EXHIBIT 10.26
PURCHASE AND SALE AGREEMENT
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THIS AGREEMENT is made and entered into this 22nd day of March, 2000 (the
"Effective Date") by and between ZiLOG, Inc., a Delaware corporation
("ZiLOG"); Xxxxxxxxx X. Xxxx, an individual ("Xxxx"); the shareholders listed
on Exhibit "A" attached hereto under the heading "Remaining Shareholders"
(collectively, the "Remaining Shareholders" and individually, a "Remaining
Shareholder"); Virtual IP Group, Inc., a California corporation ("VIP");
Qualcore Group, Inc., a Delaware corporation ("Qualcore"); and Qualcore Logic
Private Limited, a Hyderabad corporation ("Qualcore India"), and is made with
reference to the following facts and objectives:
R E C I T A L S
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X. Xxxx and the Remaining Shareholders, collectively, own Seven Million One
Hundred Ninety-one Thousand (7,191,000) shares of common stock in Qualcore,
which constitutes fifty-one percent (51%) of the issued and outstanding shares
of Qualcore.
B. Qualcore is the parent corporation and sole shareholder of VIP and
Qualcore India.
C. DII Group, Inc., a Delaware corporation ("DII") originally acquired and
currently owns Six Million Nine Hundred Nine Thousand (6,909,000) shares of
stock in Qualcore, which constitutes the remaining forty-nine percent (49%) of
the issued and outstanding shares of stock in Qualcore.
D. In addition to the foregoing, Qualcore desires to authorize and grant
options to certain employees of Qualcore and/or its subsidiaries under a stock
option plan or other arrangement to be developed whereby such employees will
have the option to acquire an additional Nine Hundred Thousand shares (900,000)
of common stock in Qualcore.
E. DII has recently agreed to merge with Flextronics International, Ltd.
("Flextronics") whereby Flextronics will be the surviving corporation in such
merger.
X. Xxxx desires to sell certain amounts of stock he owns in Qualcore to ZiLOG
in order to raise some of the funds necessary to acquire all of the shares in
Qualcore owned by DII and/or Flextronics and some or all shares owned by certain
other shareholders of Qualcore which, following the same, will result in ZiLOG
owning twenty percent (20%) of Qualcore, taking into account both the issued and
outstanding stock in Qualcore and the options anticipated to be granted to
employees to acquire stock in Qualcore, and Xxxx and some or all of the
Remaining Shareholders owning all remaining issued and outstanding equity
interests in Qualcore.
G. ZiLOG desires to obtain an option to acquire all of the issued and
outstanding shares of stock in Qualcore and all options to acquire stock in
Qualcore which may be granted to employees of Qualcore and/or its subsidiaries.
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NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this agreement, the parties agree
as follows:
1. Acquisition of Stock: ZiLOG agrees to purchase from Xxxx, and Xxxx agrees
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to sell to ZiLOG, Three Million (3,000,000) shares of common stock in
Qualcore (the "Initial Stock Acquisition"), which, as of the Effective Date,
represents twenty percent (20%) of the total issued and outstanding shares
of stock in Qualcore plus the options to acquire stock in Qualcore which are
anticipated to be granted to employees of Qualcore and/or its subsidiaries.
The closing date for the Initial Stock Acquisition shall occur on the First
Closing Date (as defined in Paragraph 14, below). The purchase price for the
Initial Stock Acquisition shall be Four Million Four Hundred Twenty-four
Thousand Dollars ($4,424,000), which shall be payable in cash on the First
Closing Date. ZiLOG, Xxxx, the Remaining Shareholders and Qualcore shall,
concurrently herewith, enter into an investor rights agreement which shall
be effective as of the First Closing Date (the "Investor Rights Agreement")
in the form attached hereto as Exhibit "D".
2. Grant of Option to Acquire Shares: Xxxx and each of the Remaining
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Shareholders hereby grant ZiLOG the option to acquire all of the shares of
stock and all other claims, rights and causes of action each of them now own
or hereafter acquire in Qualcore and any and all rights, claims and causes
of action any of them may have against Qualcore and/or any of its
subsidiaries, whether or not such rights, claims or causes of action are
known (collectively, the "Option Shares"). This option shall be exercised,
if at all, by delivery of written notice of exercise (the "Exercise Notice")
by ZiLOG to Qualcore, Xxxx and each of the Remaining Shareholders who
continue to hold Option Shares, no later than the earlier of June 30, 2001,
or thirty (30) days following the date of ZiLOG's IPO. Notwithstanding the
foregoing, however, in the event ZiLOG's IPO occurs prior to June 30, 2001,
then ZiLOG must exercise the option set forth herein within thirty (30) days
following such IPO.
3. Option Consideration: The consideration for the option to acquire the
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Option Shares granted pursuant to Paragraph 2, above, shall be Three Million
Five Hundred Seventy-six Thousand Dollars ($3,576,000), of which One Million
Seventy-six Thousand Dollars ($1,076,000) shall be payable in cash at the
First Closing, and the remaining Two Million Five Hundred Thousand Dollars
($2,500,000) shall be payable in cash at the Second Closing (as defined in
Paragraph 14, below). The payment of this option consideration shall be made
to Xxxx, who shall be responsible for distributing such cash to any
Remaining Shareholders in accordance with Xxxx'x agreement or understanding
with such Remaining Shareholders. The Remaining Shareholders acknowledge and
agree that the payment of the option consideration to Xxxx hereunder shall
constitute full performance of ZiLOG's obligation to deliver such option
consideration. Each Remaining Shareholder acknowledges that they have a
previous agreement or understanding with Xxxx concerning the disposition of
this option consideration, and, upon ZiLOG paying the option consideration
to Xxxx, each Remaining Shareholder agrees to hold ZiLOG harmless from and
against any and all claims, liabilities, causes of action or damages any of
them may have or incur as a result of ZiLOG paying such option consideration
to Xxxx. In addition to the foregoing, the option consideration
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includes the Initial Stock Acquisition referenced in Paragraph 1, above, and
other valuable consideration, the receipt of which is hereby acknowledged by
Xxxx and the Remaining Shareholders. Xxxx and the Remaining Shareholders
acknowledge that the provision of funds by ZiLOG to allow Xxxx and/or the
Remaining Shareholders to acquire the shares of stock from DII and/or
Flextronics will confer additional valuable benefit to each of them, and
they acknowledge that the granting of the options to acquire the Option
Shares is a material and substantial consideration for ZiLOG agreeing to the
Initial Stock Acquisition hereunder. In the event the option to acquire the
shares is exercised, then the option consideration shall be applied towards
the Purchase Price (as defined in Paragraph 5, below). In the event the
option is not exercised, then the option consideration shall be considered
nonrefundable.
4. Use of Cash Received: Xxxx and the Remaining Shareholders all agree that
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the cash received by Xxxx and/or the Remaining Shareholders on account of
the Initial Stock Acquisition and on account of the option consideration
shall be used solely for the following purposes:
x. Xxxx has entered or shall enter an agreement with DII and/or Flextronics
to acquire all of the shares of stock and any and all other rights held
by DII and/or Flextronics in Qualcore (other than contractual rights DII
may have with respect to the provision of services or of intellectual
property by VIP to DII) which, as of the Effective Date, equals Six
Million Nine Hundred Nine Thousand (6,909,000) shares of common stock in
Qualcore, and represents forty-nine percent (49%) of the currently
issued and outstanding equity interests in Qualcore. Such agreement
shall provide that Xxxx and/or the Remaining Shareholders shall acquire
such stock for a total amount equal to Nine Million Six Hundred Seventy-
two Thousand Six Hundred Dollars ($9,672,600), plus forty-six and 06/100
percent (46.06%) of the cash on hand in Qualcore, VIP and Qualcore India
as of the closing of that transaction, which is estimated to be a total
purchase price equal to Ten Million Two Hundred Twenty-five Thousand
Three Hundred Twenty Dollars ($10,225,320), consisting of an amount
equal to Five Million Five Hundred Thousand Dollars ($5,500,000) in
cash, with the balance estimated at Four Million Seven Hundred Twenty-
five Thousand Three Hundred Twenty Dollars ($4,725,320) being
represented by a purchase money promissory note from Xxxx, as maker, to
DII and/or Flextronics, as holder. A copy of the agreement under which
Xxxx will acquire the stock in Qualcore from DII and/or Flextronics is
attached hereto as Exhibit "C" (the "DII Agreement"). The funding for
the cash portion of this acquisition shall be funded from the cash
received by Xxxx on account of the Initial Stock Acquisition, from the
cash received by Xxxx on account of the option consideration payable on
the First Closing Date, and from any other independent sources Xxxx may
require.
b. The balance of the cash shall be distributed as determined by Xxxx and
the Remaining Shareholders.
5. Exercise of Option; Purchase Price: In the event the option to purchase the
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Option Shares is exercised as provided herein, then the purchase price shall
be an amount equal
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to Seventeen Million Six Hundred Ninety-six Thousand Dollars ($17,696,000)
(the "Purchase Price") . The option consideration paid by ZiLOG shall be
applied against and reduce the amount of the Purchase Price which is
required to be paid by ZiLOG on the Final Closing Date, resulting in a total
net payment if the option hereunder is exercised of Fourteen Million One
Hundred Twenty Thousand Dollars ($14,120,000) payable on the Final Closing
Date (the "Net Final Payment"). The Net Final Payment shall be allocated
pro-rata among Xxxx and the Remaining Shareholders in proportion to the
number of shares each of them hold in Qualcore.
6. Payment of Purchase Price: Upon ZiLOG exercising its option to acquire the
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Option Shares, payment of the Purchase Price shall be paid as follows:
a. Payment of the Purchase Price shall be paid as follows: (i) Three
Million Five Hundred Seventy-six Thousand Dollars ($3,576,000), in the
form of the option consideration paid by ZiLOG on the First Closing Date
and the Second Closing Date, shall be applied against and reduce the
amount of the Purchase Price; (ii) part of the remaining Purchase Price
payable on the Final Closing Date shall be paid in cash in an amount not
to exceed Eight Million One Hundred Thousand Dollars ($8,100,000); and
(iii) the balance of the Purchase Price payable on the Final Closing
Date shall be paid through the issuance of common stock in ZiLOG (the
"ZiLOG Stock"). The number of shares of ZiLOG Stock to be issued shall
be determined by dividing the remainder dollar amount to be paid in
ZiLOG Stock by an amount computed as follows (the "Conversion Price"):
i. The asking price of ZiLOG Stock as of 4:00 p.m. in New York City on
the first day of ZiLOG's initial public offering ("IPO"), and the
asking price as of 4:00 p.m. in New York City on each of the next
four (4) trading days, shall be determined.
ii. Each of the five (5) closing prices determined pursuant to
subparagraph (i), above, shall be added together.
iii. The sum computed pursuant to subparagraph (ii), above, shall be
divided by five (5), which shall be the Conversion Price for
purposes of this Agreement.
The parties agree that the Conversion Price, as calculated above, shall,
for purposes of this Agreement, be deemed the fair market value of each
share of ZiLOG Stock to be issued to Xxxx and the Remaining Shareholders
at the Final Closing Date.
b. Exhibit "B" sets forth the Net Final Payment amounts to be received by
Xxxx and the Remaining Shareholders in exchange for their shares of
Qualcore. This schedule presumes that Nine Hundred Thousand (900,000)
options to acquire stock in Qualcore will be granted to the employees of
Qualcore and/or its subsidiaries, and a pro-rata portion of the Net
Final Payment is allocated to "Employee Option Holders" on the basis of
this presumption. In the event some
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or al of the options are not, in fact, granted prior to the Final
Closing Date, than any amounts which are allocable to those options
which are not granted shall be reallocated proportionately to Xxxx, the
Remaining Shareholders and to those employees who were, in fact, granted
such options. A portion of the Net Final Payment will be made in cash,
and a portion of the Net Final Payment shall be made in ZiLOG Stock. The
amount of cash and the value of shares of ZiLOG Stock to be issued to
Xxxx, each Remaining Shareholder and each the employees, collectively,
who are anticipated to be granted Nine Hundred Thousand (900,000)
options to acquire stock in Qualcore are dollar value denoted on Exhibit
"B". The number of shares of ZiLOG Stock shall be the value denoted as
being received in ZiLOG Stock divided by the Conversion Price. No change
may be made to Exhibit "B" following the execution of this Agreement
without the prior written consent of ZiLOG, which consent may be given
or withheld in ZiLOG's sole and absolute discretion.
c. Notwithstanding the foregoing, ZiLOG may, in its sole discretion,
substitute cash in favor of ZiLOG Stock for any part of the
consideration payable to Xxxx and/or the Remaining Shareholders
hereunder. If ZiLOG has not had its IPO on the Final Closing Date, and
it has exercised its option to acquire the Qualcore shares pursuant
hereto, it shall pay the entire consideration to Xxxx and/or the
Remaining Shareholders in cash or in ZiLOG Stock at a Conversion Price
to be determined by agreement between the parties hereto; provided,
however, that if Xxxx or any Remaining Shareholder does not desire to
receive ZiLOG Stock, such person shall be entitled to receive cash in
lieu thereof, and, provided further, that the Conversion Price shall be
determined by agreement between ZiLOG and a majority in interest of
those persons electing to receive ZiLOG Stock, which Conversion Price,
once agreed, shall be binding on ZiLOG and all persons electing to
receive ZiLOG Stock. In the event ZiLOG exercises its right to pay cash
in lieu of ZiLOG Stock, it shall notify Xxxx and the Remaining
Shareholders of its desire to substitute cash for a portion of the
Purchase Price hereunder prior to the Final Closing Date. Any payment of
cash pursuant to an election by ZiLOG to pay cash rather than ZiLOG
Stock shall be paid out of the general funds of ZiLOG as and when the
same become due.
7. Pledge of Optioned Shares: Xxxx and the Remaining Shareholders agree to
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pledge all of the Option Shares in which ZiLOG has an option to purchase
pursuant to the terms of the pledge agreement attached hereto as Exhibit "E"
(the "Option Pledge Agreement") for purposes of perfecting ZiLOG's option
hereunder. In the event employee stock options are granted to employees of
Qualcore and/or its subsidiaries following the date of this Agreement, such
grants shall specifically provide that the options and/or shares received
thereunder constitute Option Shares under this Agreement, and any such
employees shall execute an agreement or agreements specifically agreeing to
be treated as a Remaining Shareholder hereunder, with all rights,
restrictions and obligations of a Remaining Shareholder hereunder including,
without limitation, the obligation to execute all agreements required to be
executed by all Remaining Shareholders hereunder, and shall be required to
assign such option and/or pledge any shares received to ZiLOG as security
for the option granted hereunder.
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8. Stockholder Agreement: Xxxx and the Remaining Shareholders agree to
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execute a stockholder agreement in the form attached hereto as Exhibit "F"
(the "Stockholder Agreement") pursuant to which ZiLOG and/or its nominee
shall be given the right to vote any shares in Qualcore outstanding in a
manner which will give ZiLOG's nominees at least one director on the Board
of Directors of Qualcore. In addition, Xxxx and the Remaining Shareholders
agree that the Certificate of Incorporation and the Bylaws of Qualcore will
be amended, as provided in Exhibit "G" and "H", respectively, to provide
that certain major decisions made prior to June 30, 2001, set forth in such
Certificate and Bylaws require the agreement of ZiLOG's designated director
in Qualcore and/or require the approval of eighty-five percent (85%) of the
issued and outstanding shares of stock in Qualcore in order for such
decisions to be effective. These provisions shall expire by their terms on
June 30, 2001. Notwithstanding the foregoing and any provision in the
Restated Certificate of Incorporation, ZiLOG agrees that it will vote its
shares and direct its designated director to vote in favor of any stock plan
or issuance for the benefit of the employees of Qualcore and/or its
subsidiaries in an amount not to exceed Nine Hundred Thousand (900,000)
shares of stock, as long as the plan requires that any person receiving
grants of stock or grants of stock options to, as a condition to receiving
such grant, execute such agreement or agreements specifically agreeing to be
treated as a Remaining Shareholder hereunder, with all rights, restrictions
and obligations of a Remaining Shareholder hereunder including, without
limitation, the obligation to execute all agreements required to be executed
by all Remaining Shareholders hereunder, and shall be required to assign
such option and/or pledge any shares received to ZiLOG as security for the
option granted hereunder, and such other agreements such that ZiLOG will
have the same rights against such employees as it has against any and all
other Remaining Shareholders.
9. Representations and Covenants of Qualcore, VIP, Qualcore India, Xxxx and the
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Remaining Shareholders: Qualcore, VIP, Qualcore India, Xxxx and the
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Remaining Shareholders hereby make the following covenants, agreements,
representations and warranties:
a. Qualcore, VIP and Qualcore India have good and marketable title to all
of its assets free and clear of any and all claims, liabilities, liens
and encumbrances of any kind or character.
b. The Option Shares, together with the Initial Stock Acquisition,
represents all of the issued and outstanding stock of Qualcore; there
are no other equity interests which are outstanding in Qualcore; and
there are no other options, warrants or rights of any kind or character
to acquire any equity interest in Qualcore, VIP or Qualcore India.
c. Neither Qualcore, VIP nor Qualcore India shall issue any additional
shares of stock, preferred or common, or any other equity interests in
either of them, or issue any options, warrants or other rights to
acquire any of the foregoing, or incur any debts or liabilities other
than those incurred in the normal course of business, without the prior
written consent of ZiLOG at any time prior to the Final Closing Date.
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x. Xxxx and the Remaining Shareholders shall, upon the exercise of the
option by ZiLOG, deliver to ZiLOG on the Final Closing Date any
instruments of assignment as may be necessary or appropriate to transfer
title in all of the Option Shares to ZiLOG.
e. There has been no transfer of any significant asset of Qualcore, VIP or
Qualcore India over the past twelve (12) months, and there shall be no
such transfer prior to the Final Closing Date, except as may have
occurred or occurs in the ordinary course of such entity's business.
f. Qualcore, VIP and Qualcore India have performed and shall continue to
perform all obligations they are required to perform under any and all
agreements which they may have at any time with any third parties; and
neither Qualcore, VIP or Qualcore India is or will be in default under
the terms and conditions of any agreements it may, at any time, have
with any third parties.
g. Qualcore is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware, and has all necessary corporate
powers to own its properties and to operate its business as now owned
and operated by it. Neither the ownership of its properties nor the
nature of its business requires Qualcore to be qualified to do business
in any jurisdiction other than Delaware.
h. VIP is a corporation duly organized, validly existing, and in good
standing under the laws of California, and has all necessary corporate
powers to own its properties and to operate its business as now owned
and operated by it. Neither the ownership of its properties nor the
nature of its business requires VIP to be qualified to do business in
any jurisdiction other than California.
i. Qualcore India is a corporation duly organized, validly existing, and in
good standing under the laws of Hyderabad, India, and has all necessary
corporate powers to own its properties and to operate its business as
now owned and operated by it. Neither the ownership of its properties
nor the nature of its business requires Qualcore India to be qualified
to do business in any jurisdiction other than in Hyderabad, India.
j. Qualcore, VIP and Qualcore India each owns or possesses sufficient legal
rights to all patents, patent applications, trademarks, service marks,
trade names, copyrights, trade secrets, information and other
proprietary rights and processes necessary for its business as now
conducted and as proposed to be conducted (collectively, the
"Intellectual Property"), without any infringement of the rights of
others. Except as set forth in a separate written document delivered by
Qualcore to ZiLOG, there are no outstanding options, licenses or
agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary
rights and processes of any other person or
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entity other than such licenses or agreements arising from the purchase
of "off the shelf" or standard products. Neither Qualcore, VIP nor
Qualcore India has received any communications alleging that any of them
have violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights,
trade secrets or other proprietary or intellectual property rights of
any other person or entity. Neither Qualcore, VIP nor Qualcore India is
aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to their
employer or that would conflict with their employer's business as
proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the business of its employer by the
employees of Qualcore, VIP or Qualcore India, nor the conduct of
Qualcore's, VIP's or Qualcore India's business as proposed, will
conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. It is not
currently, nor will it be in the future, necessary to utilize any
inventions, trade secrets or proprietary information of any employees of
Qualcore, VIP or Qualcore India made prior to their employment by
Qualcore, VIP and/or Qualcore India, except for inventions, trade
secrets or proprietary information that have been assigned to the
respective employer.
k. Qualcore is the sole owner of all equity interests outstanding in VIP
and in Qualcore India, free and clear of any and all liabilities,
claims, liens or encumbrances of any kind, and no person or entity has
any options, warrants or any other rights to acquire any equity interest
in either VIP or Qualcore India.
l. Qualcore, VIP and Qualcore India has supplied copies of all agreements
which any of them have entered into over the past four (4) years (the
"Contracts"), and such Contracts are full and complete copies of all
such agreements.
m. Attached hereto as Exhibit "I" are copies of all of the financial
statements, tax returns and other financial reports or tax filings from
Qualcore, VIP and Qualcore India for the past three (3) years (the
"Financial Statements"). All Financial Statements supplied hereunder are
true and correct, fully and accurately report all financial transactions
of the respective entity to which it relates; are prepared in accordance
with generally accepted accounting principals except as may be
specifically noted thereon; and such Financial Statements do not fail to
state any material fact which would cause such Financial Statements not
to be misleading as presented.
n. All technology, know-how and other intellectual property owned by, used
by or delivered or made available to third parties by Qualcore, VIP or
Qualcore India were developed by or for Qualcore, VIP or Qualcore India;
do not make use of or incorporate in any way any intellectual property
rights belonging to any third party; and do not infringe on the patent
rights, copyrights, trade secret rights or other intellectual property
rights of any third party.
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o. Qualcore, VIP and Qualcore India are the sole and exclusive owners of
all technology, know-how and other intellectual property used by any of
them in their respective businesses; and no transfer of any of the
foregoing has been made by any of them within the past twelve (12)
months.
p. Attached hereto as Exhibit "J" is a listing of all employees of
Qualcore, VIP and Qualcore India which devote substantially all of their
time to the business affairs of their respective employer. All of such
employees have been paid all compensation due to them as a result of
their employment with their respective employer except for any accrued
vacation duly reflected on the Financial Statements of such employees'
employer including, without limitation, wages, benefits, bonuses and
profit-sharing, and all requirements of law concerning benefit plans
including, without limitation, the requirements imposed by any United
States or state laws including, without limitation, the Employee
Retirement and Income Security Act ("ERISA") and all requirements
imposed by any Indian or Hyderabad laws, have been complied with. There
are no collective bargaining agreements in force or effect concerning
such employees, there are no threatened labor disputes by such
employees, and there are no unfunded vested benefits under any
retirement plan maintained by any of these entities.
q. Qualcore, VIP and Qualcore India shall continue to maintain in full
force and effect through the Final Closing Date all existing insurance
policies currently being maintained by such entities including, without
limitation, any insurance policies covering any assets owned by any of
them, any comprehensive general liability policies, and any worker's
compensation insurance. Each of them shall, at all times prior to the
Final Closing Date, pay all premiums which become due prior to the
latest date on which failure to pay such premiums would result in
cancellation of such policies.
r. The consummation of the transactions contemplated by this agreement will
not result in or constitute any of the following: (1) a breach of any
term or provision of this Agreement; (2) a default or an event that,
with notice or lapse of time or both, would be a default, breach or
violation of the articles of incorporation or bylaws of Qualcore, VIP or
Qualcore India, or any lease, license, promissory note, conditional
sales contract, commitment, employee plan, indenture, mortgage, deed of
trust or other agreement, instrument or arrangement to which Qualcore,
VIP, Qualcore India, Xxxx or the Remaining Shareholders is a party or by
which any of them, or the property of any of them, is bound, or which
may result in the creation or imposition of any lien, charge or
encumbrance on any of the properties of any of them.
s. Qualcore, VIP, Qualcore India, Xxxx and the Remaining Shareholders each
has the right, power, legal capacity, and authority to enter into and
perform its obligations under this agreement, and no approvals or
consents of any persons are necessary in connection with it. The
execution and delivery of this agreement by Qualcore, VIP, Qualcore
India, Xxxx and the Remaining Shareholders has been
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duly authorized by all necessary corporate action on the part of the
respective party.
t. Qualcore, VIP and Qualcore India shall each use its best efforts to
preserve its business organizations intact, to keep available to each of
them its present officers and employees, and to preserve its present
relationships with suppliers, customers, clients and others having
business relationships with them.
u. All tax returns of any kind or character which are required to be filed
by Qualcore, VIP and Qualcore India have been accurately prepared and
filed, as required by law, and all taxes of any kind or character
including, without limitation, all federal, state and local employment
taxes, sales taxes, excise taxes, and income taxes, together with any
taxes required to be withheld from employees and/or customers and
required to be remitted to the relevant taxing authorities, have been
withheld and paid as required. Qualcore, VIP and Qualcore India further
agree that they will accurately prepare and file all tax returns of any
kind or character required to be filed following the date hereof, and
will pay all taxes of any kind or character required to be paid by any
of them following the date hereof.
v. None of the representations and warranties made by Qualcore, VIP,
Qualcore India, Xxxx or the Remaining Shareholders contains or will
contain any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
w. The authorized number of shares of common stock of Qualcore are Twenty
Million (20,000,000) shares; the authorized number of common stock of
VIP are Fifteen Million (15,000,000) shares, and the authorized number
of common stock of Qualcore India are Six Million (6,000,000) shares,
and no other authorized equity exists in any of these entities. The
total number of shares issued by Qualcore are Fourteen Million One
Hundred Thousand (14,100,000) shares of common stock, plus it is
anticipated that employees of Qualcore and/or its subsidiaries will be
granted employee stock options and/or employee stock grants giving such
employees, collectively, the option to acquire and/or grant of no more
than Nine Hundred Thousand (900,000) shares of common stock in Qualcore
to be proposed by the officers of Qualcore for approval by the board of
directors and, if required in the opinion of counsel for Qualcore,
shareholders of Qualcore; the total number of shares issued by VIP are
Nine Million One Hundred Twenty-three Thousand (9,123,000) shares of
common stock; and the total number of shares issued by Qualcore India
are One Million Three Hundred Seventy-five Thousand Six Hundred
(1,375,600) shares of common stock, and no other equity shares are
issued in any of the foregoing entities. It is anticipated that, within
the next several months, Qualcore India will issue an additional Two
Million One Hundred Seventy-five Thousand (2,175,000) shares of its
common stock to Qualcore to facilitate capitalization of Qualcore India.
All issued and outstanding shares of stock in each of these entities (i)
have been duly authorized and validly issued to Xxxx and/or the
Remaining Shareholders as listed on Exhibit "A" attached hereto;
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(ii) are fully paid and nonassessable, and (iii) were issued in
compliance with all applicable state and federal laws concerning the
issuance of securities. Attached hereto as Exhibits K, L and M,
respectively, are full and complete copies of the Articles of
Incorporation and other organizational documents of Qualcore, VIP and
Qualcore India; and attached hereto as Exhibits N, O and P,
respectively, are full and complete copies of the bylaws of Qualcore,
VIP and Qualcore India. The rights, preferences, privileges and
restrictions of the shares are as stated in the articles of
incorporation and/or bylaws of the respective entity issuing the same.
There are no outstanding options, warrants, rights (including conversion
or preemptive rights and rights of first refusal), proxy or shareholder
agreements, or agreements of any kind for the purchase or acquisition
from any of the entities listed above, or from Xxxx or the Remaining
Shareholders, of any of any of the foregoing entities' securities. When
the Option Shares are transferred to ZiLOG in accordance with the
provisions of this Agreement, the Option Shares will be validly issued,
fully paid and nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Option Shares may be subject
to restrictions on transfer under state and/or federal securities laws
or as otherwise required by such laws at the time a transfer is
proposed.
x. To the knowledge of Qualcore, VIP, Qualcore India, Xxxx and the
Remaining Shareholders, there is no action, suit, proceeding or
investigation pending or to the knowledge of Qualcore, VIP, Qualcore
India, Xxxx or the Remaining Shareholders, currently threatened against
Qualcore, VIP, Qualcore India, for any claim whatsoever; or pending
against Xxxx or the Remaining Shareholders which involve the Option
Shares; or that questions the validity of this Agreement or the right of
the parties to enter into any of such the agreements contemplated
hereby; or to consummate the transactions contemplated hereby; or which
might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of
Qualcore, VIP or Qualcore India, financially or otherwise, or any change
in the current equity ownership of Qualcore, VIP or Qualcore India; nor
are any of the foregoing aware that there is any basis for any such
claims. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor) involving the prior employment of any
employees or officers of Qualcore, VIP or Qualcore India, their use in
connection with their respective employer's business of any information
or techniques allegedly proprietary to any of their former employers, or
their obligations under any agreements with prior employers. None of the
parties hereto is a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency
or instrumentality. To the best knowledge of Qualcore, VIP, Qualcore
India, Xxxx and the Remaining Shareholders, there is no action, suit,
proceeding or investigation by or against Qualcore, VIP or Qualcore
India currently pending, which any of them intends to initiate, or which
any of them contemplate initiating.
y. Neither Qualcore, VIP or Qualcore India is, to the best knowledge of
Qualcore, VIP, Qualcore India, Xxxx and the Remaining Shareholders, in
violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign
-11-
government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties. No
governmental orders, permissions, consents, approvals or authorizations
are required to be obtained and no registrations or declarations are
required to be filed in connection with the execution and delivery of
this Agreement and the transfer of the Option Shares, except such as has
been duly and validly obtained or filed, or with respect to any filings
that must be made after the Final Closing Date, as will be filed in a
timely manner. Qualcore, VIP and Qualcore India have all franchises,
permits, licenses and any similar authority necessary for the conduct of
their respective businesses as now being conducted by them, and believes
it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted.
z. Neither Qualcore, VIP nor Qualcore India is in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will
be required in order to comply with any such existing statute, law or
regulation.
aa. This Agreement, the Exhibits hereto, and all other documents delivered
to ZiLOG or its attorneys or agents in connection herewith or with the
transactions contemplated hereby are complete and, except as
specifically stated thereon, have not been amended, rescinded or
modified in any manner; and do not contain any untrue statement of a
material fact nor omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading.
bb. There are no liabilities of any kind or character, whether contingent or
liquid, known or unknown, which exist and which are not fully disclosed
on the Financial Statements.
cc. All representations and warranties of Qualcore, VIP, Qualcore India,
Xxxx and the Remaining Shareholders set forth herein shall also be true
and correct on the date hereof, on the First Closing Date, on the Second
Closing Date and on the Final Closing Date as if made on each such date.
dd. Qualcore, VIP, Qualcore India, Xxxx and each of the Remaining
Shareholders shall, jointly and severally, indemnify and hold ZiLOG
harmless from and against any and all claims, liabilities, causes of
action, damages, taxes, penalties, interest, costs and expenses
(including, without limitation, attorneys' fees) which may be incurred
or sustained by ZiLOG as the result of any inaccuracy or breach of any
of the representations, warranties, agreements or covenants contained
herein. The obligations of Xxxx and the Remaining Shareholders under
this subparagraph shall survive the First Closing Date, the Second
Closing Date and the Final Closing Date, and shall survive the transfer
of the Option Shares to ZiLOG. The liability of Xxxx and the Remaining
Shareholders hereunder shall be primary to the liability of Qualcore,
VIP and Qualcore India, and Xxxx and the Remaining Shareholders hereby
waive any and all rights any of them may have to claim contribution or
reimbursement of any amounts required to be paid by any of them
-12-
hereunder from Qualcore, VIP or Qualcore India under any contract,
document, agreement, or any theory of law or equity. Notwithstanding the
foregoing, however, the maximum individual liability of Xxxx and of each
of the Remaining Shareholders to ZiLOG on account of this subparagraph
(dd) shall not exceed the total of the following: (i) the Purchase Price
allocated to each of them for the purchase of their respective shares
hereunder; plus (ii) the value of any restricted stock (valued at the
date of vesting), or cash paid in lieu thereof, which is paid or becomes
payable to Xxxx and/or the Remaining Shareholders under and pursuant to
an employment agreement executed between Xxxx and/or the Remaining
Shareholders and Qualcore, VIP, Qualcore India or ZiLOG.
10. Representations and Warranties of ZiLOG: ZiLOG hereby represents and
---------------------------------------
warrants that it is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, and has all necessary corporate
powers to own its properties and to operate its business as now owned and
operated by it; that it has the right, power, legal capacity, and authority
to enter into and perform its obligations under this agreement, and no
approvals or consents of any persons other than ZiLOG and its board of
directors are necessary in connection with it. ZiLOG further represents and
warrants that it will maintain sufficient common stock reserves to
accomplish the issuance of the shares required to be issued by it pursuant
hereto. The execution and delivery of this agreement by ZiLOG has been duly
authorized by all necessary corporate action on the part of ZiLOG.
11. ZiLOG's Contingencies: The closing of the Initial Stock Acquisition, and
---------------------
all of ZiLOG's other obligations under and pursuant to this Agreement
including, without limitation, any obligations arising on the First Closing
Date, the Second Closing Date, the Final Closing Date, or following the
lapse of the option granted hereunder, are contingent upon all of the
following contingencies being satisfied or waived in writing by ZiLOG
within the time periods set forth below:
a. ZiLOG shall have the opportunity to inspect, test, verify and otherwise
validate all assets held by Qualcore, VIP and Qualcore India to such
extent as ZiLOG, in its sole and absolute discretion, determines is
necessary or appropriate including, without limitation, interviewing
the employees, customers, clients, suppliers, landlords and others
having business relationships with Qualcore, VIP and Qualcore India.
Qualcore, VIP and Qualcore India agree to cooperate with ZiLOG in
conducting its examinations hereunder, and shall make available
personnel who are qualified to respond to questions which may be raised
by ZiLOG and/or its employees or consultants. The determination of
whether or not this contingency is satisfied shall be made by ZiLOG in
its sole and absolute discretion. In the event ZiLOG does not give
written notice to Qualcore, Xxxx and the Remaining Shareholders of the
failure of this contingency by March 13, 2000, then this contingency
shall conclusively be considered satisfied or waived by ZiLOG.
b. ZiLOG shall have the opportunity to review and inspect all Financial
Statements, and any other Contracts, agreements, leases or other
documents related to Qualcore, VIP and Qualcore India or to which any
of them may be a party, and
-13-
any underlying documents or supporting documents related thereto, to
the extent ZiLOG may, in its sole and absolute discretion, determine.
Qualcore, VIP and Qualcore India agree to cooperate with ZiLOG and
provide all documents requested by ZiLOG which any of them may have or
can reasonably acquire. To the extent Qualcore, VIP, Qualcore India,
Xxxx and/or the Remaining Shareholders are aware that documents exist
but they do not have possession or cannot acquire possession, then such
person or entity shall provide a listing of such documents to ZiLOG
together with the person or persons who have or may have possession
thereof. The determination of whether or not this contingency is
satisfied shall be made by ZiLOG in its sole and absolute discretion.
In the event ZiLOG does not give written notice to Qualcore, Xxxx and
the Remaining Shareholders of the failure of this contingency by March
13, 2000, then this contingency shall conclusively be considered
satisfied or waived by ZiLOG.
c. ZiLOG shall conduct an all inclusive feasibility study concerning the
acquisition of the Option Shares including, without limitation, the
underlying technology, intellectual property, business plans, and
technological expertise to ascertain whether the Initial Stock
Acquisition and/or the acquisition of the Option Shares is suited to
ZiLOG's intended plans and future development. The determination of
whether or not this contingency is satisfied shall be made by ZiLOG in
its sole and absolute discretion. If ZiLOG does not give written notice
to Qualcore, Xxxx and the Remaining Shareholders of the failure of this
condition by March 13, 2000, then this contingency shall conclusively
be considered satisfied or waived by ZiLOG.
x. Xxxx and MLN Xxxxxxxxx shall have delivered to ZiLOG an executed
Covenant Not to Compete in the form attached hereto as Exhibit "Q".
x. Xxxx and each of the Remaining Shareholders who are to receive an
allocation of Restricted Stock under and pursuant to their employment
arrangement with Qualcore, VIP and/or Qualcore India shall have
delivered to ZiLOG executed employment agreements in a form approved by
ZiLOG. The form of the Employment Agreement to be executed by Xxxx
shall be in the form attached hereto as Exhibit "R", and the form of
agreement to be executed by all remaining employees shall be as agreed,
but shall be no less restrictive than the terms contained on Exhibit
"R".
f. ZiLOG shall have received an opinion from the attorney for Qualcore
Group, VIP and Qualcore India in the form attached hereto as Exhibit
"S".
g. All representations and warranties of Qualcore, VIP, Qualcore India,
Xxxx and the Remaining Shareholders shall be true, correct and complete
in all material respects as of the First Closing Date, the Second
Closing Date and the Final Closing Date except for those which, by
their nature, shall change over time, and with respect to those which
change over time, any change (either singularly or in the aggregate)
does not materially adversely affect either Qualcore, VIP, Qualcore
India, Xxxx or the Remaining Shareholders.
-14-
12. Xxxx'x and the Remaining Shareholder's Contingencies: The closing of the
----------------------------------------------------
transactions contemplated by this Agreement, and Xxxx'x and the Remaining
Shareholder's obligations under and pursuant to this Agreement, are
contingent upon all representations and warranties made by ZiLOG hereunder
being true, correct and complete in all material respects as of the First
Closing Date, the Second Closing Date and the Final Closing Date.
13. Costs of Sale: Xxxx and the Remaining Shareholders shall be responsible for
-------------
any and all taxes, duties or assessments arising out of the Initial Stock
Acquisition and arising out of the sale of the Option Shares under and
pursuant to this Agreement. Each party shall be responsible for its own
attorneys' fees, accounting fees, consulting fees and all other costs
incurred by such party in connection with this Agreement and the
implementation hereof.
14. Closing Dates: The First Closing Date shall be the date of execution of
-------------
this Agreement by all parties hereto (the "First Closing Date"); and the
Second Closing Date shall be April 15, 2000 (the "Second Closing Date").
The closing of all remaining transactions contemplated hereby shall occur
within fifteen (15) business days following the delivery of the Exercise
Notice, or such other date as may be mutually agreed in writing by all of
the parties hereto (the "Final Closing Date"), but in no event later than
July 30, 2001.
15. Obligations After Closing: Qualcore, VIP, Qualcore India, Xxxx, the
-------------------------
Remaining Shareholders and ZiLOG shall have the following obligations which
shall survive the First Closing Date, the Second Closing Date and the Final
Closing Date:
x. Xxxx and the Remaining Shareholders, jointly and severally, shall
indemnify, defend and hold ZiLOG harmless from and against any and all
claims, taxes, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest,
penalties, and reasonable attorneys' fees that it shall incur or suffer
and which arise, result from, or relate to: (i) any breach of this
Agreement by Qualcore, VIP, Qualcore India, Xxxx or the Remaining
Shareholders; (ii) any inaccuracy in or breach of any representations,
warranties, covenants or agreements in this Agreement by Qualcore, VIP,
Qualcore India, Xxxx or the Remaining Shareholders; or (iii) the
business of Qualcore, VIP or Qualcore India which arises or is
attributable to events occurring prior to the Final Closing Date. The
liability of Xxxx and the Remaining Shareholders hereunder shall be
primary to the liability of Qualcore, VIP and Qualcore India, and Xxxx
and the Remaining Shareholders hereby waive any and all rights any of
them may have to claim contribution or reimbursement of any amounts
required to be paid by any of them hereunder from Qualcore, VIP or
Qualcore India under any contract, document, agreement, or any theory
of law or equity. The obligations of Xxxx and the Remaining
Shareholders under this paragraph shall survive the First Closing Date,
the Second Closing Date and the Final Closing Date and the transfer of
the Option Shares to ZiLOG hereunder.
b. ZiLOG shall indemnify, defend and hold Xxxx and the Remaining
Shareholders harmless from and against any and all claims, taxes,
demands, losses, costs,
-15-
expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties, and reasonable attorneys'
fees that they shall incur or suffer and which arise, result from, or
relate to: (i) any breach of this Agreement by ZiLOG; or (ii) any
inaccuracy in or breach of any representations, warranties, covenants
or agreements in this Agreement by ZiLOG. The obligations of ZiLOG
under this paragraph shall survive the First Closing Date, the Second
Closing Date and the Final Closing Date.
16. Failure to Exercise Option: In the event ZiLOG shall fail to exercise the
--------------------------
option to acquire the Option Shares pursuant hereto on or before the
earlier of: (i) June 30, 2001, or (ii) within thirty (30) days following
ZiLOG's IPO, then the option to acquire the Option Shares described in
Paragraph 2, above, shall lapse, and all option consideration paid by ZiLOG
shall become nonrefundable. Notwithstanding the foregoing, however, upon
such lapse, ZiLOG shall purchase from Xxxx, and Xxxx shall sell to ZiLOG,
One Million Six Hundred Forty-two Thousand Eighteen (1,642,018) shares of
common stock in Qualcore for a cash purchase price of Four Million Seven
Hundred Twenty-five Thousand Three Hundred Twenty Dollars ($4,725,320), the
closing date of which shall be thirty (30) days following the date the
option to acquire the shares of stock in Qualcore lapses, or such other
date as may be mutually agreed in writing, but in no event later than July
30, 2001. In the event the option lapses, and ZiLOG is obligated to acquire
the shares set forth herein, then, for purposes of this Agreement, the
closing date of such acquisition shall be the Final Closing Date.
17. Acknowledgment of Assignment: ZiLOG acknowledges that Xxxx is required to
----------------------------
assign the proceeds payable to him hereunder to DII as additional security
for his secured promissory note to DII under the terms of his separate
agreement with DII. Xxxx shall be permitted to make this assignment to DII,
and ZiLOG agrees to pay any proceeds payable hereunder to Xxxx directly to
DII upon such assignment, which payment shall in all events be in complete
satisfaction of ZiLOG's obligation to pay the foregoing proceeds to Xxxx;
and upon such payment, Xxxx shall take all necessary action to transfer to
ZiLOG any Option Shares held by DII as security for its loan. Any payment
by ZiLOG shall be concurrent with and contingent upon the transfer by DII
of any Option Shares DII is holding which are being purchased by ZiLOG on
account of the payment being made hereunder.
18. Public Announcements: This Agreement is to be maintained in strict
--------------------
confidence, and neither party shall issue any public announcement
concerning this transaction without the approval of the other until after
the Final Closing Date. Notwithstanding the foregoing, however, in the
event a disclosure of this transaction is required under securities or
other laws of the United States of America or any state thereof, or under
the laws of India, or any state or province thereof, then the terms of this
Agreement may be announced to the extent required to comply with any such
disclosure or other requirements.
19. Notices: All notices, requests, demands and other communications under
-------
this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service, if served personally on the party to whom
notice is to be given, or on the second day after mailing, if mailed to the
party to whom notice is to be given, by first class mail,
-16-
registered or certified, postage prepaid, or by express courier such as
Federal Express, DHL, United Parcel Service or similar types of carrier, and
properly addressed as follows:
ZiLOG 000 X. Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx,
Senior Vice President and General Counsel
Qualcore 0000 Xxxx Xxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxx
VIP 0000 Xxxx Xxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxx
Qualcore India 0000 Xxxx Xxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxx
Xxxx 0000 Xxxx Xxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Remaining Shareholders See Addresses on Exhibit A
Any party may change its address for purposes of this paragraph by giving
the other parties written notice of the new address in the manner set forth
above.
20. Commissions and Fees: Xxxx and the Remaining Shareholders shall pay any and
--------------------
all costs, fees and expenses associated with any brokers, agents, attorneys,
accountants or other advisors or agents hired by or representing either
Qualcore, VIP, Qualcore India, Xxxx or the Remaining Shareholders other than
the fees and costs payable to current legal counsel and accountants for
Qualcore, VIP and Qualcore India incurred in the ordinary course of business
or in connection with the transactions contemplated by this Agreement, which
shall be paid by Qualcore, VIP and/or Qualcore India; and ZiLOG shall pay
any and all costs, fees and expenses associated with any brokers, agents,
attorneys, accountants or other advisors or agents hired by or representing
ZiLOG. ZiLOG, Xxxx and the Remaining Shareholders each agree to defend and
to indemnify and hold each other and Qualcore, VIP and Qualcore India free
and harmless from and against any and all claims, demands, causes of action
or judgments respecting payment of any brokers' commissions or other fees of
any advisors representing the indemnifying party, including attorneys' fees
and costs arising from a breach of the foregoing obligations. The liability
of Xxxx, the Remaining Shareholders and ZiLOG hereunder shall be primary,
and Xxxx, the Remaining Shareholders and ZiLOG hereby waive any and all
rights any of them may have to claim contribution or reimbursement of any
amounts required to be paid by any of them hereunder from Qualcore, VIP or
Qualcore India under any contract, document, agreement, or any theory of law
or equity.
-17-
21. Attorneys' Fees: If any party to this Agreement becomes involved in any
---------------
litigation or other proceeding concerning the enforcement or interpretation
of this Agreement, the losing party shall be liable for the prevailing
party's reasonable attorneys' fees and court costs actually incurred in
such litigation, and in any enforcement or appeal of any judgment rendered
therein.
22. Arbitration of Disputes: Any dispute, claim or controversy arising between
-----------------------
ZiLOG, Qualcore, VIP, Qualcore India, Xxxx or the Remaining Shareholders
regarding this Agreement or any ancillary agreement executed concurrently
herewith shall be settled by arbitration in accordance with the rules of
the American Arbitration Association. Proper service of process for such
arbitration shall be by U.S. Postal Service or by Federal Express, DHL,
United Parcel Service or similar types of carriers. The arbitration shall
be held in Santa Xxxxx County, California before one arbitrator who shall
follow the substantive law of California in deciding the arbitration. Pre-
hearing discovery shall be allowed of all evidence and testimony to be
presented at the hearing. The arbitrators' decision shall be final and
binding upon the parties. The arbitrators shall render their decision in
writing, explaining the legal and factual basis for decision as to each of
the principal controverted issues. An award shall be deemed in excess of
the powers granted to the arbitrators if it (1) does not contain the legal
grounds therefor; or (2) if it contains an error of law on the face of the
award that causes substantial injustice. In any petition to confirm or
vacate the arbitrator's decision, an error of law appearing on the face of
the award that causes substantial injustice shall constitute grounds to
vacate the award. A judgment upon any award may be entered in a court of
competent jurisdiction.
23. Joint and Several Liability: The obligations of Qualcore, VIP, Qualcore
---------------------------
India, Xxxx and the Remaining Shareholders under this Agreement are joint
and several, and each shall be fully responsible and liable for any and all
obligations of any of them hereunder. ZiLOG shall have the right to proceed
against any of the foregoing; provided, however, that if ZiLOG proceeds
against Xxxx and/or the Remaining Shareholders, in full or in part, Xxxx
and the Remaining Shareholders hereby waive any and all rights any of them
may have to claim contribution or reimbursement of any amounts required to
be paid by any of them hereunder from Qualcore, VIP or Qualcore India under
any contract, document, agreement, or any theory of law or equity.
Notwithstanding the foregoing, however, the maximum individual liability of
Xxxx and of each of the Remaining Shareholders to ZiLOG on account of this
paragraph shall not exceed the total of the following: (i) the Purchase
Price allocated to each of them for the purchase of their respective shares
hereunder; plus (ii) the value of any restricted stock (valued at the date
of vesting), or cash paid in lieu thereof, which is paid or becomes payable
to Xxxx and/or the Remaining Shareholders under and pursuant to an
employment agreement executed between Xxxx and/or the Remaining
Shareholders and Qualcore, VIP, Qualcore India or ZiLOG.
24. Confidentiality Obligations: ZiLOG acknowledges that, in the course of
---------------------------
conducting its due diligence, it has or will receive certain information
about Qualcore, VIP and/or Qualcore India which is the confidential
information of Qualcore, VIP and/or Qualcore India. For purposes of this
Agreement, the term "Confidential Information" means any
-18-
financial information, technical information or employment information
received by ZiLOG from Qualcore, VIP, Qualcore India, Xxxx and/or the
Remaining Shareholders (a "Discloser") other than: (i) any information
which ZiLOG had in its possession through lawful means prior to disclosure
by Discloser; (ii) any information which is or becomes publicly known
through no breach of this Agreement by ZiLOG; (iii) any information which
is furnished to others by Discloser without restriction on disclosure; (iv)
any information which is hereafter furnished to ZiLOG by a third party
without restriction on disclosure; or (v) information which is
independently developed by ZiLOG. For a period of three (3) years following
the execution date hereof, ZiLOG agrees that it shall not disclose
Confidential Information to any person, or use any Confidential Information
except as contemplated by this Agreement. In addition, until June 30, 2001,
ZiLOG agrees that it will not hire any employees of Qualcore, VIP or
Qualcore India as an employee of ZiLOG or any entity affiliated with ZiLOG.
Notwithstanding the foregoing, however, the restrictions hereunder shall
lapse upon ZiLOG's exercise of the option described herein.
25. Miscellaneous Provisions:
------------------------
a. Time of Essence: Time is of the essence of each provision of this
---------------
Agreement.
b. Successors and Assigns: This Agreement shall be binding on and inure to
----------------------
the benefit of the parties and their respective successors and assigns.
c. Exhibits: All Exhibits referred to are attached hereto and incorporated
--------
herein by this reference.
d. Governing Law: This Agreement shall be construed and interpreted in
-------------
accordance with the laws of the State of California.
e. Integrated Agreement: Modification: This instrument contains the entire
--------------------
agreement of the parties and cannot be amended or modified except by a
written Agreement, executed by each of the parties hereto.
f. Captions: The captions of this Agreement are for convenience purposes
--------
only, and shall have no effect on its construction or interpretation.
g. Singular and Plural; Gender: When required by the context of this
---------------------------
Agreement, the singular shall include the plural, and the masculine
shall include the feminine, and the impersonal pronoun "it" shall refer
to either of the above, a corporation, partnership, joint venture, or
other entity, regardless of number or gender.
h. Severability: The unenforceability, invalidity, or illegality of any
------------
provision shall not render the other provisions unenforceable, invalid,
or illegal.
i. Waiver: No consent or waiver, express or implied, by either party to
------
this Contract of any breach or default by the other in the performance
of any obligation hereunder shall be deemed or construed to be a
consent to or waiver of any other
-19-
breach or default by such party hereunder. Failure on the part of any party
hereto to complain of any act or failure to act of the other party or to
declare the other party in default hereunder, irrespective of how long such
failure continues, shall not constitute a waiver of the rights of such
party hereunder.
j. Execution of Documents: The parties hereto hereby agree to execute and
----------------------
deliver such further instruments, agreements, contracts and documents, as
may be reasonably required to effectuate the stated and intended purposes of
this Agreement.
k. Counterparts: This Agreement may be executed simultaneously in one (1) or
------------
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
l. Neutral Construction: The parties hereto agree that this Agreement will be
--------------------
interpreted neutrally, and that it should not be construed for or against
any party deemed to be the drafter thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
Qualcore Group, Inc. ZiLOG, Inc.
By: /s/ Xxxxxxxxx X. Xxxx By: /s/ X. Xxxxxx Win
---------------------------- --------------------------
Title: C.E.O. Title: SVP
------------------------- -----------------------
Virtual IP Group, Inc.
By: /s/ Xxxxxxxxx X. Xxxx
----------------------------
Title: C.E.O.
-------------------------
Qualcore Logic Private Limited
By: /s/ Xxxxxxxxx X. Xxxx
----------------------------
Title: C.E.O.
-------------------------
/s/ Xxxxxxxxx X. Xxxx
------------------------------
Xxxxxxxxx X. Xxxx
-20-
The Xxxxxx & Xxxxx Xxx 1996 Trust
By: /s/ Xxxxxx Xxx
----------------------------
Xxxxxx Xxx, Trustee
By: /s/ Xxxxx Xxx
----------------------------
Xxxxx Xxx, Trustee
/s/ Xxxxxx Xxxx
--------------------------
Xxxxxx Xxxx
--------------------------
Xxx X. Xxxxxxxxxxxx
/s/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx
/s/ Xxxx Xxx
--------------------------
Xxxx Xxx
/s/ Xxxx Xxxx-Xxxx
--------------------------
Ling-Xxxx Xxxx
/s/ Xxxxx Xxxxxxxxxx-Xxxxxx
---------------------------
Xxxxx Xxxxxxxxxx-Xxxxxx
Xxxxx Family Trust
By: /s/ Xxxxxx Xxxxx
--------------------------
Xxxxxx Xxxxx, Trustee
/s/ Xxxxx Xxxx
--------------------------
Xxxxx Xxxx
--------------------------
Ming-Xxx Xxxx
-21-
/s/ X.X. Xxxx
--------------------------
X.X. Xxxx
/s/ Xxxxxx X. Xxxxxxxx III
--------------------------
Xxxxxx X. Xxxxxxxx III
/s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx
-22-
Qualcore Logic Private Limited
By:
---------------------------
Title:
------------------------
------------------------------
Dasardha X. Xxxx
The Xxxxxx & Xxxxx Xxx 1996 Trust
By: /s/ Xxxxxx Xxx,
---------------------------
Xxxxxx Xxx, Trustee
By: /s/ Xxxxx Xxx, Trustee
---------------------------
Xxxxx Xxx, Trustee
---------------------------
Xxxxxx Xxxx
---------------------------
Xxx X. Xxxxxxxxxxxx
---------------------------
Xxxxxx Xxxxxxx
---------------------------
Xxxx Xxx
/s/ Xxxx Xxxx-Xxxx
---------------------------
Ling-Xxxx Xxxx
---------------------------
Xxxxx Xxxxxxxxxx-Xxxxxx
-23-
EXHIBIT LIST
Exhibit A Listing of Shareholders
Exhibit B Allocation of Purchase Price to Shareholders
Exhibit C DII Agreement
Exhibit D Investor Rights Agreement
Exhibit E Option Pledge Agreement
Exhibit F Stockholder Agreement
Exhibit G Amended Articles for Qualcore
Exhibit H Amended Bylaws for Qualcore
Exhibit I Financial Statements
Exhibit J Listing of Employees
Exhibit K Articles of Incorporation of Qualcore Group, Inc.
Exhibit L Articles of Incorporation of Virtual IP Group, Inc.
Exhibit M Articles of Incorporation of Qualcore Logic Private Limited
Exhibit N Bylaws of Qualcore Group, Inc.
Exhibit O Bylaws of Virtual IP Group, Inc.
Exhibit P Bylaws of Qualcore Logic Private Limited
Exhibit Q Covenant Not to Compete
Exhibit R Xxxx Employment Agreement
Exhibit S Attorney Opinion Letter
24
