EXHIBIT 2.8
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MASTER
SALE AND PURCHASE AGREEMENT
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regarding the
sale and purchase of certain assets pertaining to the
INFINEON FIBER OPTICS BUSINESS
dated as of January 25, 2005
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TABLE OF CONTENTS
A. STATUS............................................................................................ 8
1. ASSETS................................................................................... 8
B. SALE, PURCHASE AND TRANSFER OF THE ASSETS, PURCHASE PRICE......................................... 9
2. SALE, PURCHASE AND TRANSFER OF THE ASSETS................................................ 9
3. PURCHASE PRICE........................................................................... 12
C. SIGNING DATE, CLOSING DATE AND CLOSING............................................................ 14
4. SIGNING DATE, CLOSING DATE, INVENTORY TRANSFER DATE AND CLOSING.......................... 14
D. GUARANTEES, REMEDIES, INDEMNITIES AND COVENANTS................................................... 15
5. INFINEON'S GUARANTEES.................................................................... 15
6. PURCHASER'S GUARANTEES................................................................... 19
7. REMEDIES................................................................................. 28
8. INFINEON'S COVENANTS..................................................................... 31
9. EXPIRATION / LIMITATION OF PURCHASER'S CLAIMS............................................ 33
10. PURCHASER'S COVENANTS.................................................................... 35
11. PURCHASER'S INDEMNITY.................................................................... 36
E. MISCELLANEOUS..................................................................................... 37
12. NON-COMPETE UNDERTAKING, SOLICITATION OF EMPLOYEES....................................... 37
13. COMPONENT AND SUBASSEMBLY SUPPLY AGREEMENT............................................... 38
14. RESTRICTION OF ANNOUNCEMENT / COOPERATION / CONFIDENTIALITY.............................. 40
15. NOTICES.................................................................................. 42
16. MISCELLANEOUS............................................................................ 43
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DEFINITIONS
Affiliate as defined in Section 2.5
Agreement as defined in Recitals (E)
Ancillary Agreements as defined in Section 5.1.1
Asia Pacific Asset Transfer Agreement as defined in Section 2.2.4
Asset Transfer Agreements as defined in Section 2.2
Assets as defined in Section 1.4
Best Knowledge of Infineon as defined in Section 5.3
Best Knowledge of Purchaser as defined in Section 6.3
Business Days as defined in Section 16.8
Claim Notice as defined in Section 7.2
Closing as defined in Section 4.2
Closing Date as defined in Section 4.1.2
Competing Business as defined in Section 12.2
Component and Subassembly Supply Agreement as defined in Section 13
Consideration Shares as defined in Section 3.1
Cross License Agreement as defined in Section 2.2.7
De Minimis Claims as defined in Section 9.3
Deductible as defined in Section 9.3
Disclosure Schedules as defined in Section 5.2
Equipment as defined in Section 1.1 (i)
EURIBOR as defined in Section 3.4
Exchange Act as defined in Section 6.1.5 (a)
Excluded Assets as defined in Section 1.5
FO Business Unit as defined in Recitals (A)
Guaranteed Inventory Value as defined in Section 3.3
ICs as defined in Section 13
Identified Employees as defined in Section 8.5 (iv)
IFAP as defined in Section 2.2.4
IF FO Asset Transfer Agreement as defined in Section 2.2.1
IF FO Assets as defined in Section 2.2.1
IFFO GmbH as defined in Section 2.2.1
IFJA as defined in Section 2.2.5
IFNA as defined in Section 2.2.3
IFNA Asset Transfer Agreement as defined in Section 2.2.3
Infineon as defined in Preamble
Infineon's Account as defined in Section 3.5
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Infineon's Guarantees as defined in Section 5.1
Intellectual Property Rights as defined in Section 5.1.3 (b)
Intellectual Property Rights and Know-How as defined in Section 5.1.3
Inventory as defined in Section 2.3
Inventory Transfer Date as defined in Section 4.1.3
Inventory Value as defined in Section 3.3
IP Rights as defined in Section 1.1 (ii)
Interim Supply Agreement as defined in Section 2.2.6
Japan Asset Transfer Agreement as defined in Section 2.2.5
Know-How as defined in Section 1.1 (iii)
Liability Cap as defined in Section 9.4
Losses as defined in Section 7.1
Micromodules as defined in Section 13
NNM as defined in Section 6.1.4
Opto chips as defined in Section 13
OpTun Shares as defined in Section 1.2
Original Agreement as defined in Recitals (D)
Parties as defined in Preamble
Party as defined in Preamble
Pertaining Assets as defined in Section 2.5
Products as defined in Section 1.1
Proprietary Information as defined in Section 14.5
Purchaser as defined in Preamble
Purchaser Claim as defined in Section 7.2
Purchaser Common Stock as defined in Section 6.1.3
Purchaser Disclosure Schedules as defined in Section 6.2
Purchaser Material Adverse Effect as defined in Section 6.1.5 (b)
Purchaser Material Assets as defined in Section 6.1.15
Purchaser Material Intellectual Property Rights as defined in Section 6.1.13
Purchaser Parties as defined in Section 16.5.1
Purchaser Permits as defined in Section 6.1.16
Purchaser Preferred Stock as defined in Section 6.1.3
Purchaser Shares as defined in Section 6.1.3
Purchaser's Account as defined in Section 3.6
Purchaser's Guarantees as defined in Section 6.1
Restated Original Agreement as defined in Recitals (D)
Restricted Activities as defined in Section 12.1
Rights as defined in Section 6.1.3
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Rights Agreement as defined in Section 6.1.3
SEC as defined in Section 5.1.1
SEC Reports as defined in Section 6.1.5 (a)
Securities Act as defined in Section 6.1.5 (a)
Seller as defined in Section 2.2
Seller Parties as defined in Section 16.5.1
Sellers as defined in Section 2.2
Signing Date as defined in Section 4.1.1
Sold Assets as defined in Section 1.1
Third Party Claim as defined in Section 7.5
Time Limitations as defined in Section 9.1
Transceiver Business as defined in Section 1.1
Transceiver Business Financial Statements as defined in Section 8.2
Transferred Contracts as defined in Section 1.3
Trutnov as defined in Section 2.2.2
Trutnov Asset Transfer Agreement as defined in Section 2.2.2
US GAAP as defined in Section 3.3
VAT Liability as defined in Section 3.9
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EXHIBITS
Exhibit A Description of Products
Exhibit 1.1 IP Rights
Exhibit 1.2 OpTun shares
Exhibit 2.2.1 IF FO Asset Transfer Agreement
Exhibit 2.2.2 Trutnov Asset Transfer Agreement
Exhibit 2.2.3 IFNA Asset Transfer Agreement
Exhibit 2.2.4 Asia Pacific Asset Transfer Agreement
Exhibit 2.2.5 Japan Asset Transfer Agreement
Exhibit 2.2.6-1 Transceiver Supply Agreement
Exhibit 2.2.6-2 Berlin Transceiver Supply Agreement
Exhibit 2.2.7 Cross License Agreement
Exhibit 2.3 Inventory
Exhibit 3.2 Purchase Price Allocation
Exhibit 3.8-1 Amended and Restated Registration Rights Agreement
Exhibit 3.8-2 Amended and Restated Stockholder Agreement
Exhibit 5.1.4 Proceedings relating to IP Rights
Exhibit 13.1.1 IC List
Exhibit 14.1 Press Release
Exhibit 16.4 Termination Agreement
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MASTER SALE AND PURCHASE AGREEMENT
by and between
1. Infineon Technologies XX, Xx.-Xxxxxx-Xxxx(xxxx)x 00, 00000 Xxxxxxx,
Xxxxxxx
- herein "INFINEON" -
2. Finisar Corporation, 0000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxx, XX 00000 U.S.A.
- herein "PURCHASER" -
- Infineon and Purchaser herein also referred to
individually as a "PARTY" and collectively as "PARTIES" -
RECITALS
(A) WHEREAS, Infineon is, among other activities, engaged in developing,
producing, marketing and selling fiber optics products and systems for
the datacom, telecom and automotive industries through its fiber optics
business unit and certain of its direct and indirect subsidiaries,
including Sellers (as defined in Section 2.2) (herein "FO BUSINESS
UNIT"). The FO Business Unit includes the development, qualification,
manufacturing and testing (including failure analysis) of "transceiver"
and "transponder" products (including products under development)
including those listed in Exhibit A hereto, excluding BIDI transceivers
using Infineon BIDI technology (herein "PRODUCTS"), such activities
being referred to as the "TRANSCEIVER BUSINESS".
(B) WHEREAS, Infineon after a strategic review of its business portfolio,
has concluded that it wishes to sell and transfer certain assets owned
by Sellers and pertaining to the Transceiver Business to Purchaser.
(C) WHEREAS, Purchaser wishes to purchase and acquire such assets from
Sellers.
(D) WHEREAS, the Parties have previously entered into a Master Sale and
Purchase Agreement with the notarial deed No. 84/2004 of the notary
public Johann Xxxxx Xxxxxxxxx with official seat in Berlin dated as of
April 29, 2004 (herein "ORIGINAL AGREEMENT") and subsequently terminated
the Original Agreement and entered into an Amended and Restated Master
Sale and Purchase Agreement with the notarial
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deed No. 231/2004 of the notary public Xxxxxxx Xxxxxxxxxxx with its
official seat in Basle dated as of October 11, 2004 (herein "RESTATED
ORIGINAL AGREEMENT") relating to the sale of the FO Business Unit to
Purchaser.
(E) WHEREAS, the Parties now desire to terminate, to the extent not
previously terminated, the Restated Original Agreement and all
agreements ancillary thereto as of the date of this agreement (herein
"AGREEMENT") and agree on new terms for the sale and purchase of certain
assets pertaining to the FO Business Unit.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
A. STATUS
1. ASSETS
1.1 For the purpose of this Agreement "SOLD ASSETS" shall refer to
(i) all equipment, fixtures and tooling owned by Infineon or
Sellers, wherever located, exclusively or primarily used in or
necessary for the conduct of the Transceiver Business (herein
"EQUIPMENT"),
(ii) all intellectual property rights listed in Exhibit 1.1 (herein
"IP RIGHTS"),
(iii) all know how owned by Infineon or Sellers, wherever located,
exclusively or primarily used in or necessary for the conduct of
the Transceiver Business (herein "KNOW-HOW"),
(iv) all business and financial records relating to the Transceiver
Business, including all sales materials, customer files, service
records, product defect and traceability records, equipment
certification and calibration records, pricing information,
historical and ongoing business plans, development roadmap
documents, training materials, forms and all other documentation
exclusively related to the Transceiver Business, and
(v) all software owned by Infineon or Sellers and exclusively used
in the Transceiver Business,
excluding, for avoidance of doubt, in case of (i), (iii) and (iv), the
Excluded Assets, as defined in Section 1.5.
1.2 In addition, IFFO GmbH (as defined in Section 2.2.1) holds shares in
OpTun Inc., a Delaware corporation (herein "OPTUN Shares") which are
described in Exhibit 1.2.
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1.3 For the purpose of this Agreement "TRANSFERRED CONTRACTS" shall be all
open customer purchase orders of Sellers relating to Products.
1.4 The Sold Assets, the OpTun Shares and the Transferred Contracts are
hereinafter also referred to collectively as "ASSETS".
1.5 Notwithstanding the provisions of Section 1.1, the term Sold Assets
shall exclude
- all assets situated at the Munich site of IFFO GmbH;
- all assets relating to the micro module technology;
- all assets relating to infrastructure such as buildings,
information technology, etc., not exclusively used in the
Transceiver Business; and
- all assets relating to the TO production line in Trutnov.
(herein "EXCLUDED ASSETS").
1.6 Notwithstanding any provision of this Agreement, Purchaser shall not
assume any liability or obligation of Infineon or any Seller related to
the FO Business Unit or otherwise, except for liabilities and
obligations associated with the Transferred Contracts, and Infineon
and/or Sellers shall remain liable for the discharge or performance of
all such liabilities and obligations other than those associated with
the Transferred Contracts.
B. SALE, PURCHASE AND TRANSFER OF THE ASSETS, PURCHASE PRICE
2. SALE, PURCHASE AND TRANSFER OF THE ASSETS
2.1 Infineon, upon the terms and conditions of this Agreement, hereby sells
with commercial effect (mit wirtschaftlicher Wirkung) as of the Closing
Date (as defined in Section 4.1.2 below) the Assets to Purchaser.
Purchaser, upon the terms and conditions of this Agreement, hereby
purchases the Assets from Seller with commercial effect (mit
wirtschaftlicher Wirkung) as of the Closing Date.
2.2 Simultaneously with the execution of this Agreement
2.2.1 Purchaser and Infineon Fiber Optics GmbH, Munchen, Germany,
(herein "IFFO GMBH") are entering into an asset transfer
agreement relating to the Assets owned by IFFO GmbH, including
for the avoidance of doubt the
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OpTun Shares, (herein "IF FO ASSETS") attached hereto as Exhibit
2.2.1 (herein "IF FO ASSET TRANSFER AGREEMENT");
2.2.2 Purchaser and Infineon Technologies Trutnov s.r.o., Czech
Republic, (herein "TRUTNOV"), are entering into an asset
transfer agreement relating to the Assets owned by Trutnov
attached hereto as Exhibit 2.2.2 (herein "TRUTNOV ASSET TRANSFER
AGREEMENT");
2.2.3 Purchaser and Infineon North America Corp., California, USA,
(herein "IFNA") are entering into an asset transfer agreement
relating to the Assets owned by IFNA attached hereto as Exhibit
2.2.3 (herein "IFNA ASSET TRANSFER AGREEMENT");
2.2.4 Purchaser and Infineon Technologies Asia Pacific Ptl, Ltd.,
Singapore (herein "IFAP") are entering into an asset transfer
agreement relating to the Assets owned by IFAP attached hereto
as Exhibit 2.2.4 (herein "ASIA PACIFIC ASSET TRANSFER
AGREEMENT");
2.2.5 Purchaser and Infineon Technologies Japan KK, Tokyo, Japan
(herein "IFJA") are entering into an asset transfer agreement
relating to the Assets owned by IFJA attached hereto as Exhibit
2.2.5 (herein "JAPAN ASSET TRANSFER AGREEMENT");
2.2.6 Purchaser and Trutnov are entering into the Transceiver Supply
Agreement attached hereto as Exhibit 2.2.6-1 (herein
"TRANSCEIVER SUPPLY AGREEMENT") and Purchaser and IFFO GmbH are
entering into the Berlin Transceiver Supply Agreement attached
hereto as Exhibit 2.2.6-2 (herein "BERLIN TRANSCEIVER SUPPLY
AGREEMENT"); and
2.2.7 Purchaser and Infineon are entering into the Cross-License
Agreement attached hereto as Exhibit 2.2.7 (herein "CROSS
LICENSE AGREEMENT").
The IF FO Asset Transfer Agreement, the Trutnov Asset Transfer
Agreement, the IFNA Asset Transfer Agreement, the Asia Pacific Asset
Transfer Agreement and the Japan Asset Transfer Agreement shall be
subject to the condition precedent that the Closing has occurred and are
herein referred to collectively as "ASSET TRANSFER AGREEMENTS". IFFO
GmbH, Trutnov, IFNA, IFAP and IFJA are herein referred to individually
as a "SELLER" and collectively as "SELLERS".
2.3 Infineon, upon the terms and conditions of this Agreement, hereby sells
to Purchaser subject to the condition precedent (aufschiebende
Bedingung) that the Closing occurs,
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with commercial effect (mit wirtschaftlicher Wirkung) as of the
Inventory Transfer Date (as defined in Section 4.1.3 below) or such
other date or dates as agreed between Purchaser and Infineon the
worldwide inventories relating to the Products owned by Infineon or its
subsidiaries, namely raw materials, "work-in-progress" and finished
goods (herein collectively the "INVENTORY"); a list of the Inventory as
of December 31, 2004 is attached as Exhibit 2.3. Purchaser hereby
purchases the Inventory subject to the condition that the Closing
occurs.
2.4 Infineon undertakes to transfer, or to procure that its respective
subsidiaries transfer, on the Inventory Transfer Date or on such other
date or dates as agreed between Purchaser and Infineon to Purchaser its
Inventory with in rem effect (mit dinglicher Wirkung) as of the
Inventory Transfer Date. Purchaser hereby undertakes to acquire on the
Inventory Transfer Date the Inventory. For the avoidance of doubt,
Purchaser shall bear all costs associated with transferring and handling
the relocation of the Inventory.
2.5 If (i) any Assets are not specified in the Asset Transfer Agreements
and/or (ii) any assets pertaining to the Inventory at the Inventory
Transfer Date are not specified in the Seller's inventories transfer
instruments and in the case of both (i) and (ii) such Assets or
inventories are not specifically retained under the terms of such Asset
Transfer Agreements and/or Seller's inventories transfer instruments by
Infineon or the Sellers or an affiliate in the meaning of Section 15
seq. of the German Stock Corporation Act (herein "AFFILIATE") of
Infineon or the Sellers (collectively, the "PERTAINING ASSETS"),
Infineon hereby undertakes, to the extent permitted by law or applicable
agreement or other arrangement, to, or to procure that the respective
Seller shall, sell and transfer the Pertaining Assets to Purchaser,
which will accept such sale and transfer, and Infineon agrees to, or to
procure that the respective Seller shall, amend the Asset Transfer
Agreements and/or the Seller's inventories transfer instruments, as the
case may be, to include the Pertaining Assets in such agreement(s) as
soon as Infineon is notified by Purchaser of the existence of such
Pertaining Assets, so that the Pertaining Assets shall be sold and
transferred to Purchaser as if they had been specified in the Asset
Transfer Agreements and/or the Seller's inventories transfer instruments
delivered at the Closing Date and/or the Inventory Transfer Date.
2.6 If (i) any Assets, (ii) any Inventory and/or (iii) any Pertaining Assets
are in the possession of third parties, Infineon hereby, to the extent
permitted by law or applicable agreement or other arrangement,
undertakes to, or to procure that the respective Seller shall, assign to
Purchaser, with commercial and with in rem effect (mit wirtschaftlicher
und dinglicher Wirkung) as of - as far as the Assets are concerned - the
Closing Date, or as of - as far as the Inventory is concerned - the
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Inventory Transfer Date, all of its or the respective Seller's claims
for return or surrogate claims with respect to such Assets, Inventory or
Pertaining Assets against such third parties and shall deliver to
Purchaser any documents related to such claims.
2.7 To the extent that Infineon or the Sellers have assigned to Purchaser
any claims for the return of (i) any Assets, (ii) any Inventory and/or
(iii) any Pertaining Assets, Infineon undertakes to, or to procure that
the respective Seller shall, immediately after the Closing Date or, in
the case of the Pertaining Assets, immediately after obtaining knowledge
of the Pertaining Assets, notify the obligors of the assignment of such
claims in a form and to the extent deemed suitable after consultation
with Purchaser.
2.8 From and after the Closing Date
(i) any payments received by Purchaser for any Products shipped at
any time up to and including the Closing Date shall be paid
promptly by Purchaser to Infineon (on behalf of itself and
Sellers), and
(ii) any payments received by Infineon and/or any Seller for any
Products shipped and invoiced after the Closing Date shall be
paid promptly by Infineon (on behalf of itself and Sellers) to
Purchaser.
Purchaser and Infineon (on behalf of itself and of the Sellers) will
settle accounts according to (i) and (ii) above and will carry out
reimbursements on a monthly basis.
3. PURCHASE PRICE
3.1 The Purchase Price for the Assets to be paid by Purchaser shall be the
aggregate of 34,000,000 shares of Purchaser Common Stock (as defined in
Section 6.1.3) (herein "CONSIDERATION SHARES").
3.2 The Parties agree that the Purchase Price shall be allocated to the
Assets as set out in Exhibit 3.2 to this Agreement.
3.3 If the value of the Inventory as of the Inventory Transfer Date or such
other date or dates upon which any portion of the Inventory is
transferred determined in accordance with accounting principles
generally accepted in the United States of America (herein "US GAAP")
subject to utilizing and continuing the capitalization, election rights,
valuation and consolidation principles and the so called "Infineon
Accounting Guidelines" and the so called "Infineon Kontenrahmen" applied
consistently with Infineon's past practices and interpretations (herein
"INVENTORY VALUE") exceeds EUR 7,861,716 (herein "GUARANTEED INVENTORY
VALUE"), Purchaser shall pay the excess amount to Infineon in cash on
the Inventory Transfer Date. If the Inventory
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Value falls short of the Guaranteed Inventory Value Infineon shall pay
such shortfall to Purchaser in cash on the Inventory Transfer Date.
3.4 Except as herein provided otherwise, each of the Parties shall pay
interest on any amounts (including, for the avoidance of doubt the
delivery of any Consideration Shares) becoming due and payable to the
other Party under this Agreement as from (excluding) the respective due
date for payment until (including) the day of actual payment at the rate
of 800 basis points over the European inter bank offered rate for EURO
deposits with an interest period of one (1) month quoted on the Reuters
Page EURIBOR at 11.00 a.m. C.E.T. on the first banking day of the
relevant month (herein "EURIBOR"). For the avoidance of doubt interest
payments under this Section 3.4 shall have to be made in cash even if
Consideration Shares are not delivered when due.
3.5 All cash payments owed by Purchaser to Infineon under this Agreement
shall be paid by Purchaser by wire transfer to the bank account of
Infineon kept with Commerzbank AG, Munchen, sort code (Bankleitzahl) 700
400 41, account number 15 30 87 200 (herein "INFINEON'S ACCOUNT").
3.6 All cash payments owed by Infineon to Purchaser under this Agreement
shall be paid by Infineon by wire transfer to an account of Purchaser to
be identified by Purchaser to Infineon on or prior to the Closing Date
(herein "PURCHASER'S ACCOUNT").
3.7 Delivery of any Consideration Shares by Purchaser to Infineon shall be
made by the delivery by Purchaser to Infineon of one or more
certificates representing the Consideration Shares registered in the
name of Infineon, or its nominees, together with all required stock
transfer stamps affixed, if any. Delivery of any Consideration Shares by
Infineon to Purchaser, shall be made by the delivery by Infineon to
Purchaser of one or more certificates representing the Consideration
Shares duly endorsed in blank, or accompanied by stock powers duly
executed in blank, together with all required stock transfer stamps
affixed, if any.
3.8 Simultaneously with the execution of this Agreement Infineon and
Purchaser are entering into the Amended and Restated Registration Rights
Agreement attached as Exhibit 3.8-1 and the Amended and Restated
Stockholder Agreement attached as Exhibit 3.8-2.
3.9 The Purchase Price and the adjustment amount potentially to be paid
pursuant to Section 3.3 are net amounts. The Parties presume that the
sale and transfer of the Assets and the Inventory by Infineon and
Sellers to Purchaser will not be subject to VAT pursuant to Section 1
para. 1 a) of the German Turnover Tax Act (Umsatzsteuergesetz
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- "USTG") or pursuant to applicable statutory provisions under any of
the non-German Sellers' respective jurisdictions. In case the competent
tax authorities should qualify the sale and transfer of the Assets as
being subject to VAT, Purchaser will be obliged to pay VAT in the
respective applicable amount in addition to the Purchase Price and the
adjustment amount potentially to be paid pursuant to Section 3.3. In
such case Sellers will be obliged to issue invoices compliant with the
requirements of Section 14 UStG or pursuant to applicable statutory
provisions under any of the non-German Sellers' respective jurisdictions
and Purchaser shall be obliged to pay the due VAT triggered by the sale
and transfer of the Assets and the Inventory including any costs
connected therewith in particular, but not limited to, interest for late
payments ("VAT LIABILITY") by assignment of the VAT reduction arising
out of the VAT charged by Sellers. Infineon hereby accepts such
assignment on account of performance (erfullungshalber) up to the VAT
Liability. The Parties hereby agree to perform the assignment vis-a-vis
the tax authority with due regard to the formal requirements of Section
46 para. 3 of the Tax Code ("Abgabenordnung").
If and to the extent the assigned compensation claim for input VAT is
less than the VAT Liability or such claim does not arise or the tax
authority is entitled to conflicting rights with regard to its payment,
assignment, or settlement, or the chosen procedure is not accepted by
tax authorities or another circumstance arises which takes away
Infineon's and the Seller's option to dispose of or deduct the claim to
compensation of input VAT, Purchaser shall pay the VAT Liability
directly to Infineon and Sellers.
3.10 Infineon and the Sellers shall cooperate with Purchaser to the extent
reasonably requested by Purchaser and legally permitted, to minimize the
amount of any VAT or other sales, transfer, stamp or similar taxes,
including cooperation, at Purchaser's expense, with regard to the manner
in which, and location at which, Purchaser obtains possession of the
Assets. Infineon, Sellers and their advisors shall be entitled to
participate in any dispute with the tax authorities concerning the
applicability of VAT in respect of the transfer of the Assets and the
Inventory.
C. SIGNING DATE, CLOSING DATE AND CLOSING
4. SIGNING DATE, CLOSING DATE, INVENTORY TRANSFER DATE AND CLOSING
4.1 Signing Date, Closing Date and Inventory Transfer Date shall each have
the following meaning in this Agreement:
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4.1.1 "SIGNING DATE" (Unterzeichnungsstichtag) shall be the day on
which this Agreement has been duly executed;
4.1.2 "CLOSING DATE" shall be as soon as possible after the Signing
Date, ideally the Signing Date, and at the latest January 31,
2005, provided that by or on such date Purchaser shall have
delivered the Consideration Shares to Infineon; and
4.1.3 "INVENTORY TRANSFER DATE" shall mean January 31, 2006 or the end
of any other fiscal month of Infineon as agreed between
Purchaser and Infineon.
4.2 The closing (Vollzug) of the transactions contemplated hereunder (herein
"CLOSING") shall occur on the Closing Date upon delivery by Purchaser of
the Consideration Shares to Infineon in accordance with Section 3.7;
4.3 In the event that the Closing has not taken place on or before January
31, 2005, then, unless such failure to close is due to Infineon's
failure to fulfill any of its obligations under this Agreement,
(i) Infineon may, with effect for Infineon and Sellers, withdraw
(zurucktreten) from this Agreement by written notice to
Purchaser, provided that any such withdrawal (Rucktritt) shall
only be valid if Purchaser has received written notice of such
withdrawal (Rucktrittserklarung) prior to the date on which
Purchaser delivers the Consideration Shares to Infineon, or
(ii) if Infineon elects to proceed with the Closing, Purchaser shall
pay to Infineon EUR 100,000.00 for every day of the delay of the
Closing beyond January 31, 2005.
D. GUARANTEES, REMEDIES, INDEMNITIES AND COVENANTS
5. INFINEON'S GUARANTEES
5.1 Infineon hereby guarantees subject to any limitations contained in this
Agreement, in particular, but not limited to, the remedies set out in
Section 7 below, the Time Limitations (as defined in Section 9.1 below),
the exclusion of De Minimis Claims (as defined in Section 9.3 below),
the Deductible (as defined in Section 9.3 below) and the Liability Cap
(as defined in Section 9.4 below) by way of an independent guarantee
pursuant to Section 311 (1) German Civil Code (BGB) that the statements
set forth hereinafter are true and correct as of the date hereof and the
Closing Date, unless expressly specified otherwise herein; provided,
however, that the statements
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which are subject to the Best Knowledge of Infineon (as defined in
Section 5.3 below) shall only be true as of the date hereof (herein
collectively "INFINEON'S GUARANTEES").
5.1.1 ENFORCEABILITY, NO CONFLICT. Infineon and each of the Sellers is
a corporation duly organised validly existing and in good
standing under the laws of its jurisdiction. This Agreement has
been duly executed by Infineon and constitutes the legal, valid,
and binding obligation of Infineon. The Asset Transfer
Agreements (herein collectively "ANCILLARY AGREEMENTS") shall
have been as of the Closing Date duly executed by Sellers and
shall each constitute legal, valid, and binding obligations of
the respective Seller. Infineon and each Seller have the right,
power, authority, and capacity to execute and deliver this
Agreement and the Ancillary Agreements to which they are parties
and to perform their obligations under this Agreement and the
respective Ancillary Agreements, as the case may be, which
actions have been duly authorized and approved by all necessary
corporate action of Infineon and each Seller. Except for (i) the
cartel approvals obtained, (ii) any notices under bulk sale or
similar laws and (iii) any filings required to be made with the
U.S. Securities and Exchange Commission (herein "SEC") under
applicable US securities laws, neither Infineon nor any Seller
is required to give any notice to any person or governmental or
regulatory authority, or obtain any consent, waiver,
authorization or approval from any such person or governmental
or regulatory authorization in connection with (a) the execution
of this Agreement by Infineon or the performance by Infineon of
its obligations hereunder or (b) the execution of the Ancillary
Agreements by the Sellers concerned or the performance by the
respective Seller of its respective obligations thereunder. The
execution and performance by Infineon and Sellers of this
Agreement or of the Ancillary Agreements (i) does not violate or
conflict with any provision of the charter or other
organizational documents or by-laws of any of Infineon and
Sellers, as the case may be (or any resolution adopted by the
respective supervisory board or boards of directors of any of
Infineon and Sellers).
5.1.2 BANKRUPTCY OR JUDICIAL COMPOSITION PROCEEDINGS. No bankruptcy or
judicial composition proceedings concerning Infineon or any
Seller have been applied for and, to the Best Knowledge of
Infineon, no circumstances exist which would require the
application for any bankruptcy or judicial composition
proceedings under mandatory law and, to the Best Knowledge of
Infineon, no circumstances exist pursuant to any applicable
bankruptcy
17
laws which could justify the voidance of this Agreement or any
of the Ancillary Agreements.
5.1.3 INTELLECTUAL PROPERTY RIGHTS AND KNOW-HOW.
(a) The IP Rights include all existing or registered patents
(Patente), utility patents (Gebrauchsmuster), design
patents (Geschmacksmuster), trademarks/service marks
(Xxxxxx) and employees' inventions according to the
German Employees' Invention Act
(Arbeitnehmererfindungsgesetz) or respective foreign
regulations of employees' inventions owned by Infineon
or Sellers and which are exclusively used in the
Transceiver Business and all pending applications for
any of the foregoing.
(b) The IP Rights are, to the Best Knowledge of Infineon, in
full force; they are - as far as registration is
possible - duly registered and all renewal fees have
been fully paid when due in as far as registration is a
prerequisite for protection. All IP Rights and Know-How
(herein "INTELLECTUAL PROPERTY RIGHTS") are free and
clear of any liens, encumbrances or other third party
rights other than non-exclusive licenses or rights of
use. No exclusive licenses have been granted for the use
of any of the Intellectual Property Rights.
(c) None of the Know How or the know-how that constitutes
Pertaining Assets has been unlawfully obtained by
Infineon or Sellers. Infineon and Sellers have not
disclosed and will not disclose the Know-How or the
know-how that constitutes Pertaining Assets to any third
party, except in the ordinary course of business and on
the basis of state-of-the-art non-disclosure agreements.
(d) To the Best Knowledge of Infineon, the Intellectual
Property Rights, together with any intellectual property
rights and know-how that constitutes Pertaining Assets
or that will be licensed to Purchaser under the Cross
License Agreement constitute all intellectual property
rights which are required to operate the Transceiver
Business in the manner in which it was being operated as
of the date of this Agreement and will be operated
through the Closing Date.
5.1.4 PROCEEDINGS RELATING TO IP RIGHTS. Except as disclosed in
Exhibit 5.1.4, (i) the Intellectual Property Rights are not
subject to any pending or, to the
18
Best Knowledge of Infineon, threatened proceedings for
opposition or cancellation, revocation and/or invalidity or any
legal proceedings otherwise challenging the use of any
Intellectual Property Rights in the Transceiver Business, (ii)
there are no contractual restrictions materially affecting the
use of the Intellectual Property Rights in the Transceiver
Business, and (iii) to the Best Knowledge of Infineon, none of
the Intellectual Property Rights infringes any third party's
rights if used in a manner consistent with past practice prior
to the Closing Date.
5.1.5 ASSETS. Sellers hold good title to all material Assets
transferred under the Asset Transfer Agreements. The Assets are
not charged with any rights of third parties except for (i)
customary rights of retention of title (handelsubliche
Eigentumsvorbehalte), liens, pledges or other security rights in
favour of suppliers, mechanics, workers, landlords, carriers and
the like; (ii) statutory security rights in favour of tax
authorities or other governmental entities; and (iv) liens,
mortgages or encumbrances (Belastungen) or other third party
rights other than rights which would not reasonably be expected
to have a material adverse effect. The Assets are in a
reasonably useable condition, except for regular needs for
maintenance and repair.
5.1.6 INVENTORY. All of the Inventory is, and as of the Inventory
Transfer Date (or any other date on which any of the Inventory
is transferred to Purchaser) will be (i) held for use in the
Transceiver Business, (ii) acquired and maintained in the
ordinary course of the Transceiver Business, and (iii) of a
quality and condition useable and saleable in the ordinary
course of business. The Guaranteed Inventory Value has been
calculated as of the December 31, 2004 in accordance with US
GAAP, subject to the capitalization, election rights, valuation
and consolidation principles of the so called "Infineon
Accounting Guidelines" and the so called "Infineon
Kontenrahmen", applied consistently with Infineon's past
practices and interpretations.
5.1.7 LITIGATION. There are (i) no court or administrative
proceedings, including arbitration proceedings or, to the Best
Knowledge of Infineon, investigations by administrative
authorities pending or, to the Best Knowledge of Infineon
threatened involving the Assets or the Transceiver Business,
either as a plaintiff or defendant having a litigation value
(Streitwert) exceeding EUR 100,000.00 in the individual case or
which in
19
any manner seek to prevent, materiality enjoin, alter or delay
the transactions contemplated herein.
5.2 All Exhibits referred to in Section 5.1 are collectively referred to as
the "DISCLOSURE SCHEDULES". For the avoidance of doubt, any fact or item
referenced in or disclosed in a specific Disclosure Schedule shall be
deemed to be disclosed also with respect to any other Infineon's
Guarantee whether or not a cross-reference appears, if the relevance of
such disclosed fact or item under any other Disclosure Schedule is
reasonably apparent. Infineon does not give or assume any guarantees
other than those set forth in Section 5.1 above and none of the
Infineon's Guarantees shall be construed as a guarantee or
representation with respect to the quality of the Purchase Object within
the meaning of Sections 276 (1), 443 German Civil Code (Garantie fur die
Beschaffenheit der Sache).
5.3 For the purpose of this Agreement, "BEST KNOWLEDGE OF INFINEON" shall
mean the actual knowledge (positive Kenntnis) of Xxxxx Xxxxxx, Xxxx
Xxxxxxx and/or Xxxxxx x. Xxxxxx, after due inquiry of the following
persons having operational responsibility for the Assets: Xxxxxxx Xxxxx,
head of business administration; Xxxx Xxxx-Xxxx, managing director; and
Xxxxxx Xxxxxxx, general manager of the Trutnov site.
6. PURCHASER'S GUARANTEES
6.1 Purchaser hereby guarantees subject to any limitations contained in this
Agreement, in particular, but not limited to, the remedies set out in
Section 7 below, the Time Limitations (as defined in Section 9.1 below),
the exclusion of De Minimis Claims (as defined in Section 9.3 below),
the Deductible (as defined in Section 9.3 below) and the Liability Cap
(as defined in Section 9.4 below) - as applicable to claims against
Purchaser on the basis of Sections 7.8 and 9.8 - by way of an
independent guarantee pursuant to Section 311 (1) German Civil Code
(BGB) that the statements set forth hereinafter are true and correct as
of the date hereof and the Closing Date, unless expressly specified
otherwise herein; provided, however, that the statements which are
subject to the Best Knowledge of Purchaser (as defined in Section 6.3
below) shall only be guaranteed as of the date hereof (herein
collectively "PURCHASER'S GUARANTEES"):
6.1.1 ENFORCEABILITY, NO CONFLICT. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. This Agreement has been duly executed
by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser. Purchaser has the right, power,
authority, and capacity to execute and deliver this
20
Agreement and the Ancillary Agreements to which it is a party
and to perform its obligations under this Agreement or the
respective Ancillary Agreements, which actions have been duly
authorized and approved by all necessary corporate action of
Purchaser and no other proceedings on the part of Purchaser, its
Board of Directors or its shareholders are necessary to approve
or recommend for approval or to consummate the transactions
contemplated by this Agreement or any Ancillary Agreement.
Purchaser is not required to give any notice to any person or
obtain any consent or governmental authorization in connection
with the execution of this Agreement or the Ancillary Agreements
by Purchaser. The execution and performance of this Agreement or
of the Ancillary Agreements does not violate or conflict with
any provision of the certificate of incorporation or by-laws of
Purchaser or any Affiliate of Purchaser, as the case may be (or
any resolution adopted by Purchaser's Board of Directors).
6.1.2 FINDERS' FEES. Purchaser does not have any obligation or
liability to pay any fees or commissions to any broker, finder
or agent with respect to the transaction contemplated hereunder
for which Seller could become wholly or partly liable.
6.1.3 CAPITALIZATION. The authorized capital stock of Purchaser
consists of 500,000,000 shares of common stock, par value $0.001
per share (herein "PURCHASER COMMON STOCK"), and 5,000,000
shares of preferred stock, par value $0.001 per share, 500,000
of which are designated Series RP Preferred Stock (herein
"PURCHASER PREFERRED STOCK" and, together with Purchaser Common
Stock, the "PURCHASER SHARES"). The shares of Series RP
Preferred Stock are issuable upon the exercise of rights
attached to shares of Purchaser Common Stock (herein "RIGHTS")
pursuant to the Rights Agreement dated as of September 25, 2002
between Purchaser and American Stock Transfer & Trust Company
(herein "RIGHTS AGREEMENT"). As of November 30, 2004: (i)
223,671,196 shares of Purchaser Common Stock were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable; (ii) no shares of Purchaser Preferred Stock were
issued and outstanding; (iii) no Purchaser Shares were held in
treasury; (iv) 62,500,602 shares of Purchaser Common Stock were
reserved for future issuance pursuant to Purchaser's stock
option and employee stock purchase plans; (v) an aggregate of
58,647,020 shares of Purchaser Common Stock were reserved for
future issuance upon the conversion of Purchaser's 5-1/4%
convertible subordinated notes due 2008 and
21
Purchaser's 2-1/2% convertible subordinated notes due 2010; and
(vi) 967,117 shares of Purchaser Common Stock were reserved for
future issuance upon the exercise of outstanding warrants at a
weighted average price of USD 1.57 per share of Purchaser Common
Stock. Except as disclosed in the SEC Reports (as defined in
Section 6.1.5 (a) below), Purchaser is not party to any
agreement relating to restrictions on the transferability of any
Purchaser Shares other than agreements entered into in
connection with the Original Agreement and the Restated Original
Agreement. Except as set forth in this Section 6.1.3 or in this
Agreement, or as disclosed in the SEC Reports, there are (i) no
options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued
capital stock of Purchaser and to which Purchaser or any of its
subsidiaries is a party or bound or obligating Purchaser to
issue or sell any Purchaser Shares or capital stock of, or other
equity interests in, Purchaser and (ii) no outstanding
contractual obligations of Purchaser or any Affiliate of
Purchaser to repurchase, redeem or otherwise acquire any
Purchaser Shares. Except as set forth in this Section 6.1.3 or
as disclosed in the SEC Reports, to the Best Knowledge of
Purchaser, there are no voting trusts, proxies or other
agreements or understandings with respect to the registration or
voting of any equity security of any class of Purchaser or with
respect to the registration or voting of any interest of any
equity security of any class of any of Purchaser's subsidiaries
other than agreements entered into in connection with the
Original Agreement and the Restated Original Agreement. The
issuance of the Consideration Shares pursuant to Section 3.2 of
this Agreement is not subject to any pre-emptive rights, rights
of first refusal, anti-dilution rights or similar rights created
by statute, the Certificate of Incorporation or By-laws of
Purchaser or by any agreement to which Purchaser is a party or
by which Purchaser is bound. Under the Rights Agreement, until
the Distribution Date (as defined in the Rights Agreement), (i)
the Rights will be evidenced by the certificates for Purchaser
Common Stock registered in the names of the holders thereof and
not by separate certificates and (ii) the surrender for transfer
of any certificate for Purchaser Common Stock shall also
constitute the surrender for transfer of the Right associated
with the Purchaser Common Stock represented thereby.
6.1.4 THE CONSIDERATION SHARES. The Consideration Shares to be issued
pursuant to Section 3.1 of this Agreement will be duly
authorized, validly issued, fully paid and non-assessable and
will not be subject to preemptive
22
rights created by statute, Purchaser's organizational documents
or any agreement to which Purchaser is a party or by which it is
bound. As of the Closing Date, the Consideration Shares will be
authorized for listing on the Nasdaq National Market (herein
"NNM"), subject to official notice of issuance.
6.1.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Purchaser has filed all forms, reports and documents
required to be filed by it with the SEC since May 1,
2002, and has heretofore delivered or made available to
Seller, in the form filed with the SEC, forms, reports
and other documents filed by the Purchaser with the SEC
since May 1, 2002, other than registration statements on
Form S-8 (herein collectively, the "SEC REPORTS"). The
SEC Reports (i) were prepared in accordance with either
the requirements of the Securities Act of 1933, as
amended (herein the "SECURITIES ACT"), or the Securities
Exchange Act of 1934, as amended (herein "EXCHANGE
ACT"), as the case may be, and the rules and regulations
promulgated thereunder, and (ii) did not, at the time
they were filed, or, if amended, as of the date of such
amendment, 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 made therein, in the light of the
circumstances under which they were made, not
misleading. No subsidiary of Purchaser is required to
file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) included or
incorporated by reference in the SEC Reports was
prepared in accordance with US GAAP applied on a
consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and
each fairly presents, in all material respects, the
consolidated financial position, results of operations
and cash flows of Purchaser and its consolidated
subsidiaries as at the respective dates thereof and for
the respective periods indicated therein except as
otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end
adjustments which would not result in a Purchaser
Material Adverse Effect). For the purpose of this
Agreement, "PURCHASER MATERIAL ADVERSE EFFECT" means any
change or effect that is materially adverse to the
financial condition, results of operation,
23
business operations or assets of the Purchaser and its
subsidiaries taken as a whole.
(c) Except as and to the extent disclosed in the SEC Reports
or set forth on the consolidated balance sheet of
Purchaser and its consolidated subsidiaries as at
October 31, 2004, including the notes thereto, neither
Purchaser nor any such subsidiary has any liability or
obligation of any nature (whether accrued, absolute,
contingent or otherwise) which would prevent or
materially delay Purchaser from performing its
obligations under this Agreement.
6.1.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. To the Best Knowledge of
Purchaser, since October 31, 2004, except as expressly
contemplated by this Agreement, or specifically disclosed in the
SEC Reports filed prior to the date of this Agreement, (i)
Purchaser and its subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past
practice, (ii) Purchaser has not issued, sold, pledged, disposed
of, granted, encumbered or authorised the issuance, sale,
pledge, disposition, grant or encumbrance of any Purchaser
Shares or its capital stock, or any options, warrants,
convertible securities or other rights of any kind to acquire
any Purchaser Shares or any such capital stock or any ownership
interest of Purchaser other than the grant of options and
issuance of Purchaser Shares pursuant to existing stock option
plans and employee stock purchase plans of Purchaser, and (iii)
there has been no dividend or other distribution with respect to
Purchaser's capital stock or any change in the rights or any
reclassification, combination, split, subdivision, redemption,
or other purchase or other acquisition by Purchaser of any of
Purchaser's capital stock.
6.1.7 VOTE REQUIRED. No vote of the holders of any class or series of
capital stock of Purchaser is necessary to approve the issuance
of the Consideration Shares pursuant to this Agreement or any
other transaction contemplated by this Agreement or the
Ancillary Agreements.
6.1.8 FORM S-3 ELIGIBILITY. Purchaser is eligible to register the
Consideration Shares for resale by Seller using Form S-3
promulgated under the Securities Act.
24
6.1.9 LISTING AND MAINTENANCE REQUIREMENTS. Since January 1, 2004,
Purchaser has been in compliance with all listing and
maintenance requirements for the NNM.
6.1.10 BOARD APPROVAL. The Board of Directors of Purchaser (i) has
determined that the Purchase Price for the Assets and the
Inventory in the form of the Consideration Shares is fair to
Purchaser and its stockholders and (ii) has approved this
Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby.
6.1.11 BANKRUPTCY OR JUDICIAL COMPOSITION PROCEEDINGS. As of the
Closing Date, no bankruptcy or judicial composition proceedings
concerning Purchaser or any subsidiary of Purchaser have been
applied for and, to the Best Knowledge of Purchaser, no
circumstances exist which would require the application for any
bankruptcy or judicial composition proceedings under mandatory
law and, to the Best Knowledge of Purchaser, no circumstances
exist pursuant to any applicable bankruptcy laws which could
justify the voidance of this Agreement or any of the Ancillary
Agreements.
6.1.12 ENTERPRISE AGREEMENTS. As of the Closing Date, neither Purchaser
nor any of Purchaser's subsidiaries are a party to an enterprise
agreement within the meaning of Sections 291 and 292 German
Stock Corporation Act (AktG) or comparable agreements under
other jurisdictions.
6.1.13 PURCHASER INTELLECTUAL PROPERTY RIGHTS. None of the intellectual
property rights that are material to the conduct of Purchaser's
business as currently conducted (herein collectively "PURCHASER
MATERIAL INTELLECTUAL PROPERTY RIGHTS") are subject to any
pending or, to the Best Knowledge of Purchaser, threatened
proceedings for opposition or cancellation, revocation and/or
invalidity or any legal proceedings otherwise challenging the
use of any Purchaser Material Property Rights in Purchaser's
business. There are no contractual restrictions materially
affecting Purchaser's and its subsidiaries' use of the Purchaser
Material Intellectual Property Rights in Purchaser's business.
To the Best Knowledge of Purchaser, none of the Purchaser
Material Intellectual Property Rights infringe any third party's
rights if used in a manner consistent with past practice prior
to the Closing Date. To the Best Knowledge of Purchaser and
except as disclosed in the SEC Reports, the Purchaser Material
Intellectual Property Rights constitute all intellectual
property rights required to operate the business of Purchaser in
the manner
25
in which it is being operated as of the date hereof and will be
operated through the Closing Date.
6.1.14 INSURANCE. Purchaser and its subsidiaries maintain in full force
and effect policies of insurance for their own benefit against
property damage, liability (Haftpflicht), including product
liability, and other usually insured business risks except for
such insurance the lack of which would not reasonably be
expected to have a Purchaser Material Adverse Effect.
6.1.15 PURCHASER MATERIAL ASSETS. Purchaser and its subsidiaries hold
good title to all material fixed assets (Anlagevermogen) which
are reflected as being owned by them in Purchaser's and its
subsidiaries books and records (herein collectively "PURCHASER
MATERIAL ASSETS"). To the Best Knowledge of Purchaser, the
Purchaser Material Assets are not charged with any rights of
third parties except for (i) customary rights of retention of
title (handelsubliche Eigentumsvorbehalte), liens, pledges or
other security rights in favour of suppliers, mechanics,
workers, landlords, carriers and the like; (ii) security rights
granted to banks and other financial institutions in respect of
debt reflected in the financial statements of Purchaser or
Purchaser's Affiliates; (iii) statutory security rights in
favour of tax authorities or other governmental entities; and
(iv) liens, mortgages or encumbrances (Belastungen) or other
third party rights other than rights which would not reasonably
be expected to have a Purchaser Material Adverse Effect. The
Purchaser Material Assets are in a reasonably useable condition,
except for regular needs for maintenance and repair, in order to
continue the Purchaser's business substantially in the same
fashion and manner as conducted as of the date of the Original
Agreement.
6.1.16 PURCHASER PERMITS. To the Best Knowledge of Purchaser, Purchaser
and its subsidiaries are in possession of all governmental
approvals, licenses and permits required under public law for
the conduct of the business of Purchaser, in particular in the
areas of emission laws, safety laws and construction laws, as
necessary to operate the business as it was being conducted as
of the date of the Original Agreement and which are material for
the business of Purchaser (herein collectively "PURCHASER
PERMITS"). To the Best Knowledge of Purchaser, (i) the Purchaser
Permits have not been withdrawn or revoked and (ii) there is no
pending threat that the Purchaser Permits will be withdrawn or
revoked. To the Best Knowledge of Purchaser, no circumstances
exist which would reasonably be expected to result in, as a
consequence of the implementation of this Agreement, (i) a
26
withdrawal, revocation or limitation of the Purchaser Permits or
(ii) the imposition of material conditions to the Purchaser
Permits.
6.1.17 LITIGATION. There are (i) no court or administrative
proceedings, including arbitration proceedings or, to the Best
Knowledge of Purchaser, investigations by administrative
authorities pending or, to the Best Knowledge of Purchaser,
threatened involving the business of Purchaser or its Affiliates
either as plaintiff or defendant having a litigation value
(Streitwert) exceeding USD 250,000.00 in the individual case or
which in any manner seek to prevent, materially enjoin, alter or
delay the transactions contemplated herein and (ii) no product
liability claims pending or, to the Best Knowledge of Purchaser,
threatened against the business of Purchaser or its Affiliates
with a value in dispute exceeding USD 1,000,000.00 in the
individual case, in each case except as disclosed in the SEC
Reports.
6.1.18 EMPLOYMENT MATTERS. Purchaser and its subsidiaries have
conducted their businesses in accordance with all laws relating
to employment and employment practices, terms and conditions of
employment, wages and hours and non discrimination in
employment, except where such failure would not have a Purchaser
Material Adverse Effect. With respect to any employee benefit
plan (as defined in the United States Employee Retirement Income
Security Act of 1974, as amended (ERISA)) or any bonus, stock
option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance or other similar employee
benefit plan, written or otherwise, for the benefit of, or
relating to, any current or former United States employee of
Purchaser or any of its subsidiaries, individually and in the
aggregate, there are no funded benefit obligations for which
contributions have not properly been made or properly accrued
and there are no unfunded benefit obligations which have not
been accounted for by reserves, or otherwise properly footnoted
in accordance with US GAAP on the financial statements of
Purchaser, that could reasonably be expected to have a Purchaser
Material Adverse Effect. With respect to any bonus, stock
option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance or other similar employee
benefit plan, written or otherwise, for the benefit of, or
relating to, any current or former employee of Purchaser or any
of its subsidiaries outside the United States, each such plan
has been established, maintained and administered in compliance
with its terms and conditions and with the requirements
prescribed by any and all
27
statutory and regulatory laws that are applicable to such plan
and no such plan has unfunded liabilities that will not be
offset by insurance or fully accrued or that could reasonably be
expected to have a Purchaser Material Adverse Effect.
6.1.19 ENVIRONMENTAL MATTERS. To the Best Knowledge of Purchaser, there
are no existing environmental conditions which could reasonably
be expected to result in an environmental liability of Purchaser
or its Affiliates which could reasonably be expected to have a
Purchaser Material Adverse Effect.
6.1.20 TAXES AND SOCIAL SECURITY. Purchaser and its subsidiaries have
timely paid and discharged all taxes and social security
contributions when due and timely and accurately filed all tax
returns, and all other returns, reports and notifications
required to be filed in accordance with applicable tax or social
security laws and regulations. To the extent taxes or social
security contributions were not due at the end of any fiscal
year of Purchaser, sufficient reserves (Ruckstellungen) have
been made in the balance sheets in the respective annual
accounts. Other than in the course of an ordinary tax audit, no
proceeding has been initiated or indicated to be initiated by
any tax or other authority against Purchaser or its Affiliates
in connection with their obligation to pay taxes or social
security contributions.
6.2 All Exhibits referred to in this Section 6 are collectively referred to
as the "PURCHASER DISCLOSURE SCHEDULES". For the avoidance of doubt, any
fact or item referenced in or disclosed in a specific Purchaser
Disclosure Schedule or in an SEC Report, shall be deemed to be disclosed
also with respect to any other Purchaser Guarantee whether or not a
cross-reference appears, if the relevance of such disclosed fact or item
under any other Purchaser Disclosure Schedule is reasonably apparent.
Purchaser does not give or assume any guarantees other than those set
forth in this Section 6 and none of the Purchaser's Guarantees shall be
construed as a guarantee or representation with respect to the quality
of the Consideration Shares within the meaning of Sections 276 (1), 443
German Civil Code (Garantie fur die Beschaffenheit der Sache).
6.3 For the purpose of this Agreement, "BEST KNOWLEDGE OF PURCHASER" shall
mean the actual knowledge (positive Kenntnis) of any of the executive
officers of Purchaser serving as of the date hereof as disclosed in the
SEC Reports.
28
7. REMEDIES
7.1 In the event of any breach or non-fulfilment by Infineon of any of
Infineon's Guarantees or Infineon's Covenants contained in this
Agreement, Infineon shall be liable for putting Purchaser into the same
position that it would have been in if the Infineon's Guarantees or
Infineon's covenants contained in this Agreement had been correct or had
not been breached (Naturalrestitution), or, at the election of Infineon,
to pay damages for non-performance (xxxxxxx Schadenersatz). For purposes
of determining the liability of Infineon under this Agreement, only the
actual losses incurred by Purchaser shall be taken into account,
excluding any consequential damages (Folgeschaden), potential or actual
reduction (Minderung) in value of the Assets, lost profits (entgangener
Gewinn), and any internal costs and expenses incurred by Purchaser
(herein "LOSSES"). If and to the extent indemnification for any Loss is
paid to Purchaser, such payments shall be treated as a reduction of the
Purchase Price as between the Parties.
7.2 In the event of any breach or non-fulfilment by Infineon of any of
Infineon's Guarantees or Covenants contained in this Agreement (herein
"PURCHASER CLAIM"), Purchaser will give Infineon written notice of such
breach or non-fulfilment containing a detailed description of the
alleged event giving rise to a Purchaser Claim, with such notice stating
the nature thereof and the amount involved, to the extent that such
amount has been determined at the time when such notice is given,
(herein "CLAIM NOTICE"). Any Claim Notice must be made within three
months after Purchaser becomes aware of the (alleged) event giving rise
to a liability. Any failure to make a Claim Notice promptly shall lead
to an exclusion of Infineon's liability for the respective event, unless
Infineon is not prejudiced by such delay. Without prejudice to the
validity of the Purchaser Claim or alleged claim in question, Purchaser
shall allow Infineon and its accountants and its professional advisors
to investigate the matter or circumstance alleged to give rise to such
Purchaser Claim, and whether and to what extent any amount is payable in
respect of such Purchaser Claim and, for such purpose, Purchaser shall
give, subject to being paid its reasonable out-of-pocket costs and
expenses, such information and assistance, including access to
Purchaser's premises and personnel and including the right to examine
and copy or photograph any assets, accounts, documents and records, as
Infineon or its accountants or professional advisors may reasonably
request. The preceding sentence shall, for the avoidance of doubt, also
apply in case any arbitration or court proceedings are pending between
the Parties.
29
7.3 Infineon shall not be liable for, and Purchaser shall not be entitled to
bring any Purchaser Claim or any other claim under or in connection with
this Agreement if and to the extent that:
7.3.1 the amount of the Purchaser Claim is or could have been
recovered from a third party or under an insurance policy in
force on the Effective Date;
7.3.2 the payment or settlement of any item giving rise to a Purchaser
Claim results in a tax benefit to Purchaser;
7.3.3 the Purchaser Claim results from a failure of Purchaser to
mitigate damages pursuant to Section 254 of the German Civil
Code;
7.3.4 the matter to which the Purchaser Claim relates was explicitly
disclosed to Purchaser during its review of the FO Business Unit
under commercial, technical, organizational, financial,
environmental and legal aspects; without limiting the generality
of the foregoing, Purchaser shall be deemed to have knowledge of
all matters explicitly disclosed to it in (i) the Information
Memorandum relating to the FO Business Unit prepared by
Citigroup, dated January 2004, (ii) the written answers to
information requests of Purchaser, (iii) the contents of the
written management presentation on 18 February 2004, (iv) the
contents of the documents disclosed in the general and protected
data rooms for the FO Business Unit, two identical copies of
which will be set aside and preserved for purposes of providing
evidence for a period of three (3) years after the Closing Date
at the offices of the Parties' external counsel, (v) any
information disclosed in the Original Agreement or the Restated
Original Agreement, in each case including all Schedules,
Exhibits or other attachments thereto as well as ancillary
agreements thereto and (vi) all other information provided to
Purchaser in writing or by e-mail since the signing of the
Original Agreement;
7.3.5 the Purchaser Claim results from or is increased by the passing
of, or any change in, after the Signing Date, any law, statute,
ordinance, rule, regulation, common law rule or administrative
practice of any government, governmental department, agency or
regulatory body including (without prejudice to the generality
of the foregoing) any increase in the rates of taxes or any
imposition of taxes or any withdrawal or relief from taxes not
actually (or prospectively) in effect at the Signing Date; and
30
7.3.6 the procedures set forth in Section 7.5 were not observed by
Purchaser unless Infineon was not prejudiced by the
non-compliance with such procedures.
7.4 Infineon shall not be liable for any Purchaser Claim if and to the
extent Purchaser has caused (verursacht oder mitverursacht) such
Purchaser Claim after the Closing. When calculating the amount of the
liability of Infineon under this Agreement all advantages in connection
with the relevant matter shall be taken into account (Vorteilsausgleich)
and Infineon shall not be liable under this Agreement in any respect of
any Purchaser Claim for any Losses suffered by Purchaser to the extent
of any corresponding savings by or net benefit to Purchaser arising
therefrom.
7.5 If (i) an order of any governmental authority is issued or threatened to
be issued against Purchaser in relation to the Assets or (ii) Purchaser
is sued or threatened to be sued by a third party, including without
limitation any government agencies in relation to the Assets (herein
"THIRD PARTY CLAIM"), Purchaser shall give Infineon prompt notice of
such Third Party Claim. Purchaser shall ensure that Infineon shall be
provided with all materials, information and assistance relevant in
relation to the Third Party Claim, be given reasonable opportunity to
comment or discuss with Purchaser any measures which Infineon proposes
to take or to omit in connection with a Third Party Claim, and in
particular Infineon shall be given an opportunity to comment on,
participate in, and review any reports and all relevant tax and social
security audits or other measures and receive without undue delay copies
of all relevant orders (Bescheide) of any authority. No admission of
liability shall be made by or on behalf of Purchaser and the Third Party
Claim shall not be compromised, disposed of or settled without the prior
written consent of Infineon. Further, Infineon shall be entitled at its
own discretion to take such action (or cause the Purchaser to take such
action) as they shall deem necessary to avoid, dispute, deny, defend,
resist, appeal, compromise or contest such Third Party Claim (including
making counter claims or other claims against third parties) in the name
of and on behalf of the Purchaser and the Purchaser will give to
Infineon or it's professional advisors, subject to them being paid all
reasonable out-of-pocket costs and expenses, all such information and
assistance, as described above, including access to premises and
personnel and including the right to examine and copy or photograph any
assets, accounts, documents and records for the purpose of avoiding,
disputing, denying, defending, resisting, appealing, compromising or
contesting any such claim or liability as Infineon or its professional
advisors may reasonably request. Infineon agrees to use all such
information confidentially only for such purpose. To the extent that
Infineon is in breach of an Infineon's Guarantee or covenant, all costs
and
31
expenses reasonably incurred by Infineon in defending such Third Party
Claim shall be borne by Infineon; if it turns out that Infineon was not
in breach, any costs and expenses reasonably incurred by them in
connection with the defense shall be borne by Purchaser.
7.6 Sections 7.1 through 7.5 shall apply mutatis mutandis to the remedies,
if any, of Purchaser under the Ancillary Agreements.
7.7 Infineon may settle any Purchaser Claim (at Infineon's option) by either
(i) wire transfer by Infineon of immediately available funds into
Purchaser's Account or (ii) the return by Infineon to Purchaser of such
number of Consideration Shares determined by dividing the amount of the
respective Purchaser's Claim by the Share Price.
7.8 In the event of any breach or non-fulfilment by Purchaser of Purchaser's
Guarantees under Sections 6.1.5 or 6.1.14 through 6.1.20 Purchaser shall
pay damages for non-performance (xxxxxxx Schadenersatz) to Infineon in
the amount of the respective Losses of Purchaser multiplied by the
percentage of the shareholding of Infineon in Purchaser acquired on the
Closing Date. The respective payment shall be treated as an increase of
the Purchase Price as between the Parties. Other than that, Sections 7.1
through 7.5 and 7.7 shall apply mutatis mutandis to any breach or
non-fulfilment of (i) any Purchaser's Guarantee or (ii) any Purchaser's
covenants under this Agreement.
8. INFINEON'S COVENANTS
8.1 After the Closing, Infineon shall permit Purchaser at its own cost to
have reasonable access to such of the books, records and files of
Infineon or Sellers that do not constitute Assets or are not transferred
together with the Assets but are relevant for the Products, if (i) such
access is reasonably necessary for use in financial reporting, tax
return preparation, or tax compliance matters and (ii) Infineon has no
legitimate interest not to disclose such books, records and files.
Infineon shall reasonably assist Purchaser, upon Purchaser's reasonable
request and against reimbursement of any cost incurred thereby, if
Purchaser reasonably needs any information not included in the Assets or
transferred together with Assets for use in financial reporting, tax
return, preparation or tax compliance matters. Without limiting the
generality of the foregoing, Infineon will provide or make available to
Purchaser all financial and accounting records not included in the
Assets that shall reasonably be requested by Purchaser if such records
are reasonably necessary for the purpose of preparing financial
statements of the Purchaser for any period, or as of any date, prior to
the
32
Closing Date, to the extent such financial statements are required by US
GAAP or by the applicable rules and regulations of the SEC.
8.2 As soon as practicable after the Closing Date, Purchaser will notify
Infineon in writing of any financial statements of the Transceiver
Business for any period, or as of any date, prior to the Closing Date,
that are required by the applicable rules and regulations of the SEC to
be included on Form 8-K to be filed by Purchaser in connection with the
transactions contemplated by this Agreement (the "TRANSCEIVER BUSINESS
FINANCIAL STATEMENTS"). Immediately after receipt of such notice Seller
will prepare or cause to be prepared and use its reasonable efforts to
cause to be audited and certified by Infineon's independent auditor the
Transceiver Business Financial Statements, to the extent required by the
rules and regulations of the SEC.
8.3 Infineon shall procure that IFFO GmbH and Trutnov shall upon request by
Purchaser, continue to produce Products using the Assets (originally
owned by IFFO GmbH and Trutnov) in accordance with the terms of the
Interim Supply Agreement until Purchaser relocates such Assets or the
Interim Supply Agreement expires. From the Closing Date, Purchaser shall
procure adequate insurance coverage for the Assets originally owned by
IFFO GmbH and Trutnov and the production process until such time when
the Assets are relocated.
8.4 Infineon will, upon request by Purchaser, execute or procure the
execution of all additional documents or instruments as may reasonably
be required to transfer the Assets and the Inventory to Purchaser in
accordance with this Agreement and otherwise to give effect to the
transactions contemplated in this Agreement.
8.5 Following the Closing, Infineon shall use its reasonable efforts,
coordinated by the managing directors of IFFO GmbH and Trutnov, to
support the effective transfer of the Assets and the transition of the
Transceiver Business to Purchaser, including, without limitation, the
following:
(i) Infineon will grant Purchaser access to the facilities and
personnel of Infineon and Sellers, during normal business hours
and with reasonable advance notice, as reasonably required to
transfer the Assets to Purchaser, to implement manufacturing of
the Products at Purchaser's facilities and to carry on research
and development projects in process as of the Closing Date,
among other things Infineon will cooperate with Purchaser in
arranging extended visits to Infineon's engineering facilities
by a reasonable number of Purchaser's management and technical
employees.
33
(ii) Infineon will use reasonable efforts to assist Purchaser in
establishing relationships with customers, suppliers,
contractors and other third parties with whom Infineon and or
any of the Sellers have had dealings related to the Transceiver
Business.
(iii) Infineon will keep Purchaser generally informed of its
intentions with respect to the termination of employees of the
FO Business Unit engaged in the Transceiver Business in order to
facilitate any offers of employment that Purchaser may wish to
make to such employee.
(iv) Infineon will base its purchase of raw materials on past
practice as well as on the forecasts and orders of Purchaser and
will, in case of deviations, consult with Purchaser.
(iv) Infineon will not terminate with effect before June 30, 2005 up
to 40 employees of the FO Business Unit located in Berlin and
Munich to be identified by Purchaser by written notice delivered
to Infineon on or before February 15, 2005 (herein "IDENTIFIED
EMPLOYEES"). At Purchaser's request, Infineon will not terminate
any of the Identified Employees with effect before September 30,
2005 (but will in any event be free to terminate any of the
Identified Employees with effect after September 30, 2005).
Infineon will pay all salaries and other compensation and
benefits of such Identified Employees through June 30, 2005 or
such earlier date as Infineon and Purchaser may agree, but will
not make any severance payment or pay any retention-related
bonus to any such Identified Employees until such date as
Infineon is free to terminate such employment as provided in
this Section. Purchaser will pay the base salaries of the
Identified Employees for periods of employment after June 30,
2005. In addition, Infineon agrees that Finisar may, at its
election but coordinated with Infineon, provide incentives to
some or all of such retained employees to facilitate the
transfer of Assets, completion of projects and implementation of
manufacturing at Purchaser's facilities. Infineon will make such
incentive payments on behalf of Finisar provided that Finisar
provides the necessary funds to Infineon. Under no circumstances
shall Purchaser be liable for any other compensation or benefits
payable to any of such Identified Employees, including without
limitation severance payments.
9. EXPIRATION / LIMITATION OF PURCHASER'S CLAIMS
9.1 All claims of Purchaser arising under this Agreement (other than claims
related to the breach of Covenants of Infineon to be performed after the
Closing Date) shall be time-
34
barred on December 31, 2005. Exempted herefrom are all claims of
Purchaser arising as a result of wilful or intentional breaches of
Infineon's Guarantees or obligations under this Agreement which shall be
time barred in accordance with the statutory rules in Sections 195, 199
German Civil Code (herein "TIME Limitations").
9.2 The expiry period for any claims of Purchaser under this Agreement shall
be tolled (gehemmt) pursuant to Section 209 German Civil Code by any
timely notification of Infineon pursuant to Section 7.2 above, provided
that Purchaser commences judicial proceedings within three (3) months
after the expiry of the relevant Time Limitations. Section 203 German
Civil Code shall not apply, unless the Parties agree in writing that the
expiry period shall be tolled on the basis of pending settlement
negotiations. This Section 9.2 shall apply mutatis mutandis to all
claims of Infineon arising under Sections 6 and 7.8.
9.3 Except as explicitly provided otherwise in this Agreement or the
Ancillary Agreements, no liability shall attach to Infineon or any
Seller under this Agreement or any of the Ancillary Agreements where the
individual claim is less than EUR 100,000.00 (in words: Euro one hundred
thousand) (herein "DE MINIMIS CLAIMS") and until the aggregate amount of
claims (excluding the De Minimis Claims) is more than EUR 1,000,000.00
(in words: Euro one million) (Freibetrag) (herein "DEDUCTIBLE"). If the
aggregate liability of Infineon and the Sellers under this Agreement
(including, for the avoidance of doubt, any liability of Infineon or any
Seller under the Ancillary Agreements) is greater than EUR 1,000,000.00
(in words: Euro one million) the liability of Infineon and the Sellers
shall be the excess above EUR 1,000,000.00 (in words: EURO one million)
subject to the other provisions of this Section 9.
9.4 The aggregate liability of Infineon and the Sellers under this Agreement
(including, for the avoidance of doubt, any liability of Infineon or any
Sellers under the Ancillary Agreements), shall not exceed twenty percent
(20 %) of the Purchase Price (herein "LIABILITY CAP").
9.5 The limitation of liabilities under Section 9.3 and Section 9.4 shall
not apply if the respective Purchaser Claim is based on intentional
behaviour of Infineon. The limitation of liabilities under Section 9.3
does not apply if the Purchaser Claim is based on a breach of a Covenant
of Infineon.
9.6 The Parties are in agreement that the remedies that Purchaser may have
against Infineon or any Seller for breach of obligations set forth in
this Agreement or any of the Ancillary Agreements are solely governed by
this Agreement, and the remedies
35
provided for by this Agreement shall be the exclusive remedies available
to Purchaser. Apart from the rights of Purchaser under Section 4.2,
Section 7 and Section 9 above (i) any right of Purchaser to withdraw
(zurucktreten) from this Agreement or to require the winding up of the
transaction contemplated hereunder (e.g. by way of gro(beta)er
Schadenersatz or Schadenersatz statt der Leistung), (ii) any claims for
breach of pre-contractual obligations (culpa in contrahendo, including,
but not limited to, claims arising under Sections 280 I, 241 (2), 311
(2) (3) German Civil Code) or ancillary obligations (positive
Forderungsverletzung, including, but not limited to, claims arising
under Sections 000, 000 XX, 000 Xxxxxx Xxxxx Xxxx), (xxx) frustration of
contract pursuant to Section 313 German Civil Code (Storung der
Geschaftsgrundlage), (iv) all remedies of Purchaser for defects of the
Assets under Sections 437 through 441 German Civil Code and (v) any and
all other statutory rights and remedies, if any, are hereby expressly
excluded and waived (verzichtet) by Purchaser, except claims for willful
deceit (arglistige Tauschung) and other intentional breaches of contract
(vorsatzliche Vertragsverletzungen). All rights of Seller pursuant to
sections 377 HGB and 442 BGB, except for the purposes of Section 7.3.3
above, are excluded.
The Parties are in agreement that Infineon's Guarantees are only
designed for the specific remedies of Purchaser set forth in Section 7
above and the restrictions contained in this Section 9 and that
Infineon's Guarantees shall not serve to provide Purchaser with any
other claims than those set forth in this Agreement. The Parties are
further in agreement that Section 444 German Civil Code shall not apply
to any of the provisions on liability in this Agreement because Infineon
has only given independent guarantees, but no representations with
respect to the quality of the Assets (Garantie fur die Beschaffenheit
der Sache) within the meaning of Section 444 German Civil Code.
9.7 This Section 9 shall also apply to any claims of Purchaser, if any,
under the Ancillary Agreements.
9.8 With respect to claims of Infineon arising under Sections 6 or 7.8, this
Section 9 shall apply mutatis mutandis.
10. PURCHASER'S COVENANTS
10.1 Purchaser undertakes and covenants that as soon as practicable after the
Closing Date, but in no event later than 6 (six) months after the
Closing Date Purchaser (i) shall remove or cause to be removed from the
Assets (other than inventory run-off in the ordinary course of business
up to 12 (twelve) months after the Closing Date), names,
36
marks and identifications heretofore used by Infineon or its Affiliates
and all variations and derivates thereof and logos relating thereto to
the extent they include the word "Infineon" or any derivation thereof or
combination therewith and (ii) will no longer produce any marketing
materials using the name "Infineon" or any derivation thereof or
combination therewith and (iii) cease using the name "Infineon" in any
way in its business activities.
10.2 Purchaser undertakes and covenants that after the Closing Date it shall
provide support to Infineon and Sellers as reasonably required to deal
with any warranty or similar claims relating to Products produced and
shipped under the responsibility of Infineon before the Closing Date.
Such support shall include, without limitation, the sale of Products to
the extent requested by Infineon. Such Products shall be provided to
Infineon either at Purchaser's then current manufacturing cost or, if
supplied to Purchaser by IFFO GmbH under the Berlin Transceiver Supply
Agreement or by Trutnov under the Transceiver Supply Agreement, at
Purchaser's cost, in either case plus three percent (3 %).
10.3 Purchaser will, upon request by Infineon, execute or procure the
execution of all additional documents or instruments as may reasonably
be required to give effect to the transactions contemplated in this
Agreement.
11. PURCHASER'S INDEMNITY
If Infineon or any of its Affiliates are held liable for any liability
arising in connection with the Assets by a third party, then Purchaser
shall indemnify and hold harmless Infineon in respect of the relevant
liability, unless Purchaser has the right to claim indemnification from
Infineon in respect of the relevant liability under the terms of this
Agreement. Purchaser shall in particular indemnify and hold harmless
Infineon and its Affiliates and their respective officers, directors,
employees and agents against any and all liability, loss, damage or
injury, together with all reasonable out-of-pocket costs and expenses
relating thereto, including reasonable legal fees, expenses and
disbursements, arising out of, connected with, or resulting from any
such third party claim. Section 7.5 shall apply mutatis mutandis.
37
E. MISCELLANEOUS
12. NON-COMPETE UNDERTAKING, SOLICITATION OF EMPLOYEES
12.1 Infineon agrees to not directly or indirectly, manufacture, develop or
sell any products similar to or derivative of the Products as of the
Closing Date (herein "RESTRICTED ACTIVITIES"), for three (3) years from
the Closing Date.
12.2 Nothing in Section 12.1 shall prevent Infineon during the three (3) year
period specified in Section 12.1 above from
- holding, directly and indirectly, ownership of an equity
interest not greater than 20 % in an entity engaged in the
Restricted Activities;
- from acquiring, directly or indirectly, shares in, or the assets
or undertaking of, any entity which carries on Restricted
Activities, provided (i) that such Restricted Activities do not
constitute the principal activities of the entity or business
acquired (the Restricted Activities shall constitute the
principal activities of an entity or business acquired if during
the four (4) consecutive calendar quarters prior to the
acquisition of the entity or business such activities
contributed more than 50 % of the total sales of the entity or
business acquired) (herein "COMPETING BUSINESS"), and (ii) that
Infineon shall cease to carry on, or to have such Competing
Business cease carrying on, the Restricted Activities within one
(1) year from completion of the relevant acquisition, unless (a)
the Competing Business or interest therein was acquired by
Infineon as part of a larger acquisition and the value properly
attributable to the Restricted Activities did not at the date of
acquisition amount to more than 20 % of the value of such larger
acquisition taken as a whole; or (b) the revenues of the
Competing Business during four (4) consecutive calendar quarters
prior to the acquisition were less than 50 % of the revenues of
Purchaser in the corresponding period, and
- fulfilling purchase orders transferred under this Agreement with
economic effect for Purchase in accordance with the Asset
Transfer Agreements.
12.3 The Parties are in agreement that Purchaser may offer permanent job
opportunities to employees of the FO Business Unit. Purchaser hereby
undertakes to notify Infineon about any such offer within nine (9))
months after the Closing Date and the terms and conditions included in
such offer.
38
13. COMPONENT AND SUBASSEMBLY SUPPLY AGREEMENT
Purchaser and Infineon shall conclude, promptly following the Closing
Date, a supply agreement or agreements pursuant to which Infineon will
supply to Purchaser integrated circuit components (herein "ICS"), 1310
nm DFB lasers manufactured at Infineon's Munich facility (herein "OPTO
CHIPS"), micromodules, including lasers on sub-mounts (herein
"MICROMODULES"), optical subassemblies, including TOs, (herein "OSAS")
and certain other components, if any, used in the manufacture of the
Products following the Closing Date (herein, collectively, the
"COMPONENT AND SUBASSEMBLY SUPPLY AGREEMENT"). The Component and
Subassembly Supply Agreement shall have the following principal terms,
and such other reasonable terms and conditions upon which the Parties
shall agree:
13.1.1 ICs
(a) The ICs to be supplied and the per unit prices for such
ICs shall be as set forth on Exhibit 13.1.1.
(b) Purchaser shall be entitled to place orders for
quantities of ICs sufficient to meet its forecasted
requirements for three (3) years following the Closing
Date.
(c) Payment terms for the ICs shall be forty-five (45) days
from the date of invoice.
(d) Purchase orders shall be submitted at least twelve (12)
weeks in advance of the required delivery date and may
be submitted at any time through September 30, 2005,
with the last scheduled delivery date on or before March
31, 2006.
(e) Finisar will, within a reasonable period after the
Closing Date, provide non-binding forecasts of its
expected IC requirements on a rolling three-month basis
up to the last delivery date.
13.1.2 Opto Chips
(a) The per unit purchase price for the Opto chips shall be
Infineon's standard cost plus three percent (3 %).
(b) Purchaser shall be entitled to place orders for one
year's forecasted demand for Opto chips relating to the
one (1) year following the
39
termination of Infineon's supply obligation, to be
shipped to Purchaser or to Infineon for the manufacture
of Micromodules.
(c) Payment terms for the Opto chips shall be forty-five
(45) days from the date of invoice.
(d) An initial purchase order for Opto chips shall be placed
on or before February 15, 2005. Thereafter, purchaser
orders shall be submitted at least thirty (30) days
prior to the required delivery date and may be submitted
at any time through April 30, 2005, with the last
scheduled delivery date on or before June 30, 2005.
13.1.3 Micromodules
(a) The per unit purchase price for the Micromodules shall
be Infineon's standard cost plus three percent (3 %).
(b) Purchaser shall be entitled to place orders for three
(3) years' forecasted demand for Micromodules relating
to the three (3) years following the Closing Date.
(c) Payment terms for the Micromodules shall be forty-five
(45) days from the date of invoice.
(d) Purchase orders shall be submitted at last thirty (30)
days prior to the required delivery date and may be
submitted at any time through May 31, 2005, with the
last scheduled delivery date on or before September 30,
2005.
13.1.4 OSAs
(a) The per unit purchase price for the OSAs shall be
Infineon's standard cost plus three percent (3 %).
(b) Purchaser shall be entitled to place orders for three
(3) years' forecasted demand for OSAs relating to the
three (3) years following the Closing Date.
(c) Payment terms for the OSAs shall be forty-five (45) days
from the date of invoice.
(d) Purchaser orders shall be submitted at last thirty (30)
days prior to the required delivery date and may be
submitted at any time through
40
September 30, 2005, with the last scheduled delivery
date on or before December 31, 2005.
13.1.5 Other Components
(a) It is understood that there are no components currently
manufactured by Infineon or its Affiliates for internal
use in the manufacture of Products other than those
described in Sections 13.1.1 through 13.1.4. However, if
the Parties identify any such components Infineon will
supply to Purchaser, in reasonable quantities, any such
components following the Closing Date until alternative
sources of supply of such components can be secured by
Purchaser, or until Infineon ceases to have the capacity
to manufacture such components, whichever first occurs.
(b) The per unit purchase price for such components shall be
Infineon's standard cost plus three percent (3 %).
13.1.6 Should Infineon change its current plans and defer the
termination of operations at any of its facilities, so that it
maintains the capacity to manufacture and supply any of the
foregoing components or subassemblies for periods longer than
contemplated by the foregoing provisions, Infineon will
negotiate in good faith with Purchaser to extend the applicable
supply periods.
14. RESTRICTION OF ANNOUNCEMENT / COOPERATION / CONFIDENTIALITY
14.1 Each of the Parties undertakes that prior to the Closing Date it will
not make an announcement in connection with this Agreement unless
required by applicable mandatory law or share exchange regulations or
unless the other Party hereto has given its consent to such
announcement, including the form of such announcement, which consents
may not be unreasonably withheld and may be subject to conditions. If
and to the extent any announcement or disclosure of information
regarding the subject matter of this Agreement is to be made under
applicable mandatory laws, in particular any applicable share exchange
rules, the Party being concerned shall not disclose any such information
without prior consultation with the other Parties. The Parties agree
that on the Signing Date the Parties will publish a joint press release
substantially in the form as attached as Exhibit 14.1 to this Agreement,
Infineon may publish an "ad hoc"-publication according to Section 15 of
the German Securities Exchange Act (Wertpapierhandelsgesetz - WpHG) and
Purchaser may publish a report
41
on Form 8-K with the SEC which shall be provided to Infineon for its
review prior to filing.
14.2 Upon and after the Closing Date, Infineon and Purchaser shall each use
their best efforts to execute and deliver or procure to be done,
executed and delivered all such further acts, deeds, documents,
instruments of conveyance, assignment and transfer that may be
reasonably necessary to implement the terms of this Agreement.
14.3 The Parties understand and agree that all Proprietary Information (as
defined in Section 14.5 below) shall be treated as confidential. The
receiving Party shall use the same degree of care as it uses with regard
to its own Proprietary Information to prevent disclosure, use or
publication of the disclosing Party's Proprietary Information.
Proprietary Information of the originating Party shall be held
confidential by the receiving Party above unless it is, has been or
shall be:
14.3.1 obtained legally and freely from a third party without
restriction;
14.3.2 independently developed by the receiving Party at a prior time
or in a separate and distinct manner without benefit of any of
the Proprietary Information of the disclosing Party, and
documented to be as such;
14.3.3 made available by the disclosing Party for general release
independent of the receiving Party;
14.3.4 within the public domain or later becomes part of the public
domain as a result of acts by someone other than the receiving
Party and through no fault or wrongful act of the receiving
Party.
14.4 A receiving Party may disclose Proprietary Information of a disclosing
Party to directors, officers, employees and advisors of the receiving
Party or its Affiliates who have undertaken in writing to keep
Proprietary Information disclosed hereunder confidential or are subject
to professional confidentiality obligations. Any disclosure hereof
required by legal process pursuant to this Section shall only be made
after providing the disclosing Party with notice thereof in order to
permit the disclosing Party to seek an appropriate protective order or
exemption. Violation by a Party, its directors, officers, employees or
its advisors of the foregoing provisions shall entitle the disclosing
Party, at its option, to obtain injunctive relief without a showing of
irreparable harm or injury. The provisions of this Section will be
effective for a period of two (2) years after the Closing Date.
42
14.5 "PROPRIETARY INFORMATION" shall mean the information created,
transferred, recorded or employed as part of, or otherwise resulting
from the activities undertaken pursuant to this Agreement or the
Disclosure Schedules and Exhibits hereto which constitutes the
confidential, proprietary or trade secret information of the disclosing
Party as well as the terms and conditions of this Agreement. Such
information may be of, but not limited to, a business, organizational,
technical, financial, marketing, operational, regulatory or sales nature
and shall include, without limitation, any and all source codes and
information relating to services, methods of operation, price lists,
customer lists, technology, designs, specifications or other proprietary
information of the business or affairs of a Party or its Affiliates.
Proprietary Information may either be in a written or an oral form.
15. NOTICES
All notices and other communications hereunder shall be made in writing
and shall be delivered or sent by registered mail, courier or telefax to
the addresses below or to such other addresses which may be specified by
any Party to the other Party in the future by notice delivered in such
manner:
If to Infineon or a Seller:
Infineon Technologies AG
Legal Department
Xxxxxxxx 00 00 00
00000 Xxxxxxx
Xxxxxxx
Telefax: x00 00 000 00 000
with a copy to:
Freshfields Bruckhaus Xxxxxxxx
Xx. Xxxxxxxxx Xxxxxxxxxx
Xxxxxxxxxxx(xxxx)x 00
00000 Xxxxxxx
Xxxxxxx
Telefax: x00 00 00 00 00 00
If to Purchaser:
Finisar Corporation
43
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
U.S.A.
Attention: Chief Executive Officer
Telefax: x0 (000) 000-0000
with a copy to:
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000-0000
U.S.A.
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telefax: x0 (000) 000-0000
and
Xxxxxx Xxxxxxx
Xxxxxxxxxxx 00x
00000 Xxxxxxxxxx
Xxxxxxx
Attention: Xx. Xxxxx Xxxxxxx
Telefax: x00 (0) 000 0000-000
16. MISCELLANEOUS
16.1 All expenses, costs, fees and charges in connection with the
transactions contemplated under this Agreement, including without
limitation, fees for legal and financial advisory services, shall be
borne by the Party commissioning the respective costs, fees and charges.
Purchaser shall be responsible for the payment of any sales, transfer or
stamp taxes, or other similar charges, payable by reason of the
transactions contemplated by this Agreement.
16.2 Effective upon the Closing, Purchaser hereby irrevocably and
unconditionally waives any and all claims against Infineon and its
Affiliates for the alleged infringement by Infineon and/or its
Affiliates of Purchaser's patents by the FO Business Unit prior to the
Closing Date.
16.3 All Exhibits and Disclosure Schedules to this Agreement constitute an
integral part of this Agreement and are incorporated herein by
reference.
44
16.4 This Agreement and the Ancillary Agreements, the Exhibits and Disclosure
Schedules to this Agreement above comprise the entire agreement between
the Parties concerning the subject matter hereof and supersede and
replace all oral and written declarations of intention made by the
Parties in connection with the contractual negotiations. In particular,
simultaneously with the execution of this Agreement, the Parties will
execute the Termination Agreement attached hereto as Exhibit 16.4 for
the purpose of terminating to the extent not previously terminated, (i)
the Restated Original Agreement and (ii) all ancillary agreements
entered into in connection with the Original Agreement and the Restated
Original Agreement, including without limitation the Stockholder
Agreement, Registration Rights Agreement and Voting Agreements referred
to therein. Changes or amendments to this Agreement (including this
Section 16.4) must be made in writing by the Parties or in any other
legally required form, if so required.
16.5 In consideration of the execution of this Agreement, subject to the
completion of the Closing, the Parties agree as follows:
16.5.1 Infineon shall, and shall procure that each Seller shall, on
behalf of itself and each of its respective officers, directors,
employees, agents, affiliates, successors and assigns (herein,
collectively, "SELLER PARTIES") hereby fully release and
discharge Buyer and each of its officers, directors, employees,
agents, affiliates, successors and assigns (herein,
collectively, "PURCHASER PARTIES") from any and all claims,
actions and causes of action, whether now known or unknown,
suspected or unsuspected that any of the Seller Parties has, had
or may have against any of the Buyer Parties based upon or
arising out of or in connection with any matter, fact, act or
omission whatsoever that occurred or existed at any time up to
and including the date of this Agreement and relating to or
arising from the Original Agreement, the Restated Original
Agreement, any ancillary agreement entered into in connection
therewith or the transactions contemplated thereby, including,
without limitation, any and all claims relating to Purchaser's
performance or non-performance of any of its obligations
thereunder.
16.5.2 Purchaser, on behalf of itself and each of the other Purchaser
Parties, hereby fully releases and discharges each of the Seller
Parties from any and all claims, actions and causes of action,
whether now known or unknown, suspected or unsuspected that any
of the Purchaser Parties has, had or may have against any of the
Seller Parties based upon or arising out of or in connection
with any matter, fact, act or omission whatsoever that occurred
or existed at any time up to and including the date of this
Agreement, and
45
relating to or arising from the Original Agreement, the Restated
Original Agreement or any ancillary agreement entered into in
connection therewith or the transactions completed thereby
including, without limitations, any and all claims related to
the performance or non-performance by Infineon or any of the
other Seller Parties of their respective obligations thereunder.
16.5.3 The Parties each acknowledge that they may have sustained
damages, expenses and losses which are presently unknown or not
suspected. The parties each acknowledge that this Agreement and
the foregoing releases have been negotiated and agreed upon in
light of such realization and, being fully advised thereof, the
Parties each agree that the releases herein given shall be and
remain in effect as full and complete releases notwithstanding
discovery of the existence of any such additional or different
damages, expenses or losses. The Parties expressly waive any and
all rights that they may have under any statute or legal
principle which would limit the effect of the releases herein to
claims actually known or expected to exist at the time of
execution of this Agreement.
16.5.4 Each of the Parties warrants and represents to the other that it
is the sole and lawful owner of all rights, title and interest
in and to all of the claims herein released by such Party and
that there has been no assignment, sale or other transfer or
disposition, voluntarily, by operation of law or otherwise, of
any such claim or any part or portion thereof.
16.5.5 Each of the Parties covenants and agrees not to commence
voluntarily, aid in any way, prosecute or cause to be commenced
or prosecuted against any other Party any legal action or other
proceeding based upon any of the claims released hereby.
16.6 No Party shall be entitled to assign any rights or claims under this
Agreement or any of the Ancillary Agreements without the written consent
of the other Parties.
16.7 Interest payable under any provision of this Agreement or any of the
Ancillary Agreements shall be calculated on the basis of actual days
elapsed divided by 360.
16.8 "BUSINESS DAYS" (Werktage) (including, for the avoidance of doubt,
Saturdays) and banking days (Bankarbeitstage) shall be those prevailing
in Frankfurt am Main and the City of New York.
16.9 Any currency conversions shall be determined using (i) the European
Central Bank fixing rates for the respective date which are published
both by electronic market
46
information providers (e.g. Reuters page ECB37) and on the ECB's website
xxx.xxx.xxx shortly after 2.15 p.m. CET or, (ii) in the event such rates
are not available on such date, Reuters world sport rates (mid rate on
page FX=) taken as close as possible to 2.15 p.m. CET shall be used ((i)
or (ii), as the case may be.
16.10 Neither this Agreement nor any of the Ancillary Agreements shall grant
any rights to, or is intended to operate for, the benefit of third
parties unless otherwise explicitly provided for herein.
16.11 In this Agreement the headings are inserted for convenience only and
shall not affect the interpretation of this Agreement; where a German
term has been inserted in quotation marks and/or italics it alone (and
not the English term to which it relates) shall be authoritative for the
purpose of the interpretation of the relevant English term in this
Agreement.
16.12 No Party, except as provided otherwise herein or in the respective
Ancillary Agreement, shall be entitled (i) to set-off (aufrechnen) any
rights and claims it may have against any rights or claims any other
Party may have under this Agreement or under any of the Ancillary
Agreements or (ii) to refuse to perform any obligation it may have under
this Agreement or under any of the Ancillary Agreements on the grounds
that it has a right of retention (Zuruckbehaltungsrecht) unless the
rights or claims of the relevant Party claiming a right of set-off
(Aufrechnung) or retention (Zuruckbehaltung) have been acknowledged
(anerkannt) in writing by the relevant other Party or have been
confirmed by final decision of a competent court (Gericht) or
arbitration court (Schiedsgericht).
16.13 This Agreement shall be governed by, and be construed in accordance
with, the laws of the Federal Republic of Germany, without regard to
principles of conflicts of laws and without regard to the UN Convention
on the Sale of Goods. All disputes arising in connection with this
Agreement or its validity shall be finally settled by three arbitrators
in accordance with the Arbitration Rules of the German Institution of
Arbitration e.V. (DIS) without recourse to the ordinary courts of law.
The venue of the arbitration shall be Munich. The language of the
arbitral proceedings shall be English.
16.14 Purchaser shall maintain at all times a duly appointed agent in Germany,
which may be changed upon ten (10) days prior written notice to Seller,
for the service of any process or summons in connection with any issue,
litigation, action or proceeding brought in any such court or arbitral
tribunal in connection with this Agreement. Any such process or summons
may also be served on Purchaser by mailing a copy of such process or
summons to such agent at its address set forth below, and in the manner
47
provided in Section 19 above. Purchaser herewith appoints Xx. Xxxxx
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxxxxxx 00x, 00000 Xxxxxxxxxx, Xxxxxxx,
Telefax: x00-(0)000 00 00-000 as such agent. Purchaser hereby
irrevocably consents to the exclusive personal jurisdiction and venue of
any court or arbitral tribunal of competent jurisdiction in Germany in
any action, claim or proceeding arising out of or in connection with
this Agreement and agrees not to commence or prosecute any action, claim
or proceeding or to enforce an arbitration decision in any other court.
Purchaser hereby expressly and irrevocably waives and agrees not to
assert the defense of lack of personal jurisdiction, forum non
conveniens or any similar defense with respect to the maintenance of any
such action or proceeding in Germany.
16.15 In the event that any terms or provisions of the Ancillary Agreements
conflict with the terms or provisions of this Agreement, the terms and
provisions of this Agreement shall prevail, unless specifically provided
for otherwise in the Ancillary Agreements.
16.16 In the event that one or more provisions of this Agreement shall, or
shall be deemed to, be invalid or unenforceable, the validity and
enforceability of the other provisions of this Agreement shall not be
effected thereby. In such case, the Parties hereto agree to recognize
and give effect to such valid and enforceable provision or provisions
which correspond as closely as possible with the commercial intent of
the Parties. The same shall apply in the event that the Agreement
contains any gaps (Vertragslucken). In case the invalidity of a
provision is caused by a measurement of performance or time (period or
certain date) set forth therein, the respective provision shall be
deemed agreed with a legally permissible measurement reaching as close
as possible to the original measurement. The Parties are aware of the
decision of the German Federal Court (Bundesgerichtshof) of 24 September
2002. It is nevertheless the explicit will of the Parties that this
Section 16.16 shall not lead to a mere shifting of the burden of proof
(Beweislastumkehr), but that Section 139 BGB shall in its entirety be
agreed as non-applicable.
Executed on January 25th, 2005 at Munich, Germany
Finisar Corporation Infineon Technologies AG
/s/ X.X. Xxxxxxx /s/ Xxxx Xxxxxxxx /s/ Xxxxxx Xxxxxx
---------------- ----------------- -----------------
By: X.X. Xxxxxxx By: Xxxx Xxxxxxxx Xxxxxx Xxxxxx
Title: CFO Title: SD M&A Corp. Legal Cousel
