This INVENTORY PURCHASE AGREEMENT (" Agreement "), is dated and executed on March 31st, 2006 by and between AGILENT TECHNOLOGIES Inc., a Delaware company, (" Seller "), and FLEXTRONICS TECHNOLOGY (SHANGHAI) LTD., a Chinese company (" Buyer ").
WHEREAS, Seller is engaged through its Semiconductor Test Solutions business unit (" STS ") in the business of manufacturing a variety of manufacturing test systems; and
WHEREAS, Buyer's affiliated entity, Flextronics Telecom Services, Ltd. ("FTS") and Seller's affiliated entity, Agilent Technologies International Sarl (" ATIS "), have executed a Global Manufacturing Services Agreement with an effective date of March 2 nd , 2006 (" MSA ") under which Buyer manufactures products based on requirements provided by ATIS or an Eligible Buyer, as defined in the MSA (including Seller), and sells the manufactured products to ATIS or an Eligible Purchaser (including Seller); and
WHEREAS, the STS business has been set up as a contract manufacturing facility; and
WHEREAS, the inventory consisting of finished products, components, raw materials, packaging materials and work in progress related to STS is owned by Seller; and
WHEREAS, Seller's affiliated company, Agilent Technologies Inc. intends to sell and transfer its STS assets to Buyer's affiliated company Flextronics International USA, Inc. on the basis of an Asset Purchase Agreement (the "Loveland APA"); and
WHEREAS, in this context Buyer desires to purchase from Seller and Seller desires to sell to Buyer the inventory consisting of finished products, components, raw materials, packaging materials and work in progress related to STS;
NOW, THEREFORE, in consideration of the promises and mutual covenants of the parties hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE OF INVENTORY ("ASSETS")
1.1 Transfer of Assets. Seller shall sell, convey, assign, transfer and deliver to Buyer, or, as the case may be, have Benchmark Inc. ("Benchmark"), an approved Agilent supplier, sell, convey, assign, transfer and deliver to Buyer and Buyer shall purchase and acquire from the Seller or from Benchmark the inventory consisting of finished products, components, raw materials, packaging materials and work in progress related to STS including any existing or future warranty claims which Seller might have against any third party in respect of such assets (collectively, the " Assets "). The transfer of Assets shall occur in three phases. The transfer of Assets in phase 1 shall occur from Benchmark Inc. to Buyer. The transfer of Assets in phases 2 and 3 shall occur from Seller to Buyer, but can also be from Benchmark to Buyer. Prior to Phase 2 and Phase 3 Seller shall in due course provide schedules for the Assets to be transferred to Buyer in the respective phase. For the avoidance of doubt, for the purposes of this Agreement, any purchase from Benchmark shall be deemed to be a purchase from Seller and Seller shall be fully responsible and shall hold Buyer harmless form any liability associated therewith, except for the payment of the purchase price for Assets transferred to Buyer.
1.2 Closing. The transfer of the Assets shall take place in three phases in March (Phase 1), in August—or such earlier date as mutually agreed by the parties—(Phase 2) and in September (Phase 3) provided that (i) the Loveland APA has been validly executed and (ii) the Closing Condition as defined in Section 1.3 of the Loveland APA has been fulfilled. Seller and Buyer shall then execute on the Closing Date a closing confirmation which shall confirm in writing both the transfer of the Assets as well as the date such transfer took place. On the Closing Date Seller shall also transfer to Buyer the Seller's records, files and other data (or copies thereof) relating to the Assets. The parties agree that upon transfer of the Assets the transfer of title shall also be accomplished.
1.3 Asset Audit. Seller and Buyer will conduct a full Physical Inventory during the one week prior to the Closing Date ("Blackout Period"). Following such Physical Inventory, the Parties shall jointly establish and agree on the Final Physical Inventory of Assets and its implications on the Purchase Price. Buyer and Seller will mutually agr