersatz ▇▇▇▇▇▇▇) SMSC and, at the request of SMSC, SMSC
Germany and/or the respective Company, from and against all costs, liabilities,
claims, losses or damages, including the costs of any settlement in accordance
with the procedures set forth in Section 8.4, reasonable legal, accounting and
experts' fees as well as other consequential and indirect damages (but excluding
lost profits (entgangene Gewinne) and internal administrative and overhead
costs) plus interest thereon from the date on which the indemnification claim is
asserted in writing at an annual rate equal to the default interest rate set
forth in Section 1.7 (the "Losses") resulting from or arising out of any such
incorrectness and thereby putting SMSC and, at the request of SMSC, SMSC Germany
and/or the respective entity of the OASIS Group, in the financial position in
which they would have been had such representation and warranty been correct
(Geldersatz). Such indemnification shall be irrespective of any fault
(Verschulden) on the part of the Representing Shareholders. The statutory rules
regarding mitigation of damage (Schadensminderung) and set-off of benefits
(Vorteilsausgleichung) pursuant to Section 249 et seq. of the German Civil Code
shall apply.
(b) SMSC's rights to demand indemnification for any incorrectness
of any representation or warranty made by the Representing Shareholders in this
Agreement shall be excluded in case of actual knowledge of SMSC or its
representatives or advisors of such incorrectness at the date hereof. However,
SMSC's rights to demand indemnification shall not be excluded in case of
negligent or gross negligent ignorance of SMSC or its representatives or
advisors that a representation or warranty of the Representing Shareholders
under this Agreement is not or may not be correct, even if the underlying facts
of such incorrect representation or warranty have been disclosed to SMSC or its
representatives or advisors. Section 442(1) 2nd Sentence of the German Civil
Code shall be excluded.
(c) For the avoidance of doubt: (i) only SMSC shall be entitled
to demand indemnification from the Shareholders, and (ii) SMSC shall be entitled
to demand indemnification from the Shareholders from and against all Losses
incurred by SMSC, SMSC Germany and/or any of the Companies. If and to the extent
that any of SMSC, SMSC Germany and/or any of the Companies has been indemnified
from and against any Losses by the Shareholders, the same Losses shall not be
recoverable twice by any of SMSC, SMSC Germany or any of the Companies.
SECTION 8.4 Third Party Claims.
In the case of the commencement of any action or proceeding, the
assertion of any claim or the imposition of any penalty or assessment by a third
party (including Tax authorities and other governmental agencies) which may
result in claims being brought against any of the Shareholders pursuant to this
Agreement (a "Third Party Claim"), SMSC shall, without undue delay after the
date on which the Third Party Claim has arisen, provide all Shareholders
potentially liable hereunder with respect to such Third Party Claim (the
"Relevant Shareholders") with notice of such Third Party Claim, together with
copies of all documents and information in connection with such Third Party
Claim reasonably necessary for the Relevant Shareholders to investigate the
Third Party Claim. SMSC shall defenditself, and shall cause SMSC Germany and the
defendant of such Third Party Claim to defend itself against such Third Party
Claim in accordance with the statutory obligation regarding mitigation of damage
(Schadensminderungspflicht) (whether or not applicable under statutory law) to
mitigate the Losses payable by the Relevant Shareholders under Articles VI
and/or VIII with respect to such Third Party Claim. SMSC shall keep the Relevant
Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) fully informed regarding the
progress of such defense and shall permit the Relevant Shareholders to assist in
the defense of the claim. Failure by SMSC to comply with its notification and
information obligations provided in this Section 8.4 shall not relieve the
Relevant Shareholders' indemnification obligations under this Agreement if and
to the extent that SMSC is able to show that its failure has not materially
prejudiced SMSC's or, as the case may be, SMSC Germany's or the relevant
defendant's ability to defend such Third Party Claim.
SECTION 8.5 Survival of Representations and Warranties of the
Shareholders.
Claims based on Articles VI and/or VIII (excluding the specific
indemnities pursuant to Sections 8.8, 8.9, 8.10 and 8.11 in respect of which the
limitation periods set forth in such Sections shall apply) shall, unless a
statement of claim has been filed by SMSC with the competent arbitration
organization, become time-barred (verjahren) upon the lapse of eighteen (18)
months following the date hereof, except that claims based on or for breach of
the representations and warranties contained in (i) Sections 6.1(d), 6.2 and 6.3
shall become time-barred at the close of the tenth (10th) anniversary of the
date hereof, (ii) Section 6.9 shall become time-barred at the close of the third
(3rd) anniversary of the date hereof, and (iii) Section 6.20 shall become
time-barred six months after the date on which any relevant Tax or social
security insurance assessment becomes final and binding. The statutory
provisions on the suspension of time-barring (Hemmung der Verjahrung) are hereby
excluded, except for Sections 204 Nos. 1, 10 and 11 and 205 of the German Civil
Code (and Section 203 of the German Civil Code to the extent applicable pursuant
to Section 10.7(d)).
SECTION 8.6 Limitations on Shareholders' Liability.
(a) Without prejudice to the following sentences, all and any
claims against any Shareholder under Articles VI and/or VIII shall be limited to
a maximum aggregate amount equal to 100% of the Initial Consideration paid to
such Shareholder. However, all and any claims against any Shareholder (except
DEWB) under Articles VI and/or VIII (other than claims for breach of any of the
representations and warranties set forth in Sections 6.1(a) through (e), 6.2 and
6.3) shall be limited to a maximum aggregate amount equal to the Initial
Consideration placed into escrow for the account of such Shareholder pursuant to
Section 3.2(a) and all and any claims against DEWB under Articles VI and/or VIII
(other than claims for breach of any of the representations and warranties set
forth in Sections 6.1(a), (d) and (e), 6.2 and 6.3) shall be limited to a
maximum amount equal to 25% of the Initial Consideration payable to DEWB
pursuant to Section 3.1(a). All and any claims against the relevant Representing
Shareholders for breach of the representation and warranty set forth in Section
6.20(h) shall be limited to a maximum aggregate amount of EUR 3,000,000. For the
avoidance of doubt, the various limitations on liability contained in this
Section 8.6 shall, to the extent that they are applicable to any particular
claim, apply concurrently with each other (nebeneinander) - e.g. a claim for a
breach of any of the representations and warranties contained in Section 6.20(h)
shall count not only against the limitation on liability contained in the
preceding sentence but also against those contained in the first and second
sentences of this Section 8.6.
(b) Notwithstanding any other provision of this Agreement, for as
long as the Escrow Accounts or Escrow Deposits have not been dissolved, all and
any claims against any of the Shareholders under Articles VI and/or VIII of this
Agreement shall be limited to a right to the use (Verwertung) of the Escrow
Shares or to the release of the Escrow Cash in accordance with the terms of the
Escrow Agreement.
(c) If and to the extent that SMSC has a claim against more than
one of the Shareholders under Articles VI and/or VIII of this Agreement, the
liability of each of the relevant Shareholders shall be limited as follows:
(i) if all Shareholders are liable for the relevant claim, to
a percentage of the amount of the claim equal to the
Representing Shareholder's percentage of shareholding in
OASIS as shown in Exhibit A;
(ii) if only Messrs. Hetzel, Heck, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ and
▇▇▇▇▇▇, OSS LLC and DEWB are liable for the relevant
claim, to the following percentage of the amount of the
claim:
Name Percentage
==== ==========
DEWB 33.33%
OSS LLC 33.28%
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 17.33%
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 5.02%
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 5.02%
▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 5.02%
▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 0.98%;
(iii) if only Messrs. Hetzel, Heck, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇
and OSS LLC are liable for the relevant claim, to the
following percentage of the amount of the claim:
Name Percentage
==== ==========
OSS LLC 49.93%
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 26.00%
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ 7.53%
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 7.53%
▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 7.53%
▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 1.48%.
(iv) in all other cases, the individual claim against each
Shareholder shall be calculated as follows:
Q1
Di=Dtx --------------
(Q1+Q2+...+Qn)
where Di shall be the amount payable by such Shareholder,
where Dt shall be the aggregate amount of the Losses,
where Qi shall be the percentage equal to such
Shareholder's percentage of shareholding in OASIS as
shown in Exhibit A,
where Q1+Q2+...+Qn shall be the sum of all percentages of
shareholdings in OASIS as shown in Exhibit A of all
Shareholders that are liable for the relevant claim.
(d) Subject to Section 8.6(f), SMSC shall only be entitled to
assert claims against the Shareholders for any incorrectness of a representation
and warranty or pursuant to Section 8.10 if (i) each individual claim for
indemnification against the Shareholders (as a group) exceeds EUR 25,000 (twenty
five thousand Euro) and (ii) the aggregate amount of all claims for
indemnification against the Shareholders (as a group) exceeds EUR 700,000 (seven
hundred thousand Euro), in which case the full amount of all indemnification
claims exceeding EUR 25,000 may be asserted (Freigrenze). This limitation shall
not apply in respect of any claims against the Shareholders for any
incorrectness of the representations and warranties contained in Sections 6.1(a)
through (e), 6.2, 6.3 and 6.6(e), and, for the avoidance of doubt, in respect of
any indemnification claim pursuant to Sections 8.8, 8.9 and 8.11.
(e) Subject to Section 8.6(f), all and any claims against any
Shareholder under Article VI and/or Article VIII shall be excluded if and to the
extent that
(i) in respect of the particular matter of the relevant claim
of SMSC a specific allowance, provision or reserve has
been made in the Financial Statements or Management
Accounts;
(ii) the Losses which are the subject matter of the claims of
SMSC have been recovered by SMSC, SMSC Germany or the
relevant Company under any insurance held by any Company;
(iii) SMSC, SMSC Germany or the Companies have obtained any Tax
benefits in (portions of) assessment periods after
December 31, 2004 to the extent they arise as a result of
the incurrence of any Taxes to be indemnified under
Section 6.20; or
(iv) the liability arises from, or was altered by, changes in
circumstances or changes in the legal position
(Rechtslage) (including changes in case law
(Rechtsprechung) or administrative practice
(Verwaltungspraxis)) which occurred after the date
hereof.
(f) None of the exclusions and limitations set forth in Section
8.6 (e) shall apply in respect of any claims against the Shareholders for any
incorrectness of the representations and warranties contained in Sections 6.1(a)
through (e), 6.2 and 6.3 and any indemnification claim pursuant to Section 8.9.
(g) If and to the extent a Party cannot bring a claim (i) based
on the incorrectness of a specific representation and warranty set forth in
Articles VI or VII which it could have brought had a particular matter not been
disclosed in an Exhibit thereto or (ii), for the indemnification pursuant to
Section 8.10, which it could have brought had the matter not been disclosed in
Exhibit 6.9(f) and/or Exhibit 6.9(i), such Party may not bring a claim with
regard to the same matter under a more general representation and warranty or,
with respect to claims under Section 8.10(a), under any of the representations
and warranties (Prinzip des lex specialis derogat legi generali).
(h) Where a representation and warranty is qualified by the
reference to the knowledge or best knowledge of a Shareholder, only the
Representing Shareholder's actual own knowledge (eigene positive Kenntnis) shall
be relevant; except that where the knowledge or best knowledge (i) of any of
Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ or OSS LLC is relevant, they
shall also be deemed not only to have the knowledge which ▇▇. ▇▇▇▇▇▇ actually
possesses on the date hereof, but also the knowledge that (A) ▇▇. ▇▇▇▇▇▇ had
possessed had he exercised the diligence of a prudent member of the management
board (Sorgfalt eines ordentlichen und gewissenhaften Geschaftsleiters) within
the meaning of Section 93(1) of the German Stock Corporation Act, and (B) (but
only for the purposes of Section 6.9) any of Messrs. Heck, Klos, Winkelmann, Ho
and ▇▇▇▇▇ actually possesses on the date hereof; and (ii) of DEWB is relevant,
DEWB shall also be deemed not only to have the knowledge which ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
actually possesses on the date hereof, but also the knowledge that any other
representative of DEWB on the supervisory board of OASIS and/or OSS within the
past five (5) years actually possessed at the time when he or she were employed
by or member of the management of DEWB; provided that the knowledge of former
representatives of DEWB on the supervisory board of OASIS and/or OSS who are no
longer employees of DEWB on the date hereof shall only be attributed to DEWB to
the extent it is documented in minutes of the supervisory board or other
documentary records.
SECTION 8.7 No Joint Liability; No Joint Creditors.
(a) The Shareholders shall not be jointly liable
(Gesamtschuldner) but only severally liable (Einzelschuldner) for their
obligations and liabilities under this Agreement.
(b) Notwithstanding the provisions in Section 10.7 of this
Agreement, the Shareholders are not joint creditors (Gesamtglaubiger), but only
several creditors (Einzelglaubiger) in respect of the rights and claims to which
they are entitled under this Agreement.
SECTION 8.8 Infineon Indemnity.
(a) The Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) shall
pay to SMSC or, at the request of SMSC, to SMSC Germany or to any of the
Companies, an amount equal to the Losses incurred by SMSC, SMSC Germany and/or
any of the Companies in connection with the current dispute with Infineon
Technologies AG concerning the OS8300 IC as described in Exhibit 6.21(a). The
provisions of Section 8.4 shall apply with regard to such dispute and SMSC
shall, and shall cause SMSC Germany and the Companies to, comply with the
statutory obligation regarding mitigation of damage (as if applicable under
statutory law) to mitigate the Losses payable by the relevant Shareholders with
respect to the aforementioned dispute.
(b) For the avoidance of doubt, the provisions contained in the
second sentence of Section 8.5 and in Section 8.6 shall apply to the specific
indemnity pursuant to this Section 8.8. The obligations of the Shareholders
(except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) pursuant to this Section 8.8 shall become
time-barred six (6) months after the end of the dispute, whether through a final
court judgment, arbitral award, settlement agreement, acknowledgment of claims,
withdrawal of the claim brought or otherwise (as evidenced in writing).
(c) Section 8.3(c) shall apply mutatis mutandis.
SECTION 8.9 Tax Indemnity.
(a) The Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) shall
pay to SMSC or, at the request of SMSC, to any of the Companies an amount equal
to the amount necessary to indemnify and hold harmless any of the Companies from
and against any liability of such Company for (A) any Taxes relating to
(portions of) periods ending on or prior to December 31, 2004, and (B) any
Losses (as defined in Section 8.3(a) with the exception of "other consequential
and indirect damages") relating to such Taxes (including reasonable professional
fees for the preparation of a transfer pricing documentation incurred in the
course of a Tax audit relating to (portions of) periods ending on or prior
December 31, 2004). However, no such obligation shall exist to the extent that:
(i) such Taxes have been reflected or provided for in the
Management Accounts; or
(ii) SMSC or the Companies have actually obtained any Tax
benefit (not including Tax refunds within the meaning of
Section 8.9(e)) after 31 December 2004 which arises from
the adjustment giving rise to any Tax to be indemnified
hereunder; or
(iii) such Taxes result from a restructuring or an alteration
of a Company's balance sheet (Bilanzanderung) or from any
Tax election or optional accounting method change (not
including an amendment of a Company's balance sheet
(Bilanzberichtigung)) which takes place after the date
hereof but has a retroactive effect on (portions of)
periods ending on or prior to December 31, 2004; provided
that such action is not required by applicable laws or
regulations.
(b) Failure by SMSC to comply with its cooperation obligations
provided in Section 8.9(c) shall not relieve the Shareholders' indemnification
obligations under Section 8.9(a) if and to the extent SMSC is able to show that
its failure has not materially prejudiced the ability to defend such Tax claim.
If and to the extent that SMSC is unable to show that its failure to comply has
not materially prejudiced the ability to defend such Tax claim, the
indemnification obligations under Section 8.9(a) shall not exist with respect to
such Tax claim.
(c) SMSC shall ensure that (i) the Companies send without undue
delay copies of all annual Tax returns and assessments relating to Taxes for
(portions of) periods ending on or prior to December 31, 2004 to the Management
Shareholders' Representative after their preparation or receipt, and (ii) the
Companies notify in writing the Management Shareholders' Representative without
undue delay about any announcement or commencement of a Tax audit or about any
finding which is made by authorities which may give rise to an indemnity claim
or refund obligation under this Section 8.9. In such case, SMSC shall ensure
that the Companies grant access to the Shareholders (except for Yazaki and ▇▇.
▇▇▇▇▇▇▇) and their tax advisors to all relevant Tax returns, assessments of
Taxes or any other relevant documents relating to Taxes for (portions of)
periods ending on or prior to the December 31, 2004. SMSC shall ensure that, at
the expense of the Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇), the
Companies challenge or take all reasonable defensive measures against any Tax
return, Tax assessment or any other procedure relating to Taxes, including the
filing of amended Tax returns where necessary to make appropriate collateral
adjustments or correlative allocations arising from any Tax assessment or other
procedure, for (portions of) periods ending on or prior to December 31, 2004,
and shall keep the Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) fully
informed regarding the progress of any such proceeding. The Shareholders and
their representatives shall be entitled to be present at any Tax audit as silent
observers without any right to interfere or actively participate in such Tax
audit. The restriction contained in the preceding sentence shall not apply to
▇▇. ▇▇▇▇▇▇ as long as he is in the service of any of the Companies.
(d) SMSC shall ensure that the Companies file all Tax returns for
(portions) of periods ending on or prior to December 31, 2004 as instructed by
the Management Shareholders' Representative provided that the Management
Shareholders' Representative can demonstrate that such instructions comply with
applicable laws and regulations.
(e) Up to a maximum aggregate amount of 25 % of the Initial
Consideration, any refund of Taxes for (portions of) periods ending on or prior
to December 31, 2004 exceeding the sum of (i) the aggregate amount of Tax claims
(excluding deferred Tax assets (aktive latente Steuern)) shown in the Management
Accounts and (ii) any Taxes caused by the Tax refunds, shall be paid by SMSC to
the Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) after all Taxes of the
Companies relating to (portions of) periods ending on or prior to 31 December
2004 have become finally binding and non-appealable or, in the sole discretion
of SMSC, prior to such date. If the Shareholders (except for Yazaki and ▇▇.
▇▇▇▇▇▇▇) have, in a case of a Tax indemnification under this Section 8.9,
completely fulfilled their obligation to indemnify and hold harmless SMSC or one
of the Companies by making a respective payment, and the indemnified Tax is
thereafter finally and non-appealably refunded to SMSC or one of the Companies,
SMSC shall re-pay the amount of such refunded Tax to the indemnifying
Shareholders, even if not all Taxes of the Companies relating to (portions of)
periods ending on or prior to December 31, 2004 have become final and
non-appealable. Section 8.6(c) shall apply mutatis mutandis to any payments to
be made to the Shareholders under this Section 8.9(e). The claims of the
Shareholders under this Section 8.9(e) shall bear interest at a rate of 4 %
above the base interest rate (Basiszinssatz) within Section 247 of the German
Civil Code. Interest shall start to run ten (10) Business Days after the receipt
of the respective Tax refund.
(f) To the extent SMSC or the Companies obtain a Tax benefit
within the meaning of Section 8.9(a)(ii) which has not reduced an indemnity
payment under Section 8.9(a) solely for the reason that such Tax benefit is
obtained after the indemnity payment has already been made SMSC shall be obliged
to pay to the Shareholders in proportion to the figures set out in Section
8.6(c)(ii) such benefit provided that it does not exceed the amount of the
indemnity payment made under Section 8.9(a).
(g) Any payment to be made under this Section 8.9 by the
Shareholders shall become payable ten (10) Business Days after the Shareholders
have received a notification including an exact calculation in writing from
SMSC, but not prior to the date at which the Taxes have become due and payable
under applicable law.
(h) Any and all claims against the Shareholders pursuant to this
Section 8.9 shall become time-barred for each Tax upon the expiration of a
period of six months after the date on which the assessment concerning the
respective Tax has become finally binding and non-appealable. Any and all claims
against SMSC pursuant to this Section 8.9 shall become time-barred six months
after the date on which the assessment concerning the respective Tax has become
finally binding and non-appealable, but not prior to the Management
Shareholders' Representative's notification pursuant to Section 8.9(c). For the
avoidance of doubt, the limitation provisions contained in Sections 8.6 (d) and
(e) shall not apply to the Tax indemnity pursuant to this Section 8.9.
SECTION 8.10 IP Indemnity.
(a) The Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇) shall
indemnify SMSC and, at the request of SMSC, SMSC Germany and/or the respective
Company, from and against all Losses (thereby putting SMSC and, at the request
of SMSC, SMSC Germany and/or the respective entity of the OASIS Group, in the
financial position in which they would have been had the relevant event not
occurred (Geldersatz)), which they may incur as a result of
(i) the use or exploitation of any Intellectual Property or
the conduct and operations of the business in the manner
currently conducted by the Companies or as conducted by
the Companies at any time in the past, or the provision
of services therein, infringing upon, violating or
conflicting, or having infringed upon or violated in the
past five (5) years, in any way any Intellectual Property
of any third party; provided that this shall not apply to
any actual or possible infringements, violations or
conflicts disclosed in Exhibit 6.9(f) and/or Exhibit
6.9(i); and
(ii) any of the Companies misappropriating or misusing on the
date hereof or having in the past five (5) years
misappropriated or misused any third party Trade Secrets.
(b) The Parties agree that Sections 8.3 and 8.4 shall apply
mutatis mutandis to claims pursuant to this Section 8.10. In particular the
statutory obligation regarding mitigation of damage (Schadensminderungspflicht)
and the statutory rules regarding the set-off of benefits (Vorteilsausgleichung)
shall apply. For the avoidance of doubt, the provisions contained in the second
sentence of Section 8.5 and in Section 8.6 shall apply to the specific indemnity
pursuant to this Section 8.10.
(c) Claims based on this Section 8.10 shall become time-barred on
the third (3rd) anniversary of the date hereof.
(d) If and to the extent that SMSC, SMSC Germany or any of the
Companies has been indemnified from and against any Losses by the Shareholders
under this Section 8.10, the same Losses shall not be recoverable under Section
8.3 in connection with the first sentence of Section 6.9(i) or the fourth
sentence of Section 6.9(k), as the case may be. If and to the extent that SMSC,
SMSC Germany or any of the Companies has been indemnified from and against any
Losses by the Shareholders under Section 8.3 in connection with the first
sentence of Section 6.9(i) or the fourth sentence of Section 6.9(k), as the case
may be, the same Losses shall not be recoverable pursuant to this Section 8.10.
SECTION 8.11 Sardis Indemnity.
(a) Except for (i) the fees and expenses already paid to Sardis
by OASIS prior to the date hereof and (ii) the fees and expenses payable by
OASIS under the final invoice of Sardis delivered by the Shareholders pursuant
to Section 5.2(a)(iv), the Shareholders (except for Yazaki and ▇▇. ▇▇▇▇▇▇▇)
shall pay to SMSC or, at the request of SMSC, to SMSC Germany or to any of the
Companies, an amount necessary to indemnify and hold harmless SMSC, SMSC Germany
and/or the respective Company from and against any liability whatsoever
vis-a-vis Sardis arising out of or in connection with the agreements between
OASIS and Sardis dated March 1, 2004 and July 5, 2004.
(b) For the avoidance of doubt, the provisions contained in the
second sentence of Section 8.5 and in Section 8.6 shall apply to the specific
indemnity pursuant to this Section 8.11. Claims based on this Section 8.11 shall
become time-barred on the third (3rd) anniversary of the date hereof.
(c) Section 8.3(c) shall apply mutatis mutandis.
SECTION 8.12 Indemnification by SMSC and SMSC Germany.
(a) If any of the representations and warranties made by SMSC or
SMSC Germany in this Agreement is partially or wholly incorrect, SMSC shall
indemnify and hold harmless the Shareholders from and against Losses resulting
from or arising out of any such incorrectness thereby putting the Shareholders
in the position in which they would have been had such representations and
warranties been correct. In determining the amount of the Losses, the
limitations set forth in Sections 8.3(a) and 8.6(e) shall apply mutatis
mutandis. Such indemnification shall be irrespective of any fault (Verschulden)
on the part of SMSC or SMSC Germany.
(b) The representations and warranties set forth in Article VII
above shall, unless timely notified prior to their expiration date, be
time-barred (verjahren) eighteen (18) months after the date hereof.
SECTION 8.13 Exclusion of Further Remedies.
(a) The Parties agree that the rights and remedies which a Party
may have with respect to a breach of a representation and warranty contained in
Articles VI and/or VII are limited to the rights and remedies explicitly
contained in this Agreement.
(b) With the exception of the claims expressly provided for in
this Agreement, any and all other rights, remedies and claims of the Parties as
a result of any incorrectness of any of the representations and warranties
contained in Articles VI and/or VII or any defects (▇▇▇▇▇▇), in particular
defects of quality or legal defects of the OASIS Shares, the Consideration
Shares, the Companies, SMSC or SMSC Germany, and any and all rights and claims
of any Party against any other Party or such other Party's representatives,
agents or advisers under or in connection with the run-up to, negotiation or
preparation of this Agreement shall be excluded. This shall apply irrespective
of the legal basis of such claims or rights. In particular, any and all rights
and remedies under statutory representations and warranties (Sections 434 et
seq. of the German Civil Code), statutory, contractual or pre-contractual
obligations (Sections 280 to 282, 311, 323 et seq. of the German Civil Code),
frustration of contract (Section 313 of the German Civil Code) or tort (Sections
823 et seq. of the German Civil Code), which the Parties may otherwise have
against the other Party in connection with this Agreement or the transactions
contemplated hereby, shall be excluded. Furthermore, neither SMSC nor SMSC
Germany nor any of the Shareholders shall have any rights of rescission
(Rucktritt), avoidance (Anfechtung) or any other form of reversal
(Ruckabwicklung) or termination of this Agreement, nor any claims against each
other or their representatives, agents and/or advisers as a result of any
mistake (Irrtum) about (or as a result of any disturbance (Storung) or
disappearance (Wegfall) of) the basis of the transaction (Geschaftsgrundlage),
as a result of a breach of pre-contractual duties (Section 241(2) in conjunction
with Section 311(2) of the German Civil Code) or as a result of positive breach
of contract (positive Vertragsverletzung), except as otherwise expressly
provided for in this Agreement.
SECTION 8.14 Willful Default.
The exclusions and limitations of rights and remedies pursuant to
this Article VIII shall not apply in cases of willful deceit (arglistige
Tauschung) or in cases of willful misconduct (Vorsatz). If any claim is made
against a Shareholder, such Shareholder shall not bring a corresponding
reimbursement claim against any Company or any director or employee of any
Company on the basis that he had relied on any confirmation or information
provided by them before agreeing to any terms of this Agreement; provided that
the foregoing shall not apply in cases of, willful deceit or willful misconduct
by the relevant Company or director or employee of the relevant Company.
ARTICLE IX
----------
COVENANTS
---------
SECTION 9.1 Cooperation.
After the date hereof, to the extent legally permitted, SMSC,
SMSC Germany and the Shareholders shall, and SMSC shall cause the Companies to,
provide each other with such assistance (including making employees available to
such Party to a reasonable extent during regular business hours) at the expense
of the requesting Party as may reasonably be requested by such Party in
connection with the preparation of any Tax return, any Tax audit, or any
judicial, administrative or arbitral proceeding or determination relating to
liability for Taxes of SMSC, SMSC Germany, the Shareholders or the Companies.
SMSC, SMSC Germany and the Shareholders shall treat all information obtained
pursuant to this Section 9.1 as confidential except to the extent that
disclosure thereof (i) is necessary for attainment of the purpose for which such
information was obtained or (ii) is required by law or by order of any court.
SECTION 9.2 Undertaking not to Compete or Hire Staff;
Non-Solicitation of Customers.
(a) Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and OSS LLC
hereby undertake, for a period extending from the date hereof to the third (3rd)
anniversary of such date, not to engage, either directly or indirectly,
personally or through other individuals or entities, in any activity which
competes with that of any of the Companies in their product and geographic areas
of business conducted as of the date hereof (as identified by the Companies'
sales-breakdown by country in the last eighteen (18) months prior to the date
hereof) or envisaged as of the date hereof to be conducted in the future
(insofar as the Companies had already undertaken investments in such future
business); provided that none of the Shareholders shall be prevented from
holding shares in any publicly listed company for investment purposes only
(i.e., the mere holding of shares). The Parties agree that any holding of shares
exceeding 5% of any class of shares in any publicly listed company is deemed to
be a strategic investment (i.e., not for investment purposes only). The
restrictions contained in this Section 9.2(a) shall, inter alia, include a
prohibition on being a controlling shareholder, controlling partner or being
involved in any other controlling manner in any entity or enterprise which is
involved in a restricted activity as aforesaid during the aforesaid three-year
non-competition period. In the event that any of the aforesaid provisions of
this Section 9.2 are held by a court with proper jurisdiction to be partially
invalid as exceeding legal limits, such provisions shall be reduced to their
legally authorized maximum limit. In the event that any of the aforesaid
provisions of this Section 9.2 is so held to be totally invalid, then the
provisions of Section 10.3 below shall be applicable.
(b) Each of Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇,
OSS LLC, DEWB and Yazaki hereby undertake, for a period extending from the date
hereof to the third (3rd) anniversary of such date, (i) not to solicit
(abwerben), directly or indirectly, personally or through other individuals or
entities, any member of the Staff of any of the Companies or any consultant of
any of the Companies with the result that such member of the Staff is
subsequently employed or that such consultant is subsequently engaged by them or
by a third party without the consent of SMSC and (ii) not to employ or engage
the services of any member of the Staff of any of the Companies or any
consultant engaged by any of the Companies; provided that this Section 9.2(b)
shall only apply with respect to persons who are employed or engaged by any of
the Companies in a capacity other than purely secretarial.
(c) Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and OSS LLC
hereby undertake, for a period extending from the date hereof to the third (3rd)
anniversary of such date, not to solicit any clients or customers of any of the
Companies (with respect to products or services that compete with those offered
by the Companies) or endeavor to entice away from any Company any person who is,
or has at any time during the past two years been, a client or customer of any
of the Companies.
(d) Should a Shareholder which is subject to the provisions of
Section 9.2(a) or 9.2(b) not comply with such provision, such Shareholder shall
be liable to SMSC for payment of liquidated damages (pauschalierter
Schadensersatz) in the amount of USD 250,000 for each case of non-compliance;
provided, however, that with respect to Section 9.2(b), Yazaki shall only be
liable for liquidated damages, if it fails to show that it instructed
periodically (i.e., every six months) the human resources department of Yazaki
and its subsidiaries in Europe, Japan and North America to comply with Section
9.2(b). The obligation to pay such liquidated damages shall be in lieu of any
claims for actual damages (Schadensersatzanspruche) with respect to such
non-compliance. Should a Shareholder who is subject to the provision of Section
9.2(c) not comply with such provision, such Shareholder shall be liable to SMSC
for payment of actual damages (Schadensersatz) incurred by SMSC, SMSC Germany
and/or any of the Companies. Any other claims (e.g., claims for performance
(Erfullungsanspruche)) against the non-complying Shareholder with respect to
such non-compliance shall not be excluded. Section 8.3(c) shall apply mutatis
mutandis.
SECTION 9.3 Publicity; Disclosure; Confidentiality.
(a) The Parties shall make no press release or similar public
announcement with respect to this Agreement and/or the transactions contemplated
herein and shall keep confidential and not disclose or transmit copies of this
Agreement to any third party, including shareholders or members of the
Shareholders (in particular to members of OSS LLC), the contents of this
Agreement and any confidential information disclosed to it in connection with
this Agreement or its implementation, except as expressly agreed upon by all
Parties and upon such third party executing a confidentiality agreement
reasonably acceptable to SMSC; provided, however, that nothing herein shall
prevent any Party from making any disclosures or statements (i) required by law
or rules of any stock exchange, in particular, SMSC's disclosure obligations
under U.S. securities laws, or (ii) with respect to information that has been or
become part of the public domain other than by default of the Shareholders. SMSC
shall announce the execution of this Agreement in accordance with all applicable
securities laws and stock exchange regulations.
(b) The Shareholders shall keep secret and strictly confidential
all information relating to the Companies and their businesses regardless of the
manner of acquisition and of whether such information has been given verbally,
in writing or otherwise (e.g., in the form of drawings, photographs or
equipment) (Betriebs- und Geschaftsgeheimnisse) (the "Business Information"). In
particular, the Shareholders (i) shall not divulge to third parties any Business
Information; (ii) shall disclose Business Information only to legal and Tax
advisers who are under a professional duty to maintain secrecy and need to know
the Business Information in order to make decision making by the Shareholders
possible; and (iii) shall neither directly nor indirectly exploit Business
Information on a commercial basis and shall make no use of Business Information
unless otherwise agreed to in writing by SMSC. The obligations in this Section
9.3(b) shall not apply to any Business Information that can be proved (i) to
have been disclosed to the Shareholders in their capacity as members of the
corporate bodies (Organmitglieder) or employees of any of the Companies (in
which case the confidentiality obligation pursuant to the relevant service
agreement or employment agreement shall apply), (ii) to have been or become part
of the public domain other than by default of the Shareholders, or (iii) to have
come to the knowledge of the Shareholders after the date hereof and not to have
been acquired by the Shareholders from sources under obligation of secrecy to
SMSC or the Companies.
SECTION 9.4 Obligations of the Shareholders concerning IP Rights.
Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and OSS LLC
hereby agree (i) to waive all claims to royalty payments for the use of (and to
remuneration or compensation, irrespective of whether such compensation shall be
paid on a statutory or contractual basis, for inventions relating to) any
Intellectual Property which is (x) owned by any of such Shareholders and (y)
based on developments or inventions made by such Shareholder prior to the date
hereof, and (ii) not to exercise any infringement claims against SMSC or any of
its Affiliates or any of the Companies with respect to such Intellectual
Property as from the date hereof. Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ and OSS LLC acknowledge and agree that the Initial Consideration and the
Contingent Consideration represent adequate compensation for the aforementioned
undertakings. The Parties agree that the rights and obligations of Messrs.
Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ with respect to developments or
inventions made by such Shareholder during their employment or service with any
of the Companies after the date hereof shall be exclusively governed by the
relevant employment agreements and service agreements, to the extent permitted
by applicable law.
SECTION 9.5 Employee Matters.
SMSC shall, and shall cause its Affiliates to, credit to the
employees of INC under all employee benefit plans, employee benefit
arrangements, and employee compensation policies and practices of SMSC and its
Affiliates, all prior service recognized by INC with respect to such employees
before the date hereof, except with respect to SMSC's severance plan. SMSC
shall, and shall cause its Affiliates to, waive all pre-existing condition
exclusions with respect to any group health plans maintained for the benefit of
employees of SMSC and its Affiliates, if and to the extent (i) such benefits are
offered by SMSC to the members of Staff of INC, (ii) such pre-existing condition
requirements were satisfied before the date hereof under INC's group health
plan, and (iii) SMSC is able to obtain the waiver of such conditions from any
insurance carrier. SMSC shall provide that each such employee shall be given
credit for all deductible payments and co-payments paid by such employee under
INC's group health plan before the date hereof during the current year, if and
to the extent SMSC is able to obtain the approval of such conditions from any
insurance carrier.
ARTICLE X
---------
GENERAL PROVISIONS
------------------
SECTION 10.1 Investigations.
Subject to Section 8.3(b) all representations and warranties made
in this Agreement shall be deemed to have been relied upon by the Shareholders
and SMSC, as the case may be, regardless of any investigation made by or on
behalf of SMSC or the Shareholders, as the case may be. Section 377 of the
German Commercial Code shall not apply.
SECTION 10.2 Substitution and Assignment.
This Agreement and any rights and obligations hereunder cannot be
assigned or pledged by any Party hereto without the prior written consent of all
other Parties. However, SMSC may assign all (but not part only) of its rights
(but not all or any of its obligations) under this Agreement to any Affiliate of
SMSC; provided that such assignment occurs subject to the condition subsequent
(auflosende Bedingung) of the assignee ceasing to be an Affiliate of SMSC and
that the assignor may not further assign any rights so assigned. No such
assignment shall relieve SMSC of its obligations hereunder.
SECTION 10.3 Severability.
If any provision of this Agreement is held to be invalid or
unenforceable in whole or in part, the validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby. In such
event, the Parties shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
SECTION 10.4 Notices and Communications.
All notices and communications provided for herein shall be
deemed to have been duly given only if made in writing, in the English language
and if delivered to the following addresses:
If to SMSC, to:
SMSC
Attn. General Counsel
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
With a copy to:
SMSC
Attn. Chief Executive Officer
▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
If to SMSC Germany, to:
SMSC GmbH
Geschaftsfuhrung
▇▇▇▇▇▇▇▇ ▇▇▇. ▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
With a copy to:
SMSC
Attn. General Counsel
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
and
SMSC
Attn. Chief Executive Officer
▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
If to Messrs. Hetzel, Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, to:
the Management Shareholders' Representative
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
If to OSS LLC, to:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
OASIS SiliconSystems, Inc.
1120 South Capital of Texas Highway
Building 2, Suite 100
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
If to Yazaki, to:
Yazaki Corporation
Y-▇▇▇▇ ▇▇▇▇▇ Headquarters
1500 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to ▇▇. ▇▇▇▇▇▇▇, to:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
If to DEWB, to:
DEWB AG
Attn. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
With a copy to:
DEWB AG
Attn. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vorstand
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
and if made in the following manner: (i) hand delivery against a
receipt signed and dated by the addressee, (ii) registered mail with return
receipt requested, or (iii) overnight courier.
SECTION 10.5 Costs and Expenses.
Except as otherwise provided herein, each Party shall bear its
own expenses (including all fees and expenses of its representatives, counsel,
accountants and consultants) incurred by it in connection with the preparation
and consummation of this Agreement, the agreements referred to herein and the
transactions contemplated herein; it being expressly understood that any fees
and expenses payable to Sardis (other than (i) the fees and expenses already
paid to Sardis by OASIS prior to the date hereof and (ii) the fees and expenses
due and payable by OASIS under the final invoice of Sardis delivered by the
Shareholders pursuant to Section 5.2(a)(iv)), if any, and to any other advisors
of any Company in connection with the preparation and consummation of this
Agreement, shall be exclusively borne by the Shareholders. SMSC and SMSC Germany
shall bear any transfer taxes incurred in connection with this Agreement or its
implementation.
SECTION 10.6 Governing Law.
This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the Federal Republic of Germany, excluding
conflict of laws provisions.
SECTION 10.7 Management Shareholders' Representative.
(a) In order to enable SMSC and SMSC Germany to deliver notices,
communications and declarations of will at any time to each of Messrs. Hetzel,
Heck, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, each of Messrs. Hetzel, Heck, ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ hereby irrevocably appoint ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the
"Management Shareholders' Representative") as their joint representative
(Bevollmachtigter) for the receipt (Empfang), service (Zustellung) and giving
(Abgabe) of all notices, communications and declarations of will, as well as for
all arbitration-related documents, which relate to or are connected with this
Agreement and/or its implementation. The Management Shareholders' Representative
hereby consents to such appointment.
(b) In case SMSC or SMSC Germany receives any notices,
communications and declarations of will from both the Management Shareholders'
Representative and any of Messrs. Heck, Klos, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, it shall be
entitled to rely solely upon any communications or writings given or executed by
the Management Shareholders' Representative.
(c) The appointment of the Management Shareholders'
Representative pursuant to Section 10.7(a) above shall only terminate upon the
appointment of another Management Shareholders' Representative domiciled in
Germany, which appointment needs to be notified to, and approved in writing by,
SMSC, which approval shall not unreasonably be withheld.
(d) If SMSC has notified the Management Shareholders'
Representative of an alleged claim under or in connection with this Agreement
which is asserted against the Management Shareholders' Representative and the
Parties represented by him pursuant to Section 10.7(a), the Management
Shareholders' Representative and SMSC shall attempt in good faith (nach ▇▇▇▇ und
Glauben) to reach agreement on the disputed matter within a period of three (3)
weeks from the date of receipt by the Management Shareholders' Representative of
the relevant notification. To the extent that agreement with regard to this
matter can be reached, it shall become binding upon the relevant Parties by
execution of a written agreement to this effect duly signed by SMSC on the one
part and the Management Shareholders' Representative (acting in his own name and
on behalf of the Parties represented by him) on the other part. If in respect of
a claim asserted under Articles VI or VIII agreement with regard to this matter
cannot be reached and the three-week period referred to in the first sentence of
this Section 10.7(d) expires during the last three weeks of the limitation
period applicable to the relevant claim under this Agreement, the period of
limitation with regard to that claim shall be extended by such three-week period
if SMSC or SMSC Germany would otherwise be precluded from bringing its claim.
SECTION 10.8 Entire Agreement; Amendments and Waivers.
(a) This Agreement (including all Exhibits hereto) contains the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings with respect thereto.
(b) This Agreement (including this Section 10.8(b)) may be
amended or supplemented only if such amendment or supplementation is made in
writing executed by all Parties to this Agreement and explicitly refers to this
Agreement. Waivers of any rights under this Agreement shall be valid and binding
only if made in writing.
(c) The Parties hereby agree that the form of execution of this
Agreement does not have to comply with the requirements of unity of the deed
(Einheitlichkeit der Urkunde) pursuant to Sections 126 and 127 of the German
Civil Code.
SECTION 10.9 Set-off; Retention.
SMSC's and SMSC Germany's right of set-off (Aufrechnung),
retention (Zuruckbehaltung) or other refusal of performance
(Leistungsverweigerung) with regard to the obligation to pay the Initial
Consideration and/or the Contingent Consideration (including, for the avoidance
of doubt, the Share Consideration) and any interest payable thereon shall be
excluded.
SECTION 10.10 No Benefit to Third Parties.
Except as otherwise expressly provided in this Agreement, this
Agreement shall only grant rights to the Parties and shall not constitute a
contract for the benefit of third parties (Vertrag zu Gunsten Dritter) or a
contract with protective effect for third parties (Vertrag mit Schutzwirkung fur
Dritte).
SECTION 10.11 Limited Claims of SMSC Germany.
With the exception of the claims pursuant to Section 2.1, SMSC
Germany shall not have any own (eigene) claims against any of the Shareholders
under this Agreement. However, any Losses incurred by SMSC Germany are
recoverable by SMSC, to the extent SMSC has any indemnification claim
(Schadensersatzanspruch) against the Shareholders under this Agreement.
SECTION 10.12 Joint and Several Liability of SMSC.
SMSC hereby assumes joint and several liability
(gesamtschuldnerische Haftung) for any and all obligations of SMSC Germany under
this Agreement.
SECTION 10.13 Approval by SMSC.
In its capacity as sole shareholder of SMSC GmbH, SMSC hereby
approves the execution by SMSC GmbH of this Agreement and all related agreements
and the performance by SMSC GmbH of all its obligations hereunder.
Frankfurt, March 30, 2005
---------------------------
Standard Microsystems Corporation,
represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board, President and Chief Executive Officer
---------------------------
SMSC GmbH,
represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Managing Director (Geschaftsfuhrer)
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇
---------------------------
OSS Holdings LLC,
represented by ▇▇▇▇▇ ▇▇▇▇▇
Manager of the Company
---------------------------
Yazaki Corp.
represented by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇,
Attorney-in-fact
---------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Deutsche Effecten- und Wechsel-Beteiligungsgesellschaft AG
represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Attorneys-in-fact
ARTICLE XI
----------
ARBITRATION
-----------
SECTION 11.1 Arbitration Agreement.
(a) All disputes arising in connection with this Agreement or its
validity shall be finally settled in accordance with the Arbitration Rules of
the German Institution of Arbitration (Deutsche Institution fur
Schiedsgerichtsbarkeit e.V.) without recourse to the ordinary courts of law.
(b) The place of arbitration shall be Frankfurt am Main, Germany.
The arbitral tribunal shall consist of three arbitrators. The arbitral
proceedings shall be exclusively conducted in the English language.
Frankfurt, March 30, 2005
---------------------------
Standard Microsystems Corporation,
represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board, President and Chief Executive Officer
---------------------------
SMSC GmbH,
represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Managing Director (Geschaftsfuhrer)
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇
---------------------------
OSS Holdings LLC,
represented by ▇▇▇▇▇ ▇▇▇▇▇,
---------------------------
Yazaki Corp.
represented by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇,
Attorney-in-fact
---------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Deutsche Effecten- und Wechsel-Beteiligungsgesellschaft AG
represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Attorneys-in-fact
Exhibit A
Ownership of OASIS Shares
Name of Shareholder Number of OASIS Shares held %
=================== =========================== ===
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,759,876 17.59
▇▇▇▇▇▇▇ ▇▇▇▇ 507,656 5.08
▇▇▇▇▇▇ ▇▇▇▇ 507,656 5.08
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 507,656 5.08
▇▇▇▇ ▇▇▇▇▇▇ 101,531 1.02
OSS LLC 3,384,375 33.84
Yazaki 356,250 3.56
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,125,000 11.25
DEWB 1,750,000 17.50
----------------------------------------------------------------------
Total: 10,000,000 100.00
----------------------------------------------------------------------