EXHIBIT 10.1


 


CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO A TERM IN THIS EXHIBIT, WHICH TERM HAS BEEN OMITTED AND REPLACED WITH [***] AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


 


ASSET
PURCHASE AGREEMENT


 


 


between


 


 


Sony
Electronics Inc.


 


as Seller,


 


 


and


 


 


GSI
Technology, Inc.


 


as Purchaser


 


 


August 28, 2009


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  1

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
  PURCHASE
  OF ASSETS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchase
  and Sale of Transferred Assets

  	
  1

  
	
  2.2

  	
  Excluded
  Assets

  	
  2

  
	
  2.3

  	
  Nonassignable
  Contracts

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
  ASSUMPTION
  OF LIABILITIES

  	
  4

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Assumed
  Liabilities

  	
  4

  
	
  3.2

  	
  Retained
  Liabilities

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4

  	
  PURCHASE
  PRICE

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Purchase
  Price

  	
  5

  
	
  4.2

  	
  Closing
  Payment

  	
  6

  
	
  4.3

  	
  Inventory
  Adjustment Payment

  	
  6

  
	
  4.4

  	
  Contingent
  Payments

  	
  6

  
	
  4.5

  	
  Allocation
  of Purchase Price

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5

  	
  CLOSING

  	
  7

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Closing

  	
  7

  
	
  5.2

  	
  Deliveries
  at Closing

  	
  8

  
	
  5.3

  	
  Delivery
  of Purchased Assets

  	
  9

  
	
  5.4

  	
  Conditions
  Precedent to Obligations of Purchaser

  	
  9

  
	
  5.5

  	
  Conditions
  Precedent to Obligations of Seller

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  	
  REPRESENTATIONS
  AND WARRANTIES OF SELLER

  	
  10

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Organization
  and Good Standing

  	
  10

  
	
  6.2

  	
  Authorization
  and Effect of Agreement

  	
  11

  
	
  6.3

  	
  No
  Conflicts

  	
  11

  
	
  6.4

  	
  No
  Third Party Options

  	
  11

  
	
  6.5

  	
  Financial
  Data

  	
  11

  
	
  6.6

  	
  Litigation

  	
  12

  
	
  6.7

  	
  Title
  to and Condition of Assets

  	
  12

  
	
  6.8

  	
  Products

  	
  12

  
	
  6.9

  	
  Contracts

  	
  13

  
	
  6.10

  	
  Business
  Contained in Seller

  	
  13

  
	
  6.11

  	
  Tax Matters

  	
  13

  
	
  6.12

  	
  Compliance
  with Laws

  	
  13

  
	
  6.13

  	
  Restrictions
  on Business Activities

  	
  13

  
	
  6.14

  	
  Disclosure

  	
  13

  
	
  6.15

  	
  Brokers

  	
  14

  



 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


TABLE OF CONTENTS

(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
  14

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Corporate
  Organization

  	
  14

  
	
  7.2

  	
  Authorization
  and Effect of Agreement

  	
  14

  
	
  7.3

  	
  No
  Conflicts

  	
  14

  
	
  7.4

  	
  Litigation

  	
  15

  
	
  7.5

  	
  Condition
  of Transferred Assets

  	
  15

  
	
  7.6

  	
  Brokers

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  	
  COVENANTS

  	
  16

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Employees

  	
  16

  
	
  8.2

  	
  Accounts
  Receivable

  	
  16

  
	
  8.3

  	
  Covenant
  Not to Compete

  	
  16

  
	
  8.4

  	
  Confidentiality

  	
  17

  
	
  8.5

  	
  Specific
  Performance: Reformation

  	
  17

  
	
  8.6

  	
  Warranty
  Support

  	
  17

  
	
  8.7

  	
  Publicity

  	
  18

  
	
  8.8

  	
  Maintenance
  of Books and Records

  	
  18

  
	
  8.9

  	
  Bulk
  Transfer Laws

  	
  18

  
	
  8.10

  	
  Insurance

  	
  18

  
	
  8.11

  	
  Customer
  Support

  	
  19

  
	
  8.12

  	
  Taking
  of Necessary Action; Further Action

  	
  19

  
	
  8.13

  	
  Continued
  CIS-SRAM Operations

  	
  19

  
	
  8.14

  	
  Reseller
  Agreement

  	
  19

  
	
  8.15

  	
  Financial
  Statements

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9

  	
  SURVIVAL
  AND INDEMNIFICATION

  	
  20

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Survival
  of Representations, Warranties and Covenants

  	
  20

  
	
  9.2

  	
  Indemnification

  	
  21

  
	
  9.3

  	
  Method
  of Asserting Claims, etc.

  	
  21

  
	
  9.4

  	
  Indemnification
  Amounts

  	
  22

  
	
  9.5

  	
  Losses
  Net of Insurance, Etc.

  	
  22

  
	
  9.6

  	
  Sole
  Remedy/Waiver

  	
  23

  
	
  9.7

  	
  No
  Consequential Damages

  	
  23

  
	
  9.8

  	
  Mitigation
  of Damages

  	
  23

  
	
  9.9

  	
  No
  Set-Off

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10

  	
  MISCELLANEOUS
  PROVISIONS

  	
  23

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Notices

  	
  23

  
	
  10.2

  	
  Expenses

  	
  24

  
	
  10.3

  	
  Successors
  and Assigns

  	
  24

  
	
  10.4

  	
  Waiver

  	
  25

  
	
  10.5

  	
  Entire
  Agreement

  	
  25

  
	
  10.6

  	
  Amendments,
  Supplements, Etc.

  	
  25

  



 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


TABLE OF CONTENTS

(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Rights
  of Third Parties

  	
  25

  
	
  10.8

  	
  Further
  Assurances

  	
  25

  
	
  10.9

  	
  Applicable
  Law

  	
  25

  
	
  10.10

  	
  Execution
  in Counterparts

  	
  25

  
	
  10.11

  	
  Titles
  and Headings

  	
  26

  
	
  10.12

  	
  Invalid
  Provisions

  	
  26

  
	
  10.13

  	
  Bulk
  Sales

  	
  26

  
	
  10.14

  	
  Transfers

  	
  26

  
	
  10.15

  	
  Transfer
  Taxes

  	
  26

  
	
  10.16

  	
  Brokers

  	
  26

  
	
  10.17

  	
  Attorneys’
  Fees

  	
  26

  



 


	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A
  — Definitions

  	
   

  
	
  Exhibit B
  — SRAM Product Inventory

  	
   

  
	
  Exhibit C
  — Transferred Equipment

  	
   

  
	
  Exhibit D
  — SRAM Purchase Orders

  	
   

  
	
  Exhibit E
  — SRAM Contracts

  	
   

  
	
  Exhibit F
  — Form of Intellectual Property Agreement

  	
   

  
	
  Exhibit G
  — Form of LOI Amendment

  	
   

  
	
  Exhibit H
  — Form of Reseller Agreement

  	
   

  
	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule
  2.2(a)(xvii) — Miscellaneous Excluded Assets

  	
   

  
	
  Schedule
  5.3(e) — Key SRAM Contracts

  	
   

  
	
  Schedule
  6.6(b) — Litigation

  	
   

  
	
  Schedule
  6.8(a) — SRAM Product Parts List

  	
   

  
	
  Schedule
  6.8(b) — Yield Expectations

  	
   

  
	
  Schedule
  6.8(c) — Standard Product Warranties

  	
   

  
	
  Schedule
  8.4 — Confidentiality Agreements

  	
   

  
	
  Schedule
  8.11 — Customer Support

  	
   

  



 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


	
  Sony Electronics-GSI Asset Purchase Agreement

  	
   

  	
  August 28, 2009

  



 


ASSET
PURCHASE AGREEMENT


 


This ASSET PURCHASE AGREEMENT (this “Agreement”)
is made and entered into as of August 28, 2009 by and between GSI Technology, Inc.,
a Delaware corporation (“Purchaser”), on the one hand, and Sony
Electronics Inc., a Delaware corporation (“Seller”), on the other hand.


 


RECITALS:


 


WHEREAS, Seller presently conducts the
business (the “Business”) of manufacturing, marketing and selling a line
of SRAM memory devices under the “SONY” brand (the “SRAM Products”), all
of which are listed by part number on Schedule 6.8(a) hereto; and


 


WHEREAS,
Seller desires to sell and Purchaser desires to purchase and/or license the
right to manufacture, market and sell the SRAM Products and certain assets,
rights and properties owned by Seller and its Affiliates that are used or
useful in connection with the Business, all on the terms and subject to the
conditions set forth in this Agreement.


 


NOW, THEREFORE, in consideration of the
mutual covenants, representations, warranties and agreements herein contained,
the parties hereto agree as follows:


 


ARTICLE 1


 


DEFINITIONS


 


1.1           Definitions.  As used in this Agreement, unless the context
otherwise requires, capitalized terms used in this Agreement shall have the
meanings set forth on Exhibit A hereto.


 


ARTICLE 2


 


PURCHASE OF ASSETS


 


2.1           Purchase and Sale of Transferred Assets.  On the terms and subject to the conditions
hereof at the Closing (as defined in Section 5.1), Seller and its
Affiliates will grant to Purchaser certain licenses under the SRAM Intellectual
Property, as set forth in the IP Agreement, and Seller and its Affiliates will
sell transfer, convey, assign and deliver, and Purchaser will purchase and
accept, all of their respective right, title and interest in and to the rights,
properties and assets described in this Section 2.1(a)-(f) (collectively,
the “Transferred Assets”) free and clear of all Liens:


 


(a)           Products.  All right,
title and interest of Seller and its Affiliates in and to the SRAM Products and
the manufacture, marketing and sale thereof, including without limitation the
part numbers and package designations associated therewith (subject to
limitations set forth in the IP Agreement).


 


(b)           Inventories.  All
inventory of finished SRAM Products, work-in-progress inventory for SRAM
Products and, with
regard to the New Product all first silicon wafers and


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


package units, on hand at July 30, 2009, as set forth on Exhibit B
hereto, as such Exhibit shall be amended and updated as of the Closing Date (as
defined in Section 5.1) to reflect changes therein occurring in the ordinary
course of the Business prior to the Closing and approved in writing in advance
by Purchaser (the “SRAM Product Inventory”).


 


(c)           Equipment.  The
manufacturing, assembly and test equipment, Mask Works and other tangible
assets and properties (and all spare parts on hand therefor) set forth on Exhibit
C hereto (the “Transferred Equipment”).


 


(d)           Purchase Orders.  All
rights and incidents of interest in and to all purchase orders and quotes for
the purchase of SRAM Products as listed and described on Exhibit D
hereto (the “SRAM Purchase Orders”).


 


(e)           Contracts.  Subject to
Section 2.3, all rights and incidents of interest in and to the Contracts
set forth on Exhibit E hereto (collectively, the “SRAM Contracts”),
provided that Seller’s obligations to effect the assignment of the SRAM
Contracts will be subject to the provisions of Section 5.3(e).


 


(f)            Databases, Documentation and Records. 
All databases, documentation and operating records related to the
Current Products and the New Product, including:  marketing materials; product design databases
and documentation; computer aided design (CAD) programs and documentation
(including mask tape-out (MTO) preparations); production documentation
(including production flows, test programs and assembly documentation); yield
history documentation; manufacturing cost documentation; test software;
historical shipping records; quality and reliability records and documentation;
and historical pricing documentation.


 


2.2           Excluded Assets.


 


(a)           Assets not Subject to Transfer.  The Transferred Assets shall not include the
following assets of Seller or any
Affiliate  of Seller  (the “Excluded Assets”):


 


(i)            accounts receivable, cash or Cash
Equivalents, whether or not related to the Business;


 


(ii)           certificates
of deposit, shares of stock, securities, bonds, debentures, evidences of
indebtedness, and interests in any Person;


 


(iii)          any
and all of Seller’s rights in any Contract or arrangement representing an
intercompany transaction between Seller and any Affiliate of Seller, whether or
not such transaction relates to the provision of goods and services, payment
arrangements, intercompany charges or balances, or the like;


 


(iv)          all
Tax Returns and all losses, loss carry forwards and rights to receive refunds,
credits and credit carry forwards with respect to any and all Taxes, including,
without limitation, interest thereon, whether or not the foregoing are derived
from the Business;


 


(v)           the
minute books, stock transfer books, corporate seals and other books and records
of Seller and its Affiliates;


 


2

















 


CONFIDENTIAL TREATMENT REQUESTED


 


(vi)          all
current and prior insurance policies and all rights of any nature with respect
thereto, including all insurance recoveries thereunder and rights to assert
claims with respect to any such insurance recoveries;


 


(vii)         all
assets of any employee benefit plan;


 


(viii)        all
rights, title and interests in or to the name “SONY,” or any derivation
thereof, as well as any related or similar name, and any other related trade
names, trademarks, service marks, corporate names and logos or any part,
derivation, colorable imitation or combination thereof;


 


(ix)           any
and all causes of action against third parties arising prior to the Closing and  relating to any of the Transferred Assets or
Intellectual Property, including any claims for refunds, prepayments, offsets,
recoupment, insurance proceeds, condemnation awards, judgments, and the like,
whether received as payment or credit against future liabilities or otherwise;


 


(x)            all
real property owned in fee or leased by Seller;


 


(xi)           any
governmental licenses, permits and approvals issued to Seller, to the extent
their transfer is not permitted by law;


 


(xii)          any
rights in, to and under all Contracts, arrangements,
permits or licenses of any nature, of which the obligations of Seller
thereunder are not expressly assumed by Purchaser hereunder;


 


(xiii)         any
books, ledgers, files, reports, plans and operating records that Seller or any
of its Affiliates are required to retain pursuant to any applicable statute,
rule, regulation or ordinance or which relate to the Excluded Assets or the
Retained Liabilities;


 


(xiv)        all
assets not related exclusively to the Business;


 


(xv)         any
Intellectual Property except for the specific Intellectual Property specified
in Section 2.1(c) and Section 2.1(f);


 


(xvi)        all
of Seller’s rights under this Agreement and any agreement or other written
instrument entered into in connection with the transactions contemplated
hereby; and


 


(xvii)       those
assets listed in Schedule 2.2(a)(xvii) hereto.


 


(b)           Use of Name. 
Purchaser shall not acquire under the terms of this Agreement any title
or interest in Seller’s name, monograms, logos, trademarks, or any variations
or combinations thereof.  The right to
use such name, monograms, logos, trademarks or any variations or combinations
thereof shall be pursuant to the IP Agreement.


 


2.3           Nonassignable Contracts.  Notwithstanding anything to the
contrary contained in this Agreement, except as
specifically provided in Section 5.3(e),  to the extent that the
sale,


 


3

















 


CONFIDENTIAL TREATMENT REQUESTED


 


assignment, lease, sublease, transfer, conveyance or delivery, or
attempted sale, lease, sublease, assignment, transfer, conveyance or delivery,
to Purchaser of any asset that would be a Transferred Asset or any claim or
right or any benefit arising thereunder or resulting therefrom is prohibited by
any Law or would require any Consent or waiver by any Governmental Authority or
other Person, and such Consent or waiver shall not have been obtained prior to
the Closing (a “Non-Assignable Contract”), the Closing shall proceed,
subject to Article 5, without the sale, assignment, lease, sublease,
transfer, conveyance or delivery of such asset (and the failure to obtain such
Consent or waiver and the failure to sell, assign, convey or deliver such asset
shall not constitute a breach of this Agreement by Seller), and this Agreement
shall not constitute a sale, assignment, sublease, transfer, conveyance or
delivery of such asset or an attempt thereof. 
In the event that the Closing proceeds without the transfer, sublease or
assignment of any such asset, then following the Closing, the parties shall use
commercially reasonable efforts and cooperate with each other to obtain
promptly such Consents or waivers; provided, however, that
Seller shall not be required to pay any consideration or compromise any rights
not otherwise required by this Agreement to be compromised for any such Consent
or waiver, other than filing, recordation or similar fees, which shall be paid
by Seller.  Pending such Consent or waiver, the parties shall cooperate with each other in any
mutually agreeable, reasonable and lawful arrangements designed to provide to
Purchaser the benefits of use of such asset and to Seller the benefits,
including any indemnities, that it would have obtained had the asset been
conveyed to Purchaser at the Closing.  To
the extent that Purchaser is provided the benefits pursuant to this Section 2.3
of any Contract,
Purchaser shall perform for the benefit of the other Persons that are parties
thereto the obligations of Seller thereunder and pay, discharge and satisfy any
related liabilities that, but for the lack of a Consent or waiver to assign such liabilities
to Purchaser, would be Assumed Liabilities. 
Once all required Consents or waivers
for the sale, assignment, lease, sublease, transfer, conveyance or delivery of
any such asset not sold, assigned, leased, subleased, transferred, conveyed or
delivered at the Closing is obtained, Seller shall assign, lease, sublease,
transfer, convey or deliver such asset to Purchaser at no additional cost to
Purchaser. To the extent that any such asset cannot be transferred or the full
benefits of use of any such asset cannot be provided to Purchaser following the
Closing pursuant to this Section 2.3, then Seller and Purchaser shall
enter into such arrangements (including leasing, subleasing, sublicensing or subcontracting)
to provide to the parties
the economic (taking into account Tax costs and benefits) and operational
equivalent, to the extent permitted, of obtaining such authorization, approval,
consent or waiver and the performance by Purchaser of the obligations
thereunder.  Seller shall pay to
Purchaser promptly upon receipt thereof, all income, proceeds and other monies
received by Seller in connection with its use of any asset (net of any Taxes
and any other costs imposed upon Seller) in connection with the arrangements
under this Section 2.3.


 


ARTICLE 3


 


ASSUMPTION OF LIABILITIES


 


3.1           Assumed Liabilities.  Upon the terms and subject to the conditions
of this Agreement, Purchaser agrees, effective at the Closing, to assume the following
Liabilities of Seller relating to the Transferred Assets or the Business (the “Assumed
Liabilities”):


 


(a)           all
Liabilities arising from the manufacture, distribution or sale of any products
of the Business after the Closing;


 


4

















 


CONFIDENTIAL TREATMENT REQUESTED


 


(b)           any
Tax that may be imposed by any federal,
state or local government on the ownership, sale,
operation or use of the Transferred Assets on or after the Closing Date, except
for any income taxes attributable to income received by Seller;


 


(c)           all
Liabilities of the Business arising and to be performed from and after the
Closing Date under or relating to the Assumed Contracts; and


 


(d)           all
Liabilities arising and to be performed from and after the Closing Date with
respect to former employees of Seller that Purchaser elects to hire pursuant to
Section 8.1.


 


Purchaser’s
obligations under this Section 3.1 will not be subject to offset or
reduction by reason of any actual or alleged breach of any representation,
warranty or covenant contained in this Agreement or any Schedule or Exhibit hereto,
or any closing or other document contemplated by this Agreement or any Schedule
or Exhibit hereto, any right or alleged right of indemnification
hereunder, or for any other reason.


 


3.2           Retained Liabilities.  Notwithstanding any provision in this
Agreement, Purchaser shall not assume, and Seller shall retain and be
responsible for performing and discharging, any and all Liabilities of Seller,
whether or not related to the Business, and whether presently fixed and
determined, contingent or otherwise, other than the Assumed Liabilities to be
expressly assumed by Purchaser under Section 3.1 (the “Retained
Liabilities”).  The Retained
Liabilities shall include, without limitation:


 


(a)           Liabilities
for which Seller expressly has responsibility pursuant to the terms of this
Agreement;


 


(b)           Liabilities
to the extent arising out of or relating to the Excluded Assets;


 


(c)           Liabilities
of any kind to Seller’s employees and former employees, except as specifically
provided in Section 3.1(d);


 


(d)           the
Accounts Payable of Seller (including Accounts Payable relating exclusively to
the Business existing as of the Closing Date); and


 


(e)           any
and all Liabilities for Taxes related to the Business or the Transferred Assets
for taxable periods prior to the Closing Date, except for Taxes attributable to
actions of Purchaser, occurring on or after the Closing Date.


 


ARTICLE 4


 


PURCHASE PRICE


 


4.1           Purchase Price.  In
consideration of the conveyance to Purchaser of the Transferred Assets and
other rights granted to Purchaser pursuant hereto and pursuant to the IP
Agreement, Purchaser shall pay to Seller: 
(i) the Closing Payment, calculated and payable pursuant to Section 4.2;
(ii) the Inventory Adjustment Payment, calculated and payable pursuant to
Section 4.3; and (iii) the Contingent Payments, calculated and payable pursuant
to Section 4.4 (collectively, the “Purchase Price”).


 


5
















 


CONFIDENTIAL
TREATMENT REQUESTED


 


4.2           Closing
Payment.  At the
Closing, Purchaser shall (a) pay to Seller the sum of $5,178,000 by wire
transfer in accordance with written instructions provided by Seller prior to
the Effective Date (the “Closing Payment”) and (b) assume the
Assumed Liabilities.


 


4.3           Inventory Adjustment Payment.  Promptly following the Closing, Seller shall
amend and update Exhibit B to reflect the final SRAM Inventory as
of the Closing, including all changes in the SRAM Inventory between July 30,
2009 and the Closing (the “Closing SRAM Inventory Schedule”).  Purchaser shall have the right to observe the
final inventory count at Sellers’ facilities. 
Seller shall deliver its proposed Closing SRAM Inventory Schedule to
Purchaser not later than ten Business Days following the Closing.  Purchaser shall have ten Business Days
following receipt of the proposed Closing SRAM Inventory Schedule to confirm
its agreement or to advise Seller of any proposed revisions thereto.  Within five Business Days following the
parties’ agreement on the Closing SRAM Inventory Schedule, Purchaser shall pay
to Seller by wire transfer, in accordance with written instructions given by
Seller, the sum of $1,716,625, as such amount shall be adjusted to reflect any
reduction in the number of units of SRAM Product Inventory in any of the
following categories and/or any increases in the number of such units approved
in advance by Purchaser, as shown on the Closing SRAM Inventory Schedule, from
the number of units in such category originally shown on Exhibit B,
based on the following per unit values (the “Inventory Adjustment Payment”):


 




	
  Product

  	
   

  	
  Front End

  Work-in-Progress

  	
   

  	
  Back End

  Work-in-Progress

  	
   

  	
  Finished

  Goods

  	
   

  
	
  Sigma RAM

  	
   

  	
  $

  	
  6.13

  	
   

  	
  $

  	
  9.99

  	
   

  	
  $

  	
  17.59

  	
   

  
	
  CIS-SRAM

  	
   

  	
  $

  	
  27.68

  	
   

  	
  $

  	
  39.09

  	
   

  	
  $

  	
  51.65

  	
   

  
	
  36M SRAM

  	
   

  	
  $

  	
  6.08

  	
   

  	
  $

  	
  10.05

  	
   

  	
  N/A

  	
   

  






 


4.4           Contingent Payments.


 


(a)           Amount.  Purchaser
shall pay to Seller cash payments equal to [***] of the Net Revenues derived by
Purchaser from the sale of CIS-SRAMs (“CIS-SRAM Revenues”) during the
eight calendar quarters beginning with the first calendar quarter following the
Closing in which CIS-SRAM Revenues are recorded in compliance with GAAP by
Purchaser (the “Contingent Payments”).


 


(b)           Payment.  The Contingent Payment for any applicable
calendar quarter shall be paid to Seller by wire transfer, in accordance with
written instructions provided by Seller, no later than 45 days following the
end of the applicable quarter and shall be accompanied by a written report
showing the amount of CIS-SRAM Revenues during the quarter, including a
detailed line item accounting of reductions in revenues charged against Gross
Revenues for purposes of determining CIS-SRAM Revenues.


 


(c)           Review Rights.  Upon the
written request of Seller, made not more frequently than twice during any
12-month period, Purchaser shall allow Seller and its accountants reasonable
access during normal business hours to Purchaser’s books and records relating
to the calculation of CIS-SRAM Revenues for the limited purpose of reviewing
such


 


6

















 


CONFIDENTIAL TREATMENT REQUESTED


 


calculation, provided that such accountants have
entered into confidentiality and non-disclosure agreements reasonably
acceptable to Purchaser.  Access shall be
made available within 15 days following Seller’s written request. Should such
review disclose an error in the calculation of CIS-SRAM Revenues or any
Contingent Payment, Purchaser will promptly, but in no case more than five
Business Days following the determination of such error, remit to Seller any
additional Contingent Payment owed to Seller. 
All expenses incurred by Seller in performing any such review shall be
borne by Seller, unless such review discloses an error of 2% or more in the
calculation of CIS-SRAM Revenues for any calendar quarter, in which case
Purchaser shall promptly, but in no case more than five Business Days following
the determination of such error, reimburse Seller for such expenses.  In the event that any such review discloses
an error of 2% or more in such calculation, Seller shall thereafter have the
right to conduct such reviews on a quarterly basis.


 


4.5           Allocation of Purchase Price.  No later than 90 days following the Closing,
Purchaser shall prepare and deliver to Seller, for its review and approval, a
statement (the “Allocation Statement”) allocating, for U.S. federal
income tax purposes, the Purchase Price (as adjusted for federal income tax
purposes to take into account any Assumed Liabilities) among the Transferred
Assets, in accordance with Section 1060 of the Code and the regulations
promulgated thereunder.  The Allocation
Statement may be revised by Seller and Purchaser to reflect any Purchase Price
adjustments.  In the event that Seller
objects in writing to all or any part of the Allocation Statement within 20
days following Seller’s receipt thereof, Seller and Purchaser shall seek in
good faith to resolve any differences they have with respect to the Allocation
Statement during the 20 days immediately following delivery of such notice.  Notwithstanding anything herein to the
contrary, if the parties are unable to resolve their differences within such
period, then the parties shall not be bound by the Allocation Statement and
shall be free to allocate the Purchase Price for Tax purposes on an
inconsistent basis.  If the Allocation
Statement is not timely objected to by Seller, or is agreed to by Seller and
Purchaser, then (i) the Allocation Statement shall be conclusive and binding
upon the parties for all purposes, and neither Seller nor Purchaser shall take
any tax position which is inconsistent with such allocation, (ii) Purchaser and
Seller shall each file IRS Form 8594 and all federal, state, local and other
Tax Returns required to be filed in accordance with the Allocation Statement
and (iii) the parties agree to consult, and to cause their respective
Affiliates to consult, with one another with respect to any Tax audit,
controversy or litigation relating to the Allocation Statement by the IRS or
another tax authority (it being understood that, notwithstanding the foregoing,
in the event the IRS challenges any position taken by either party relating to
the Allocation Statement, such party may settle or litigate such challenge
without the consent of, or liability to, the other parties).


 


ARTICLE 5


 


CLOSING


 


5.1           Closing.  The consummation of the
transactions contemplated hereby (the “Closing”) shall take place at the
offices of Seller,
1730 N. First Street, San Jose,  California
(or at such other place as the parties may designate), at 9:00 a.m. on August     ,
2009 or, if later, the third Business Day after such later date as the
conditions specified in Sections 5.4 and 5.5 are


 


7

















 


CONFIDENTIAL TREATMENT REQUESTED


 


fulfilled.  The date on which the
Closing is effected is referred to in this Agreement as the “Closing Date.”


 


5.2           Deliveries at Closing.  At the Closing:


 


(a)           Seller Deliveries. 
Seller shall deliver to Purchaser the items described in clauses (i) through
(vii) below:


 


(i)            one
or more bills of sale, in form and substance reasonably satisfactory to
Purchaser and Seller (collectively, the “Bill of Sale”), executed by
Seller and its Affiliates with respect to the Transferred Assets owned by each
such Person;


 


(ii)           assignments
of contracts, in form and substance reasonably satisfactory to Purchaser and
Seller (the “Assignments of Contracts”), executed by Seller and its
Affiliates with respect to the SRAM Purchase Orders and SRAM Contracts to which
each such Person is a party;


 


(iii)          the
Intellectual Property Agreement, dated as of the Closing Date, in the form
attached hereto as Exhibit F (the “IP Agreement”), executed
by Seller;


 


(iv)          the
Amendment to the Letter of Intent between the parties dated February 12,
2008 (the “Letter of Intent”), substantially in the form attached hereto
as Exhibit G (the “LOI Amendment”), executed by Seller and
Parent;


 


(v)           the
Reseller Agreement, dated as of the Closing Date, in the form attached hereto
as Exhibit H (the “Reseller Agreement”), executed by Seller;


 


(vi)          evidence
that the individuals
signing this Agreement and the Collateral Agreements on behalf of Seller and
its Affiliates are authorized to do so; and


 


(vii)         all
other documents, certificates, instruments or writings required hereunder to be
delivered by Seller or reasonably requested by Purchaser in connection
herewith.


 


(b)           Purchaser Deliveries. 
Purchaser shall deliver to Seller the items described in clauses (i) through
(vi) below:


 


(i)            the
Closing Payment by wire transfer of immediately available funds to the account
designated in writing by Seller;


 


(ii)           any
sales tax applicable to the transfer of U.S. based Transferred Assets as set
out in any Bill of Sale delivered to Purchaser;


 


(iii)          the
IP Agreement, executed by Purchaser;


 


(iv)          the
LOI Amendment, executed by Purchaser;


 


(v)           the
Reseller Agreement, executed by Purchaser;


 


8

















 


CONFIDENTIAL TREATMENT REQUESTED


 


(vi)          evidence
that the individuals signing this Agreement and the Collateral Agreements on
behalf of Purchaser are authorized to do so; and


 


(vii)         all
other documents, certificates, instruments or writings required hereunder to be
delivered by Purchaser or reasonably requested by Seller in connection
herewith.


 


(c)           Collateral Agreements. 
The Bill of Sale, Assignments of Contracts, IP Agreement and Reseller
Agreement shall constitute, collectively, the “Collateral Agreements.”


 


5.3           Delivery of Purchased Assets.  Title to the Transferred Assets will pass to
Purchaser as of the Closing at the locations where such Transferred Assets are
physically located.  Promptly following
the Closing, Seller will place Purchaser in full possession and control of the
Transferred Assets and all other information to be provided in accordance with
the terms of the IP Agreement, and Purchaser shall promptly remove the
Transferred Assets from Seller’s premises as follows:


 


(a)           All
Transferred Assets and other information capable of electronic transmission
will be transmitted to Purchaser in such manner, as reasonably instructed by
Purchaser.


 


(b)           All
other assets and information will be made available to Purchaser by Seller at
the facilities where such items are currently located.  Purchaser and Seller shall agree on a
schedule for the transfer of such Transferred Assets as soon as practicable
following the Closing.  Seller shall
allow reasonable access to its premises and otherwise cooperate reasonably with
Purchaser so that Purchaser may promptly remove such items.  Seller shall, at its expense:  (i) disassemble and crate all
Transferred Equipment in accordance with applicable industry standards and
subject to appropriate manufacturer certification; and (ii) make any
permanent or temporary modifications to its facilities (including the removal
of windows or doors), in each case as may be necessary for the removal of any
Transferred Equipment from Seller’s premises. 
Purchaser shall otherwise be responsible for the removal and
transportation of such assets, at its cost and risk of loss.


 


(c)           Seller
shall have no responsibility for the maintenance of the Transferred Equipment
following the Closing.


 


(d)           Seller
shall have the right to retain copies and/or originals of the databases,
documentation, records and other Transferred Assets described in Section 2.1(f) solely
for archival purposes and for use related to warranty claims and other customer
claims concerning SRAM Products sold by Seller prior to the Closing.


 


(e)           Seller
shall obtain and deliver to Purchaser within 30 days following the Closing Date
all Consents and waivers required to permit the assignment to Seller of the key
SRAM contracts listed on Schedule 5.3(e) hereto (the “Key SRAM
Contracts”).  Seller will use
commercially reasonable efforts to effect the assignment of the other SRAM
Contracts as soon as possible after the Closing.


 


5.4           Conditions Precedent to Obligations of Purchaser.
The obligations of Purchaser under this Agreement to consummate the
transactions contemplated hereby will be


 


9

















 


CONFIDENTIAL TREATMENT REQUESTED


 


subject to the satisfaction, at or prior to the  Closing, of all of the
following conditions, any one or more of which may be waived at the option of
Purchaser:


 


(a)           All
representations and warranties of Seller made in this Agreement or in any
exhibit, schedule or document delivered pursuant hereto shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date.


 


(b)           All
of the terms, covenants and conditions of this Agreement to be complied with
and performed by Seller on or prior to the Closing Date shall have been duly
complied with or performed.


 


(c)           No
suit, action, claim or governmental proceeding shall be pending against, and no
order, decree or judgment of any court, agency or Governmental Authority shall
have been rendered against, any party hereto that would render it unlawful, as
of the Closing Date, to effect the transactions contemplated by this Agreement
in accordance with its terms.


 


5.5           Conditions Precedent to Obligations of Seller.  The obligations of Seller under this
Agreement to consummate the transactions contemplated hereby will be subject to
the satisfaction, at or prior to the Closing, of all the following conditions,
any one or more of which may be waived at the option of Seller:


 


(a)           All
representations and warranties of Purchaser made in this Agreement or in any
exhibit, schedule or document delivered pursuant hereto shall be true and
complete in all material respects as of the Closing Date as if made on and as
of that date.


 


(b)           All
of the terms, covenants and conditions of this Agreement to be complied with
and performed by Purchaser on or prior to the Closing Date shall have been duly
complied with or performed.


 


(c)           No
suit, action, claim or governmental proceeding shall be pending against, and no
order, decree or judgment of any court, agency or other Governmental Authority
shall have been rendered against, any party hereto that would render it
unlawful, as of the Closing Date, to effect the transactions contemplated by
this Agreement in accordance with its terms.


 


ARTICLE 6


 


REPRESENTATIONS AND WARRANTIES OF SELLER


 


Seller
hereby makes the following representations and warranties to Purchaser, each of
which shall be true and correct as of the date hereof and as of the Closing
Date and shall be unaffected by any investigation heretofore or hereafter made.


 


6.1           Organization and Good Standing.  Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted.


 


10

















 


CONFIDENTIAL TREATMENT REQUESTED


 


6.2           Authorization and Effect of Agreement. 
Seller and its Affiliates each has the requisite corporate power and
authority to execute and deliver this Agreement and the Collateral Agreements
to which it is a party, and to perform the transactions contemplated hereby and
thereby.  The execution and delivery by
Seller of this Agreement, the execution and delivery by Seller and its
Affiliates of the Collateral Agreements and the performance by each of them of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Seller and its Affiliates, as
applicable, and do not and will not require any consent or approval of any
Governmental Authority or any other Person. 
This Agreement has been duly executed and delivered by Seller and
constitutes a valid and binding agreement of Seller, enforceable against Seller
in accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, fraudulent conveyance and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity.  Each of
the Collateral Agreements, when executed and delivered by Seller and its
Affiliates at the Closing, will constitute a valid and binding agreement of
Seller and/or its Affiliate(s), as applicable, enforceable against such Person(s) in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, fraudulent conveyance and similar laws affecting creditors’
rights and remedies generally and subject, as to enforceability, to general
principles of equity.


 


6.3           No Conflicts.  The execution and delivery of this Agreement
and the Collateral Agreements by Seller and its Affiliates does not, and the
performance by Seller and its Affiliates of the transactions contemplated by
this Agreement and the Collateral Agreements will not, conflict with, or result
in any violation of, or constitute a default under, or, as applicable, give
rise to the creation of a Lien upon any of the Transferred Assets or to a right
of termination, cancellation or acceleration of any obligation or to a loss of
a benefit under, (a) any provision of the Certificate of Incorporation or
Bylaws or other applicable constituent documents of Seller or any of its
Affiliates, (b) except for Consents required to permit Seller or its
Affiliates to assign SRAM Contracts (each of which consent is described on Exhibit E
hereto), any of the terms, conditions or provisions of any Contract by which
Seller of any of its Affiliates is bound, or (c) any Law or Order
applicable to or binding on Seller or any of its Affiliates or any of their
respective assets.  Except for any
Consents required to permit the assignment of SRAM Contracts, no Consent is
required to be obtained, made or given (whether pursuant to applicable Law,
Contract or otherwise) in connection with the execution and delivery of this
Agreement or any of the Collateral Agreements by Seller or any of its
Affiliates or the performance by any of them of the transactions contemplated
hereby or thereby.


 


6.4           No Third Party Options.  There are no existing agreements, options or
commitments granting to any Person the right to acquire any of the Transferred
Assets or any interest therein except for sales of SRAM Product Inventory in
the ordinary course of business.


 


6.5           Financial Data.  All historical financial data related to the
Business provided to Purchaser in connection with the negotiation of the
transactions contemplated hereby was accurately extracted from the books and
records of Seller.  Such financial
information presents fairly, in all material respects, the financial position
and the results of operations of the Business for the periods indicated
(exclusive of the Excluded Assets and the Retained Liabilities), except for the
omission of certain information required by GAAP to be included in footnotes to
such financial information, which footnotes have not been prepared by
Seller.  Seller makes no other


 


11

















 


CONFIDENTIAL TREATMENT REQUESTED


 


representations with regard to such financial information.  Purchaser acknowledges that such financial
information was prepared solely for the purpose of this Agreement and that the
Business was not conducted on a stand-alone basis as a separate entity during
the periods indicated in such financial information and that the financial
information includes allocations and estimates not necessarily indicative of
the costs that would have resulted if the Business had been operated and
conducted on a stand-alone basis as a separate entity during such periods.


 


6.6           Litigation.


 


(a)           There
are no judicial or administrative actions, proceedings or investigations
pending or threatened that question the validity of this Agreement or any
action taken or to be taken by Seller in connection with this Agreement.


 


(b)           There
are no lawsuits, claims, administrative or other proceedings or investigations
relating to the conduct of the Business or otherwise affecting the Transferred
Assets pending or threatened against Seller or any of its Affiliates, except as
disclosed on Schedule 6.6(b) hereto.


 


(c)           There
are no Orders of any Governmental Authority binding on Seller or any of its
Affiliates that relate to the Business or otherwise affect the Transferred
Assets.


 


6.7           Title to and Condition of Assets.  Seller and each of its Affiliates owns,
leases or has the legal right to use all of its respective Transferred Assets,
as identified in the exhibits hereto (other than SRAM Intellectual Property
which is subject to the IP Agreement) and has good title to (or in the case of
leased Transferred Assets, valid leasehold interests in) all such Transferred
Assets (other than SRAM Intellectual Property which is subject to the IP
Agreement).  The Transferred Assets are
in good operating condition and repair, subject to normal wear, are usable in
the regular and ordinary course of business and conform to all applicable
Laws.  At the Closing, Seller and its
Affiliates will sell, convey, assign, transfer and deliver to Purchaser (i) valid
and marketable title to all of the Transferred Assets, and (ii) all their
respective right and interest in and to all of the Transferred Assets (other
than SRAM Intellectual Property which is subject to the IP Agreement), free and
clear of any Liens.


 


6.8           Products


 


(a)           Attached
hereto as Schedule 6.8(a) is a complete list of the SRAM Products
by part number.


 


(b)           All SRAM
Product Inventory consisting of finished SRAM Products is
of good and merchantable quality and is  free of defects, except for such
inventory that is designated as defective on Exhibit B hereto and
as to which no value has been assigned. 
All other SRAM Product Inventory meets Seller’s defined yield
expectations as set forth on Schedule 6.8(b) hereto, but no
warranty of merchantability or other warranties are given for such goods.


 


(c)           Schedule
6.8(c) sets forth the standard form terms and conditions of all
product warranties generally extended by Seller to purchasers of the SRAM
Products during the preceding three years.


 


12

















 


CONFIDENTIAL TREATMENT REQUESTED


 


(d)           Aside
from its obligations under such standard warranties, Seller is not under any
liability or obligation with respect to the return of any inventory in the
possession of distributors or other customers.


 


6.9           Contracts. 
Each SRAM Contract is valid and enforceable in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, fraudulent conveyance and similar laws affecting creditors’ rights
and remedies generally and subject, as to enforceability, to general principles
of equity.  Seller is not, and to Seller’s
Knowledge, no other party thereto is, in material default in the performance,
observance or fulfillment of any obligation under the SRAM Contracts.  To Seller’s Knowledge, no event has occurred
which, with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder.  To
Seller’s Knowledge, the SRAM Contracts represent all contracts material to the
operation of the Business.


 


6.10         Business Contained in Seller. All of the
assets, properties and rights under agreements, contracts, licenses and leases
constituting the Transferred Assets are owned, leased, held or licensed by
Seller or its Affiliates.  Where not
owned by Seller, the owner is indicated on the exhibits attached hereto.


 


6.11         Tax Matters.  All material Tax Returns
that are required to be filed on or before the date hereof with respect to any
Tax by or on behalf of Seller have been filed and all Taxes shown to be due and
payable on such Tax Returns have been paid except where such Tax is being
contested in good faith by appropriate proceedings or where the failure to so
file or pay would not be reasonably likely to be material to Seller.  There are no Liens for Taxes upon any of the
Transferred Assets, except for Liens for Taxes not yet due and payable.  For current property taxes, Purchaser and
Seller agree that the assessment date (or lien date) will determine the
ownership of the liability. If the Closing takes place after the assessment
date, then the property tax liability remains with Seller. If the Closing takes
place before the assessment date then the liability will transfer to Purchaser.


 


6.12         Compliance with Laws.  Seller, its Affiliates and their respective
officers and employees have complied in all material respects with, are not in
violation in any material respect of, and have not received any notices of
violation with respect to, any foreign, federal, state, province or local Law
with respect to the conduct of the Business or the ownership or operation of
the Transferred Assets.  There are no governmental
licenses, permits or approvals issued to Seller that relate exclusively to the
Business or the SRAM Products.


 


6.13         Restrictions on Business Activities.  There is no agreement (noncompete or
otherwise), commitment, judgment, injunction, order or decree to which Seller,
any of its Affiliates or, to Seller’s Knowledge, any of their respective
officers is a party or otherwise binding upon Seller, any of its Affiliates or,
to Seller’s Knowledge, any of their respective officers that has or reasonably
could be expected to have the effect of prohibiting or materially impairing the
transactions contemplated hereby, the conduct of the Business by Purchaser or
the performance of any party’s obligations under this Agreement or the
Collateral Agreements.


 


6.14         Disclosure.  No representation or warranty of Seller
contained herein, and no statement contained in any document or other
instrument furnished or to be furnished by Seller


 


13

















 


CONFIDENTIAL TREATMENT REQUESTED


 


to Purchaser in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the representation,
warranty or statement so made not misleading. 
Seller has delivered to Purchaser complete and accurate copies of each
Contract or other document referred to in any Exhibit or Schedule hereto
or otherwise included in the Transferred Assets.


 


6.15         Brokers.  No broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller.


 


ARTICLE
7



REPRESENTATIONS AND WARRANTIES OF PURCHASER


 


Purchaser hereby makes the following
representations and warranties to Seller, each of which shall be true and
correct as of the date hereof and as of the Closing Date and shall be
unaffected by any investigation heretofore or hereafter made.


 


7.1           Corporate Organization.  Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted.


 


7.2           Authorization and Effect of Agreement.  Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and the Collateral
Agreements and to perform the transactions contemplated hereby and
thereby.  The execution and delivery by
Purchaser of this Agreement and the Collateral Agreements and the performance
by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Purchaser, and do
not and will not require any consent or approval of any Governmental Authority
or any other Person.  This Agreement has
been duly executed and delivered by Purchaser and constitutes a valid and
binding agreement of Purchaser, enforceable against Purchaser in accordance
with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, fraudulent conveyance and similar laws affecting creditors’ rights
and remedies generally and subject, as to enforceability, to general principles
of equity.  Each of the Collateral
Agreements, when executed and delivered by Purchaser at the Closing, will
constitute a valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles of
equity.


 


7.3           No Conflicts. The execution and delivery of this Agreement and the Collateral
Agreements by Purchaser does not, and the performance by Purchaser of the
transactions contemplated by this Agreement and the Collateral Agreements will
not, conflict with, or result in any violation of, or constitute a default
under (a) any provision of the Certificate of Incorporation or Bylaws of
Purchaser, (b) any of the terms, conditions, or provisions of any Contract
by which Purchaser is bound, or (c) any Law or Order applicable to or
binding on Purchaser.  No Consent is
required to be obtained, made or given (whether pursuant to applicable 


 


14

















 


CONFIDENTIAL TREATMENT REQUESTED


 


Law, Contract or otherwise) in connection with the execution and
delivery of this Agreement or any of the Collateral Agreements by Purchaser or
the performance by Purchaser of the transactions contemplated hereby or thereby.


 


7.4           Litigation. 
There are no judicial or administrative actions, proceedings or
investigations pending or, to Purchaser’s knowledge, threatened that question
the validity of this Agreement or any action taken or to be taken by Purchaser
in connection with this Agreement.


 


7.5           Condition of Transferred Assets. Purchaser
and its representatives and agents have had and exercised, prior to the date
hereof, the right to make all inspections and investigations of the Business
and the Transferred Assets deemed necessary or desirable by Purchaser.  In light of these inspections and
investigations and the representations and warranties made to Purchaser by
Seller in Article 6 hereof, Purchaser is relinquishing any right to any
claim based on any representations and warranties other than those specifically
included in Article 6 hereof  and in the Collateral
Agreements.  ALL OTHER WARRANTIES OF
MERCHANTABILITY, INFRINGEMENT AND FITNESS FOR ANY PARTICULAR PURPOSE, AND ALL
OTHER WARRANTIES ARISING UNDER THE UNIFORM COMMERCIAL CODE (OR SIMILAR
FOREIGN LAWS), ARE HEREBY WAIVED BY PURCHASER. 
PURCHASER FURTHER REPRESENTS THAT NEITHER SELLER NOR ANY OTHER PERSON
HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY
OR COMPLETENESS OF ANY INFORMATION REGARDING ANY OF SELLER, THE BUSINESS, THE
TRANSFERRED ASSETS OR THE ASSUMED LIABILITIES NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT OR IN THE COLLATERAL AGREEMENTS, AND NEITHER SELLER NOR ANY OTHER
PERSON WILL HAVE OR BE SUBJECT TO ANY LIABILITY TO PURCHASER OR ANY OTHER
PERSON RESULTING FROM THE DISTRIBUTION TO PURCHASER OR ITS REPRESENTATIVES OR
PURCHASER’S USE OF, ANY SUCH INFORMATION RELATING TO THE BUSINESS, ANY OFFERING
MEMORANDUM OR OTHER PUBLICATION PROVIDED TO PURCHASER OR ITS REPRESENTATIVES,
OR ANY OTHER DOCUMENT OR INFORMATION PROVIDED TO PURCHASER OR ITS
REPRESENTATIVES IN CONNECTION WITH THE SALE OF THE BUSINESS.  SUBJECT TO THE REPRESENTATIONS AND WARRANTIES
OF SELLER CONTAINED HEREIN AND IN THE COLLATERAL AGREEMENTS, (I) PURCHASER
IS ASSUMING ALL LIABILITIES AND OBLIGATIONS WITH RESPECT TO THE CONDITION OF
THE TRANSFERRED ASSETS, AND (II) PURCHASER IS ACKNOWLEDGING THAT IT IS
BUYING THE TRANSFERRED ASSETS ON AN “AS IS, WHERE IS” BASIS “WITH ALL FAULTS”
AND THAT SELLER IS NOT MAKING ANY FURTHER REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, RESPECTING THE TRANSFERRED ASSETS.  PURCHASER ACKNOWLEDGES THAT ANY FINANCIAL
PROJECTIONS PROVIDED BY SELLER ARE FOR ILLUSTRATIVE PURPOSES ONLY AND DO NOT FORM THE
BASIS FOR ANY LIABILITY.


 


7.6           Brokers. 
No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Purchaser.


 


15
















 


CONFIDENTIAL TREATMENT REQUESTED


 


ARTICLE
8



COVENANTS


 


8.1           Employees. Purchaser shall have the right, but shall be
under no obligation, either prior to or after the Closing, to make offers of
employment (to be effective at or following the Closing) to such current
employees of the Business as it shall designate in its sole discretion.  Any such offer made prior to the Closing may
be conditioned upon the consummation of the transactions contemplated hereby at
the Closing.  All obligations of Seller
to all employees of the Business through the Closing, including, without
limitation, obligations for salary, sales commissions, bonus compensation,
payroll taxes, fringe benefits and severance pay, are and shall remain, the
sole obligations of Seller.  All employment
arrangements between Purchaser and any such employees that may be hired by
Purchaser will be negotiated directly between Purchaser and such employees.


 


8.2           Accounts Receivable. 
Purchaser shall promptly remit to Seller any payments received by
Purchaser following the Closing Date with respect to any accounts receivable of
Seller accrued as of the Closing Date. 
Seller shall promptly remit to Purchaser any payments received by Seller
following the Closing Date with respect to any accounts receivable of the
Business accruing from and after the Closing Date.


 


8.3           Covenant Not to Compete.


 


(a)           Ownership of Competing Business Interests.  Seller, for itself and on behalf
of Parent and SCK, agrees that prior to the fifth anniversary of the Closing
Date, none of them will, directly or indirectly, own, manage, operate, control
or participate in the ownership, management, operation or control of any
business, whether in corporate, proprietorship or partnership form or
otherwise, engaged in the sale of Competing Products, provided,  however, that
nothing herein shall preclude Seller, Parent or SCK from (i) owning a
non-controlling equity interest in any publicly traded company listed on a
stock exchange, or (ii) investing in ventures, partnerships or other
entities that do not constitute affiliates (as such term is defined in the
Securities Exchange Act of 1934, as amended) of Seller or any of its
Affiliates.


 


(b)           Manufacture and Sale of Competing Products.  Seller, for itself and on behalf of Parent
and SCK, further agrees that prior to the fifth anniversary of the Closing
Date, Seller, Parent and SCK shall not make, have made, sell, offer to sell,
import or otherwise distribute any Competing Products; provided, however,
that nothing herein shall preclude Seller, Parent or SCK from making (or having
made), using, purchasing, selling, importing or otherwise distributing a
Competing Product, to the extent that such Competing Product is incorporated
into any of such party’s or its Affiliates’ end products.


 


(c)           Nonsolicitation of Employees.  Seller, for itself and on behalf of Parent
and SCK, agrees that during the period in which they are bound by the covenants
contained in Sections 8.3(a) and 8.3(b), none of them will, directly or
indirectly, specifically target, solicit or induce any employee of Purchaser (i) to
discontinue his or her relationship with Purchaser or (ii) to accept
employment by, or enter into a business relationship with Seller or any of its
Affiliates; provided, however, that Seller, Parent and SCK shall
not be prohibited from


 


16

















 


CONFIDENTIAL TREATMENT REQUESTED


 


(A) soliciting by means of general advertisement or third party
agent (it being permissible for third party agents to solicit Purchaser’s employees
as long as Seller, Parent and/or SCK do not direct such third party agents to
solicit Purchaser’s employees) or (B) soliciting or hiring individuals who
initiate contact with Sony, Parent or SCK regarding potential employment.


 


8.4           Confidentiality.


 


(a)           Seller’s Obligations. 
Seller agrees that from and after the Closing, Seller will
not, directly or indirectly, disclose, reveal, divulge or communicate to any
person or entity other than authorized officers, directors and employees of
Purchaser, or use or otherwise exploit for its own benefit or for the benefit
of anyone other than Purchaser, any Confidential Information (as defined
below).  Seller shall not have any
obligation to keep confidential any Confidential Information if and to the
extent disclosure thereof is required by Law or in the enforcement of its
rights hereunder; provided, however, that in the event disclosure
is required by applicable Law, Seller shall, to the extent reasonably possible,
provide Purchaser with prompt notice of such requirement prior to making any
disclosure so that Purchaser may seek an appropriate protective order.  For purposes of this Section 8.4, “Confidential
Information” shall mean any confidential information with respect to the
conduct or details of the Business, including, without limitation, methods of
operation, products, proposed products, former products, prices, fees, costs,
plans, designs, technology, inventions, trade secrets, know-how, software,
marketing methods, policies, plans, or other specialized information or
proprietary matters.  The term
Confidential Information does not include, and there shall be no obligation
hereunder with respect to, information that (a) is generally available to
the public on the date of this Agreement, (b) becomes generally available
to the public other than as a result of a disclosure by Seller not otherwise
permissible thereunder, (c) is independently developed by Seller as
established by documentary evidence, (d) Seller learns from other sources
where such sources have not, to Seller’s Knowledge, violated their
confidentiality obligation to Purchaser, or (e) Seller or its Affiliates
use in other lines of business.


 


(b)           Purchaser’s Obligations.  Purchaser shall be bound to the same extent
as Seller to the confidentiality agreements listed on Schedule 8.4,
provided, and to the extent, that such agreements or other documents provided
to Purchaser by Seller clearly identify the confidential information subject to
such agreements.  If requested by the
other party or parties to any such agreement, Purchaser shall sign a
counterpart to such confidentiality agreement confirming its agreement to be so
bound.


 


8.5           Specific Performance: Reformation.  The parties hereto specifically acknowledge
and agree that the remedy at law for any breach of Sections 8.3 or 8.4 may be
inadequate and that Purchaser, in addition to any other relief available to it,
shall be entitled to seek temporary and permanent injunctive relief without the
necessity of proving actual damage or posting any bond whatsoever.  In the event that the provisions of Sections
8.3 or 8.4 should ever be deemed to exceed the limitations provided by
applicable Law, then the parties hereto agree that such provisions shall be
reformed to set forth the maximum limitations permitted.


 


8.6           Warranty Support.  Purchaser will make available for sale to
Seller SRAM Products for a period of one year following the Closing Date in
order for Seller to satisfy, in its good faith determination, Seller’s warranty
obligations for SRAM Products distributed prior to


 


17

















 


CONFIDENTIAL TREATMENT REQUESTED


 


the Closing Date.  Purchaser
shall sell such SRAM Products to Seller for such purpose at Purchaser’s then
current manufacturing cost.  Delivery of
such products shall be pursuant to Seller’s standard purchase order terms and
conditions.


 


8.7           Publicity. 
Neither party will issue or cause the publication of any press release
or other public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of the other party; provided,
however, that nothing herein will prohibit either party from issuing or
causing publication to the extent that such party determines, on advice of
counsel, that such publication is required by Law or the rules of any
national stock exchange applicable to it, in which event the party making such
determination will use reasonable efforts to allow the other party reasonable
time to comment on such release or announcement, and will make all revisions
thereto reasonably requested by such other party, in advance of its issuance.


 


8.8           Maintenance of Books and Records.  Each of Seller and Purchaser shall preserve
until the second anniversary of the Closing Date all electronic records (excluding
emails) possessed by such party directly relating to the assets, liabilities or
operations of the Business prior to the Closing Date.  After the Closing Date, where there is a
legitimate purpose, such party shall provide the other party with access, upon
prior reasonable written request specifying the need therefor, during regular
business hours, to (i) the relevant officers and employees of such party
and (ii) the books of account and records of such party, but, in each
case, only to the extent relating to the assets, liabilities and operations of
the Business prior to the Closing Date, and the other party and its
representatives shall have the right to make copies of such books and records; provided,
however, that the foregoing right of access shall not be exercisable in
such a manner as to interfere unreasonably with the normal operations and
business of such party; and further  provided that, as to so much
of such information as constitutes trade secrets or confidential business
information of such party, the requesting party and its representatives will
use due care to not disclose such information except (i) as required by
Law, (ii) with the prior written consent of such party, which consent
shall not be unreasonably withheld, or (iii) where such information
becomes available to the public generally, or becomes generally known to
competitors of such party, through sources other than the requesting party and
its representatives.  Such records may
nevertheless be destroyed by a party if such party sends the other party
written notice of its intent to destroy records, specifying with particularity
the contents of the records to be destroyed. 
Such records may then be destroyed after the 30th day following delivery
of such notice unless the other party objects to the destruction, in which case
the party seeking to destroy the records shall either agree to retain such
records or to deliver such records to the objecting party.


 


8.9           Bulk Transfer Laws. Purchaser acknowledges
that Seller has not taken, and does not intend to take, any action required to
comply with any applicable bulk sale or bulk transfer laws or similar laws.


 


8.10         Insurance. 
Prior to and following the Closing, the coverage under all insurance
policies of Seller and its Affiliates related to the Business shall continue in
force only for the benefit of Seller and its Affiliates and not for the benefit
of Purchaser.  Purchaser agrees to
arrange for its own insurance policies with respect to the Business covering
all periods following the Closing and agrees not to seek, through any means, to
benefit from any of Seller’s or its


 


18

















 


CONFIDENTIAL TREATMENT REQUESTED


 


Affiliates’ insurance policies which may provide coverage for claims
relating in any way to the Business.


 


8.11         Customer Support. 
Purchaser will assume front line customer
support functions with respect to the Business on and after the Closing
Date.  Purchaser will respond to initial
customer support inquiries, including inquiries related to SRAM Products sold
by Seller prior to the Closing. 
Purchaser will perform the initial response functions listed on Schedule 8.11
with respect to such SRAM Products within the times noted thereon.  Seller shall reimburse Purchaser for the cost
of such services in the amounts set forth on Schedule 8.11.  Any additional customer service support to be
provided by Purchaser with respect to SRAM Products sold prior to the Closing
will be subject to further agreement between the parties.


 


8.12         Taking of Necessary Action; Further Action.  If, at any time after the Closing Date, any
further action is necessary to carry out the purposes of this Agreement and to
vest Purchaser with full right, title and possession to the Transferred Assets,
Seller will take, and cause its Affiliates to take, all such lawful and
necessary action. Neither Purchaser nor Seller shall take any action that is
materially inconsistent with its obligations under this Agreement.


 


8.13         Continued CIS-SRAM Operations.  Purchaser acknowledges that a material
inducement for Seller to enter into this Agreement is Purchaser’s good faith
commitment to support the manufacture, sale and distribution of CIS-SRAMs,
without which Seller would not have entered into this Agreement.  Purchaser further acknowledges that it is
Purchaser’s current intention, following the Closing, to continue to actively
support the development, manufacture and sale of CIS-SRAMs to the mutual
financial advantage of both Purchaser and Seller.  To that end, Purchaser covenants that during
the two-year period in which Contingent Payments may be payable, Purchaser will
not develop a product that directly competes with CIS-SRAM; provided, however,
that Purchaser shall be relieved from such obligation in the event that any
viable claim of infringement is asserted against Purchaser by a third party or
Purchaser encounters a material technical problem which, in either case,
Purchaser reasonably determines would materially affect its ability to
manufacture, sell or distribute CIS-SRAMs but would not so affect such
competitive product.  Seller
acknowledges, however, that the SRAM industry is characterized by rapidly
changing technologies, evolving industry standards and frequent new product
introductions and that Purchaser must be able to react, on a timely and
cost-effective basis, to meet changing customer requirements.  Accordingly, Seller acknowledges that, except
as specifically provided in this Section 8.13, Purchaser’s obligation to
make Contingent Payments shall not in any way affect Purchaser’s right to
exercise management control over all aspects of its business.  Without limiting the generality of the
foregoing, Purchaser shall not be required to: 
(i) continue to manufacture or sell CIS-SRAMs for any period of
time following the Closing; (ii) devote more resources to the sale of
CIS-SRAMs than is, in the opinion of Purchaser’s management, prudent in the
context of Purchaser’s overall business; or (iii) seek to maximize
CIS-SRAM Revenues where to do so, in the opinion of Purchaser’s management,
would have an adverse effect on Purchaser’s profitability or on the sale of
Purchaser’s other products.


 


8.14         Reseller Agreement.   Notwithstanding any rights conferred on
Purchaser in this Agreement or the IP Agreement to the contrary, if any finished
SRAM Products delivered by Seller to Purchaser, and bearing the Sony logo on
the exterior packaging, have not been sold by


 


19

















 


CONFIDENTIAL TREATMENT REQUESTED


 


Purchaser to an unaffiliated third party by the 180th day following the
Closing Date, any sales of such SRAM Products made by Purchaser thereafter
shall be subject to the Reseller Agreement.


 


8.15         Financial Statements.


 


(a)           On
or before the 65th day after the Closing Date, Seller shall, to the extent
required by the SEC, deliver to Purchaser, financial statements of the Business
to support Purchaser’s SEC Form 8-K filing consistent with SEC
requirements.  Such financial statements
shall be in the form required by Regulation S-X, subject to such modifications
as the SEC may permit, and audited by registered independent public accountants
(collectively, the “Audited Financial Statements”).  Seller shall bear all of its internal costs
related to the preparation of the Audited Financial Statements.  Seller and Purchaser shall share equally in (i) the
fees and expenses of Seller’s registered independent public accountants
incurred in connection with their services related to the Audited Financial
Statements and (ii) the reasonable fees and expenses of Seller’s outside
counsel incurred in connection with the preparation of the Audited Financial
Statements and approved in advance by Purchaser (which approval shall not be
unreasonably withheld).


 


(b)           In
addition, Seller shall, to the extent required by the SEC, deliver to Purchaser
any unaudited interim financial information of the Business required by the SEC
in connection with Purchaser’s SEC reporting obligations.  Such interim financial information shall be
in the form required by Regulation S-X, subject to such modifications as
the SEC may permit.  Seller shall bear
all of its internal costs related to the preparation of such interim financial
statements.  Seller and Purchaser shall
share equally in (i) the fees and expenses of Seller’s registered independent
public accountants in connection with their services related to such interim
financial information and (ii) the reasonable fees and expenses of Seller’s
outside counsel incurred in connection with the preparation of such interim
financial information and approved in advance by Purchaser (which approval
shall not be unreasonably withheld).


 


ARTICLE
9



SURVIVAL AND INDEMNIFICATION


 


9.1           Survival of Representations, Warranties and Covenants


 


(a)           The
representations and warranties of Seller and Purchaser contained in this
Agreement shall survive the Closing until the expiration of two years from the
Closing Date. No claims for Losses based on such representations and warranties
may be asserted following the expiration of such period.  The covenants contained in this Agreement
shall survive until they terminate pursuant to their terms.


 


(b)           No
party hereto shall be deemed to have breached any representation, warranty, or
covenant contained herein if (i) the other party was aware prior to the
execution and delivery of this Agreement of the breach of, or inaccuracy in, or
of any facts or circumstances constituting or resulting in the breach of, or
inaccuracy in, such representation, warranty or covenant, or (ii) such
party shall have notified the other party hereto in writing, on or prior to the
Closing Date, of the breach of, or inaccuracy in, or of any facts or
circumstances constituting or


 


20

















 


CONFIDENTIAL TREATMENT REQUESTED


 


resulting in the breach of or inaccuracy in, such representation,
warranty or covenant, and such other party has permitted the Closing to occur.


 


9.2           Indemnification.


 


(a)           From
and after the Closing Date and subject to Sections 9.1 and 9.4, Seller agrees
to indemnify and hold harmless Purchaser against and in respect of any and all
losses, claims, damages, liabilities, reasonable costs and expenses, including
reasonable legal fees and expenses (“Losses”), resulting or arising from
or otherwise relating to (i) any breaches of the representations and
warranties of Seller or its Affiliates set forth in this Agreement or any of
the Collateral Agreements, (ii) any nonfulfillment of or material failure
to comply with any covenant of Seller or its Affiliates set forth in this
Agreement or any of the Collateral Agreements, or (iii) any Retained
Liability.


 


(b)           From
and after the Closing Date and subject to Sections 9.1 and 9.4, Purchaser
agrees to indemnify and hold harmless Seller against and in respect of any and
all Losses resulting or arising from or otherwise relating to (i) any
breaches of Purchaser’s representations and warranties set forth in this
Agreement, (ii) any nonfulfillment of or material failure to comply with
any covenant set forth in this Agreement by Purchaser, (iii) the operation
of the Business or the Transferred Assets or actions taken by or on behalf of
Purchaser after the Closing, or (iv) any Assumed Liability.


 


9.3           Method of Asserting Claims, etc.  All claims for indemnification by any
Indemnified Party hereunder shall be asserted and resolved as set forth in this
Section 9.3.  In the event that any
written claim or demand for which an Indemnifying Party would be liable to any
Indemnified Party hereunder is asserted against or sought to be collected from
any Indemnified Party by a third party, such Indemnified Party shall promptly,
but in no event more than 30 days following such Indemnified Party’s receipt of
such claim or demand, notify the Indemnifying Party of such claim or demand and
the amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and demand)
(the “Claim Notice”).  The
Indemnifying Party shall have 30 days from the delivery of the Claim Notice
(the “Notice Period”) to notify the Indemnified Party whether or not it
desires to defend (or permit any of its predecessors (a “Permitted Designee”)
to defend) the Indemnified Party against such claim or demand.  An election to assume the defense of such
claim or demand shall not be deemed to be an admission that the Indemnifying
Party is liable to the Indemnified Party in respect of such claim or
demand.  All costs and expenses incurred
by the Indemnifying Party in defending such claim or demand shall be a
liability of, and shall be paid by, the Indemnifying Party; provided, however,
that the amount of such expenses shall be a liability of the Indemnifying Party
hereunder, subject to the limitations set forth in this Article 9.  In the event that it is ultimately determined
that the Indemnifying Party is not obligated to indemnify, defend or hold the
Indemnified Party harmless from and against any third party claim, the
Indemnified Party shall reimburse the Indemnifying Party for any and all costs
and expenses (including, without limitation, attorney’s fees and court costs)
incurred by the Indemnifying Party in its defense of the third party
claim.  In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to defend or permit a Permitted Designee to defend, the Indemnified
Party against such claim or demand, except as hereinafter provided, the
Indemnifying Party shall have the right to defend the Indemnified Party by


 


21

















 


CONFIDENTIAL TREATMENT REQUESTED


 


appropriate proceedings.  If any
Indemnified Party desires to participate in any such defense or settlement for
which the Indemnifying Party has elected, pursuant to the prior sentence to
defend, or permit its Permitted Designee to defend, the Indemnified Party may
do so at its sole cost and expense.  The
Indemnified Party shall not settle a claim or demand without the consent of the
Indemnifying Party, which shall not be unreasonably withheld.  The Indemnifying Party shall not, without the
prior written consent of the Indemnified Party, which shall not be unreasonably
withheld, settle, compromise or offer to settle or compromise any such claim or
demand on a basis which would result in the imposition of a consent order,
injunction or decree that would restrict the future activity or conduct of the
Indemnified Party or any Subsidiary or Affiliate thereof.  If the Indemnifying Party elects not to
defend the Indemnified Party against a claim or demand for which the
Indemnifying Party has an indemnification obligation hereunder, whether by not
giving the Indemnified Party timely notice as provided above or otherwise, then
the amount of any such claim or demand, or, if the same shall be contested by
the Indemnified Party, then that portion thereof as to which such contest is
unsuccessful (and the reasonable costs and expenses pertaining to such contest)
shall be the liability of the Indemnifying Party hereunder, subject to the
limitations set forth in this Article 9. 
To the extent the Indemnifying Party shall control or participate in the
defense or settlement of any third party claim or demand, the Indemnified Party
will give the Indemnifying Party, its counsel and any Permitted Designee (with
respect to any liability for which the Indemnifying Party may have an indemnity
claim pursuant to any agreement it had made with such Permitted Designee as in
effect as of the date hereof), access to, during normal business hours, the
property and relevant business records and other documents, and shall permit them
to consult with the employees and counsel of the Indemnified Party.  The Indemnified Party shall use its best
efforts in the defense of all such claims. 
Any notice of a claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall state specifically
the representation, warranty, or covenant with respect to which the claim is
made, the facts giving rise to an alleged basis for the claim, and the amount
of the liability asserted against the Indemnifying Party by reason of the
claim.


 


9.4           Indemnification Amounts.  No Indemnifying Party shall have liability
under Sections 9.2(a) or 9.2(b) until the aggregate amount of Losses
to such Indemnified Party exceeds $200,000 (the “Basket Amount”), in
which case the Indemnified Party shall be entitled to recover Losses in an
amount up to 20% of the aggregate amount of the Closing Payment plus the Inventory Adjustment Payment; provided,
however, that the Indemnifying Party shall be liable only for the amount
by which all Losses exceed the Basket Amount; and provided, further,
that no individual claim for payment of a Loss may be made under Sections
9.2(a)(i)-(ii) or 9.2(b)(i)-(ii) unless such claim is an amount of
$75,000 or greater.  Nothing contained in
this Section 9.4 shall apply to limit in any way the amount that Purchaser
owes to Seller under Article 4 or that either party may recover against
the other under Article 4.


 


9.5           Losses Net of Insurance, Etc.  The amount of any Loss for which
indemnification is provided under Section 9.2 shall be net of (i) any
amounts recovered by the Indemnified Party pursuant to any indemnification by
or indemnification agreement with any third party, (ii) any insurance
proceeds or other cash receipts or sources of reimbursement received as an
offset against such Loss (each source named in clauses (i) and (ii), a “Collateral
Source”) and (iii) an amount equal to the present value of the Tax
benefit, if any, available to or taken by the Indemnified Party attributable to
such Loss. Indemnification under this Article 9 shall not be available to
Seller or Purchaser, as the case may be, unless the party seeking


 


22

















 


CONFIDENTIAL TREATMENT REQUESTED


 


indemnification under this Article 9 first uses all reasonable
efforts to seek recovery from all Collateral Sources. The parties acknowledge
and agree that no right of subrogation shall accrue or inure to the benefit of
any Collateral Source hereunder.  The
Indemnifying Party may require an Indemnified Party to assign the rights to
seek recovery pursuant to the preceding sentence; provided, however,
that the Indemnifying Party will then be responsible for pursuing such recovery
at its own expense.  If the amount to be
netted hereunder from any payment required under Section 9.2 is determined
after payment by the Indemnifying Party of any amount otherwise required to be
paid to an Indemnified Party pursuant to this Article 9, the Indemnified
Party shall repay to the Indemnifying Party, promptly after such determination,
any amount that the Indemnifying Party would not have had to pay pursuant to
this Article 9 had such determination been made at the time of such
payment.


 


9.6           Sole Remedy/Waiver.  To the extent permitted by Law, the indemnity
provisions of this Article 9 shall be the sole and exclusive remedy of the
parties with respect to claims arising under or related to this Agreement and
the Collateral Agreements that are asserted subsequent to the Closing;  provided, however,
that nothing contained in this Article 9 shall:  (i) prohibit any party from seeking an
injunction or any other equitable remedy in respect thereof or (ii) limit
in any manner any remedy at law or in equity to which an Indemnified Party
shall be entitled against an Indemnifying Party as a result of willful fraud or
intentional misrepresentation by the Indemnifying Party or any of its
employees, representatives or agents.


 


9.7           No Consequential Damages.  Notwithstanding anything to the contrary
contained herein, no Indemnifying Party shall be liable to or otherwise
responsible to any Indemnified Party for consequential, incidental or punitive
damages, for lost profits or for diminution in value which arise out of or
relate to this Agreement or the performance or breach thereof or any liability
retained or assumed hereunder.


 


9.8           Mitigation of Damages.  The Indemnified Party shall take all
reasonable steps to mitigate any Loss upon becoming aware of any event that
would reasonably be expected to, or does, give rise thereto, including
incurring costs only to the minimum extent necessary to remedy the breach or
other occurrence which gives rise to the Loss.


 


9.9           No Set-Off. 
Neither Seller nor Purchaser shall have any right to set-off any Losses
against any payments to be made by either of them pursuant to this Agreement or
otherwise.


 


ARTICLE 10



MISCELLANEOUS PROVISIONS


 


10.1         Notices. 
All notices and other communications required or permitted hereunder
will be in writing and, unless otherwise provided in this Agreement, will be
deemed to have been duly given when delivered in person or when dispatched by
electronic facsimile transfer (confirmed in writing by mail simultaneously
dispatched) or one business day after having been dispatched by a nationally
recognized overnight courier service to the appropriate party at the address
specified below:


 


23

















 


CONFIDENTIAL TREATMENT REQUESTED


 


(a)           If
to Purchaser, to:


 


GSI Technology, Inc.


2360
Owen Street


Santa
Clara, CA  95054


Attention: 
Chief Financial Officer


Facsimile No.:  (408) 980-8377


 


with a copy
(which will not constitute
notice)  to :


 


DLA
Piper LLP (US)


2000
University Avenue


East
Palo Alto, CA  94303-2215


Attention: 
Dennis C. Sullivan


Facsimile No.:  (650) 867-1200


 


(b)           If  to
Seller, to:


 


Sony
Electronics Inc.


1730
N. First Street


San
Jose, CA 95112


Attention:
Law Department


Facsimile
No.: (408) 352-4169


 


with a copy
(which will not constitute
notice)  to :


 


Sony Electronics Inc.


16530 Via Esprillo, MZ7300


San
Diego, CA 92127


Attention:  General Counsel


Facsimile
No.:  (858) 942-8170


 


or
to such other address or addresses as any such party may from time to time
designate as to itself by like notice.


 


10.2         Expenses. 
Except as otherwise expressly provided herein, each party hereto will
pay any expenses incurred by it incident to this Agreement, and in preparing to
consummate and consummating the transactions provided for herein.


 


10.3         Successors and Assigns.  This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party. 
Notwithstanding the foregoing, a party may transfer or assign its rights
under this Agreement in connection with a merger, acquisition or sale of all or
substantially all of its assets, on condition that it provides the other party
with notice of the transfer or assignment. 
Any attempted transfer in contravention of this Section 10.3 shall
be null and void.


 


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CONFIDENTIAL TREATMENT REQUESTED


 


10.4         Waiver. 
Purchaser may, by written notice to Seller, and Seller may, by written
notice to Purchaser, (a) extend the time for performance of any of the
obligations of the other party under this Agreement, (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement, (c) waive compliance with any of the conditions or
covenants of the other party contained in this Agreement, or (d) waive or
modify performance of any of the obligations of the other party under this
Agreement; provided, however, that no such party may, without the
prior written consent of the other party, make or grant such extension of time,
waiver of inaccuracies or compliance or waiver or modification of performance
with respect to its representations, warranties, conditions or covenants
hereunder.  Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties, conditions or covenants contained in this Agreement and will not
operate or be construed as a waiver of any subsequent breach, whether of a
similar or dissimilar nature.


 


10.5         Entire Agreement.  This Agreement, the Collateral Agreements and
the LOI Amendment, including all schedules and exhibits hereto and thereto,
supersede any other agreement, whether written or oral, that may have been made
or entered into by any party relating to the matters contemplated hereby and
constitutes the entire agreement by and among the parties hereto.  That certain confidentiality agreement dated
as of April 6, 2009 and that certain confidentiality agreement dated September 13,
2006, each entered into between the parties, shall be deemed terminated as of
the Closing, with both Seller and Purchaser waiving and releasing any and all
rights, claims (known and unknown) or interests such party may have had arising
under or related to those agreements prior to the Closing Date.


 


10.6         Amendments, Supplements, Etc.  This Agreement may be amended or supplemented
at any time by additional written agreements as may mutually be determined by
Purchaser and Seller to be necessary, desirable or expedient to further the
purposes of this Agreement or to clarify the intention of the parties.


 


10.7         Rights of Third
Parties.  Nothing expressed or
implied in this Agreement is intended or will be construed to confer upon or
give any Person other than the parties hereto any rights or remedies under or
by reason of this Agreement or any transaction contemplated hereby.


 


10.8         Further Assurances.  From time to time, as and when requested by
any party hereto, the other party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments, make such other
deliveries and take such other actions as may be reasonably necessary to
consummate the transactions contemplated by this Agreement.


 


10.9         Applicable Law.  This Agreement and the legal relations among
the parties hereto will be governed by and construed in accordance with the rules and
substantive Laws of the State of California, United States of America, without
regard to conflicts of law provisions thereof.


 


10.10       Execution in Counterparts.  This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.


 


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CONFIDENTIAL
TREATMENT REQUESTED


 


10.11       Titles and Headings.  Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.


 


10.12       Invalid Provisions.  If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future Law, and if
the rights or obligations under this Agreement of Seller  on the one hand and Purchaser on the other
hand will not be materially and adversely affected thereby, (a) such
provision will be fully severable; (b) this Agreement will be construed
and enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof; (c) the remaining provisions of this Agreement
will remain in full force and effect and will not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Agreement;
and (d) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible.


 


10.13       Bulk Sales. 
Purchaser waives compliance by Seller with the provisions of the
so-called bulk sales Law of any applicable jurisdiction.


 


10.14       Transfers. 
Purchaser and Seller will cooperate and take such action as may be
reasonably requested by the other in order to effect an orderly transfer of the
Transferred Assets with a minimum of disruption to the operations and employees
of the businesses of Purchaser and Seller.


 


10.15       Transfer Taxes.  All sales, use, transfer, stamp, conveyance,
value added or other similar taxes, duties, excises or governmental charges imposed
by any taxing jurisdiction, domestic or foreign, and all recording or filing
fees, notarial fees or other similar costs of Closing with respect to the
transfer of the Transferred Assets or otherwise on account of this Agreement or
the transactions contemplated hereby will be borne by Purchaser.


 


10.16       Brokers. 
Purchaser hereby agrees to indemnify and hold harmless Seller, and
Seller hereby agrees to indemnify and hold harmless Purchaser, against any
liability, claim, loss, damage or expense incurred by Seller or Purchaser,
respectively, relating to any fees or commissions owed to any broker, finder or
financial advisor as a result of actions taken by Purchaser or Seller,
respectively.


 


10.17       Attorneys’ Fees.  If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover in such action its reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.


 


[Remainder of this Page Intentionally
Left Blank]


 


26

















 


CONFIDENTIAL TREATMENT REQUESTED


 


IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first above written.


 


	
   

  	
   

  	
  Sony Electronics Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Tomoya Hayakawa

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tomoya Hayakawa

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President of CSBD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GSI Technology, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lee-Lean Shu

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Lee-Lean Shu

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President & CEO

  



 


27

















 


CONFIDENTIAL TREATMENT REQUESTED


 


EXHIBIT A


 


DEFINITIONS


 


“Accounts Payable” shall mean all trade
accounts payable and all evidences of indebtedness arising out of purchases of
inventory and other property, assets or services by any Person.


 


“Affiliate” shall mean with respect to any
Person, any other person who, directly or indirectly, controls, is controlled
by, or is under common control with that Person.


 


“Agreement” shall have the meaning ascribed
to such term in the preamble to this Agreement.


 


“Allocation Statement” shall have the meaning
ascribed to such term in Section 4.6 of this Agreement.


 


“Assignments of Contracts” shall have the
meaning ascribed to such term in Section 5.2(a)(ii) of this
Agreement.


 


“Assumed Liabilities” shall have the meaning
ascribed to such term in Section 3.1 of this Agreement.


 


“Audited Financial Statements” shall have the
meaning ascribed to such term in Section 8.15 of this Agreement.


 


“Basket Amount” shall have the meaning
ascribed to such term in Section 9.4 of this Agreement.


 


“Bill of Sale” shall have the meaning
ascribed to such term in Section 5.2(a)(i) of this Agreement.


 


“Business” shall have the meaning ascribed to
such term in the recitals to this Agreement.


 


“Business Day” shall mean any day except
Saturday, Sunday or any Japanese, U.S. federal or California state holiday.


 


“Cash Equivalents” shall mean checks, money
orders, marketable or other securities, short-term instruments and other cash
equivalents, prepaid deposits, demand deposits or similar accounts, and any
evidence of indebtedness issued or guaranteed by any United States Governmental
Authority.


 


“CIS-SRAM” shall mean Seller’s CIS-SRAM
memory products (also referred to by Seller’s principal customer as CSRAM
products), but specifically excluding Sellers Cache SRAM products.


 


“CIS-SRAM Revenues” shall have the meaning
ascribed to such term in Section 4.4(a) of this Agreement.


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


“Claim Notice” shall have the meaning
ascribed to such term in Section 9.3 of this Agreement.


 


“Closing” shall have the meaning ascribed to
such term in Section 5.1 of this Agreement.


 


“Closing Date” shall have the meaning
ascribed to such term in Section 5.1 of this Agreement.


 


“Closing Payment” shall have the meaning
ascribed to such term in Section 4.2(a) of this Agreement.


 


“Closing SRAM Inventory Schedule” shall have
the meaning ascribed to such term in Section 4.3 of this Agreement.


 


“Code” shall mean the Internal Revenue Code
of 1986, as amended.


 


“Collateral Agreements” shall have the
meaning ascribed to such term in Section 5.2(c) of this Agreement.


 


“Collateral Source” shall have the meaning
ascribed to such term in Section 9.5 of this Agreement.


 


“Competing
Products”  shall mean any
SRAM product in discrete or component form. For avoidance of doubt, Competing
Products does not include any large-scale integration with memory, memory with
CPU, or system-in-package products (including those with embedded SRAM on
chip).


 


“Confidential Information” shall have the
meaning ascribed to such term in Section 8.4(a) of this Agreement.


 


“Consent” shall mean any consent, approval or
authorization of, notice to, or designation, registration, declaration or
filing with, any Person.


 


“Contingent Payments” shall have the meaning
ascribed to such term in Section 4.4(a) of this Agreement.


 


“Contract” shall mean any agreement,
contract, lease, commitment, license, undertaking or other legally binding
contractual right or obligation to which a Person is a party or by which a Person
or its assets or properties are bound.


 


“Current Products” shall mean Seller’s
SigmaRAM, CIS-SRAM and 36M SigmaQuad SRAM memory products.


 


“Effective Date” shall mean the latest date
on which an authorized representative of one of the parties signs the
Agreement.


 


“Excluded Assets” shall have the meaning
ascribed to such term in Section 2.2(a) of this Agreement.


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


“GAAP” shall mean United States generally
accepted accounting policies, consistently applied.


 


“Governmental Authority” shall mean any
federal, state, local or foreign government or any subdivision, agency,
instrumentality, authority, department, commission, board or bureau thereof or
any federal state, local or foreign court, tribunal or arbitrator.


 


“Gross Revenues” shall mean gross revenues as
recognized by Purchaser in accordance with GAAP and Purchaser’s general revenue
recognition policies, consistently applied.


 


“Indemnifying Party” shall mean any party
required to indemnify another party pursuant to Article 9 hereof.


 


“Indemnified Party” shall mean any party
entitled to indemnification pursuant to Article 9 hereof.


 


“Intellectual Property” shall mean any or all
of the following and all rights in, arising out of, or associated
therewith:  (i) all United States
and foreign patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof, and equivalent or similar rights anywhere in the world in inventions
and discoveries (“Patents”); (ii) all inventions (whether patentable or
not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation embodying or evidencing any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor and all other
rights corresponding thereto throughout the world (“Copyrights”); (iv) all
mask works, mask work registrations and applications therefor, and any
equivalent or similar rights in semiconductor masks, layouts, architectures or
topology (“Mask Works”); (v) all industrial designs and any registrations
and applications therefor throughout the world; (vi) all databases and
data collections and all rights therein throughout the world; and (vii) all
computer software including all source code, object code, firmware, development
tools, files, records and data, all media on which any of the foregoing is
recorded; and (viii) any similar, corresponding or equivalent rights to any
of the foregoing anywhere in the world.


 


“Inventory Adjustment Payment” shall have the
meaning ascribed to such term in Section 4.3 of this Agreement.


 


“IP Agreement” shall have the meaning
ascribed to such term in Section 5.2(a)(iii) of this Agreement.


 


“JTAG” shall mean the electronic code
embedded on SRAM Products that indicate the identity of the manufacturer.


 


“Key SRAM Contracts” shall have the meaning
ascribed to such term in Section 5.3(e) of this Agreement.


 


“Knowledge of Seller” (or, for
purposes of the IP Agreement, “Knowledge of SONY”) shall mean the current,
actual knowledge, after reasonable inquiry, of any of the following officers,
directors or employees of Seller and Parent: 
General Manager, Memory Department, 


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


LSI Business Division, Semiconductor Business Group
of Parent; Strategic Alliance Manager, Business Strategy Department, Planning &
Control Division, Semiconductor Business Group of Parent; President, Product,
Memory Department, Component Solutions Business Division of Seller; Vice
President, Memory Department, Component Solutions Business Division of Seller;
Vice President, Corporate Development of Seller; Vice President, Intellectual
Property of Sony Corporation of America; and Senior Managing Counsel of SEL.


 


“Laws” shall mean all federal, state, local
or foreign laws, ordinances, rules and regulations.


 


“Letter of Intent” shall have the meaning
ascribed to such term in Section 5.2(a)(iv) of this Agreement.


 


“Liabilities” shall mean any and all debts,
liabilities and obligations, whether accrued or fixed, known or unknown,
absolute or contingent, matured or unmatured or determined or determinable.


 


“Liens” shall mean all title defects or
objections, mortgages, liens, claims, charges, pledges or other encumbrances of
any nature whatsoever, whether accrued, absolute, contingent or otherwise,
including without limitation licenses, leases, chattel or other mortgages,
collateral security arrangements, pledges, title imperfections, defect or
objection liens, security interests, conditional and installment sales
agreements, easements, encroachments or restrictions, of any kind and other
title or interest retention arrangements, reservations or limitations of any
nature.


 


“LOI Amendment” shall have the meaning
ascribed to such term in Section 5.2(a)(iv) of this Agreement.


 


“Loss” or “Losses”
shall have the meaning ascribed to such term in Section 9.2(a) of
this Agreement.


 


“Net Revenues” shall mean net
revenues as recognized by Purchaser in accordance with GAAP and Purchaser’s
general revenue recognition policies, consistently applied.


 


“New Product” shall mean Seller’s 65nm 72M SQ
memory products (including the products designated 260L IIIe/IIe and 165L
II+/II) currently being developed.


 


“Non-Assignable Contract” shall have the
meaning ascribed to such term in Section 2.3 of this Agreement.


 


“Notice Period” shall have the meaning
ascribed to such term in Section 9.3 of this Agreement.


 


“Order” shall mean any judgment, award,
order, writ, injunction or decree issued by any Governmental Authority.


 


“Parent” shall mean Sony Corporation.


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


“Person” shall mean any individual,
partnership, joint venture, corporation, trust, unincorporated organization,
Governmental Authority or other entity.


 


“Permitted Designee” shall have the meaning
ascribed to such term in Section 9.3 of this Agreement.


 


“Purchase Price” shall have the meaning
ascribed to such term in Section 4.1 of this Agreement.


 


“Purchaser” shall have the meaning ascribed
to such term in the preamble to this Agreement.


 


“Reseller Agreement” shall have the meaning
ascribed to such term in Section 5.2(a)(v) of this Agreement.


 


“Retained Liabilities” shall have the meaning
ascribed to such term in Section 3.2 of this Agreement.


 


“SCK” shall mean Sony Semiconductor Kyushu
Corporation.


 


“SEC” shall mean the U.S. Securities and
Exchange Commission.


 


“Seller” shall have the meaning ascribed to
such term in the preamble to this Agreement.


 


“SRAM” shall mean static random access memory.


 


“SRAM Contracts” shall have the meaning
ascribed to such term in Section 2.1(e) of this Agreement.


 


“SRAM Intellectual Property” shall mean all
Intellectual Property as can be documented as being in existence on or before
the Closing, only to the extent that any SRAM Product incorporates, is based on
or infringes such Intellectual Property.


 


“SRAM Products” shall mean Current Products
together with the  New
Product.


 


“SRAM Product Inventory” shall have the
meaning ascribed to such term in Section 2.1(b) of this Agreement.


 


“SRAM Purchase Orders” shall have the meaning
ascribed to such term in Section 2.1(d) of this Agreement.


 


“Tax” or, collectively, “Taxes,” shall mean (i) any
and all federal, state, province, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, wherever imposed,
including, without limitation, taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem, goods
and services, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the payment
of any amounts of the type described in clause (i) as a 


 

















 


CONFIDENTIAL TREATMENT REQUESTED


 


result of being a member of an affiliated, consolidated, combined or
unitary group for any period; and (iii) any liability for the payment of
any amounts of the type described in clause (i) or (ii) as a result
of any express or implied obligation to indemnify any other Person or as a
result of any obligations under any agreements or arrangements with any other
Person with respect to such amounts and including any liability for taxes of a
predecessor entity.


 


“Tax Return” or “Tax Returns” shall mean any
return, report, declaration, information return, statement or other document
filed or required to be filed with any Governmental Authority, in connection
with the determination, assessment or collection of any Tax or the
administration of any Laws relating to any Tax.


 


“Transferred Assets” shall have the meaning
ascribed to such term in Section 2.1 of this Agreement.


 


“Transferred Equipment” shall have the
meaning ascribed to such term in Section 2.1(c) of this Agreement.