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EXHIBIT 2.6
ASSET ACQUISITION AGREEMENT
This ASSET ACQUISITION AGREEMENT (this "AGREEMENT") is made and
entered into as of March 24, 1998 (the "EFFECTIVE DATE"), by and among, on the
one hand, Analog Devices, Inc., a Massachusetts corporation ("SELLER"), on
behalf of itself and the Seller Subsidiaries (collectively "SELLER"), and, on
the other hand, Adaptec, Inc., a Delaware corporation ("PURCHASER"), and Adaptec
Singapore Mfg. (S) Pte. Ltd., a wholly-owned Singapore subsidiary of Purchaser
("SUB").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and assign to Purchaser and Sub, and
Purchaser and Sub desire to purchase and acquire from Seller, certain assets
associated with Seller's Storage Products Business (as defined below), all upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, Purchaser and Sub desire to enter into licenses to use
certain intellectual property rights of Seller in connection with the design,
development and manufacture of Products and commercial exploitation of
technology associated with the Storage Products Business; and
WHEREAS, in connection with the sale of assets and licenses described
above, Seller has permitted Purchaser to interview and make offers of employment
to employees of Seller who work in the Storage Products Business;
NOW, THEREFORE, in consideration of the facts stated in the above
recitals and of the mutual agreements and covenants hereinafter set forth, and
for good and valuable consideration, the receipt, sufficiency and adequacy of
which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means, with respect to a specified person, any other
person that directly or indirectly controls, is controlled by, or is under
common control with, such specified person, except that the term "affiliate"
shall not be deemed to apply to officers and directors of a party hereto acting
in their own personal individual capacity and not for the benefit of or on
behalf of a party hereto or such party, subsidiaries or entity affiliates.
"ANCILLARY AGREEMENTS" means, collectively, the Bills of Sale, the
Patent Assignments, the Copyright Assignments, the Mask Work Assignments, the
Technology and Patent License Agreement, the R&D Services and Transition Support
Agreement, the Foundry Agreement and the Non-Competition Agreements (as such
terms are defined herein).
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"BUSINESS ASSETS" means the Purchased Assets and the Licensed Assets
(as each such term is defined below).
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to be closed in the city of San Francisco, California.
"BUSINESS PLAN" means collectively that certain business plan for the
Storage Products Business (as defined below), a copy of which has been delivered
to Purchaser, together with that certain technology map for the Storage Products
Business, a copy of which has been delivered to Purchaser.
"CIRCUITS" shall have the meaning ascribed to such term in the
Technology and Patent License Agreement.
"COMPETITION ACT" means The Competition Act, 1991 (as amended) of
Ireland.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly, or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or otherwise.
"CO-OWNED PATENTS" means the Patent Assets listed on Schedule 15
hereto, subject to the Cross-License Agreements.
"COPYRIGHT ASSETS" means all copyrights, whether or not registered,
owned by Seller as of the Closing Date, including all registrations and
applications therefor, including those listed on SCHEDULE 1 hereto (the "LISTED
COPYRIGHT ASSETS").
"CROSS-LICENSE AGREEMENTS" means those certain cross-license
agreements entered into by Seller with third parties listed on SCHEDULES 2A AND
2B hereto.
"DOLLARS" or "$" means U.S. dollars.
"EMPLOYEE ASSETS" means all personal property assets owned (or
leased) by Seller, wherever located, that are utilized by New Hires (as defined
in Section 6.01(b)) in the normal course of the performing their duties for the
Storage Products Business during the time period beginning on the Effective Date
and ending on the Closing Date (as defined in Section 2.04 below), including
work-stations, personal computers, personal digital assistants and all
associated assignable licenses to use third-party software applications used
thereon, excluding assets used on an incidental basis.
"ENCUMBRANCE" means any pledge, lien, collateral assignment, security
interest, mortgage, deed of trust, title retention, conditional sale or other
security arrangement, or any charge, adverse claim of title, ownership or use,
or any other encumbrance of any kind, excluding the Cross-License Agreements.
"ENVIRONMENTAL LAWS" means all U.S. and non-U.S. federal, state,
local laws and regulations relating to pollution, the protection of human health
or the environment (including
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without limitation ambient air, surface water, ground water, land surface or
subsurface strata), including without limitation laws and regulations relating
to emissions, discharges, releases or threatened releases of Hazardous
Substances, or otherwise relating to the manufacture, processing, distribution,
use, treatment, disposal, transport or handling of Hazardous Substances, or
relating to occupational health and safety.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended, and the rulings and regulations promulgated thereunder.
"EXCLUDED ASSETS" means (i) the Retained Assets (as defined below),
(ii) all Seller's cash, bank accounts and securities; (iii) all Seller's
accounts receivable, unbilled receivables, accounts payable, notes and other
amounts receivable or payable from or to third parties; (iv) all insurance
policies of Seller and all rights of Seller of every nature and description
under or arising out of such insurance policies; (v) claims for refunds of Taxes
(as defined below) actually paid by Seller prior to the Closing Date; (vi) all
assets of, or held by or with respect to, any employee benefit plan (whether or
not governed by ERISA) or any trust, fund or account that is related to any such
employee benefit plan or that is similar in purpose or function thereto; and
(vii) lease or other agreements related to the Facilities (as defined in Section
3.19 below).
"GOVERNMENTAL ANTITRUST AUTHORITY" means any non-U.S., federal, state
or local governmental or quasi-governmental authority charged with the
administration or enforcement of antitrust laws.
"HAZARDOUS SUBSTANCES" means: (i) any pollutant, contaminant, toxic,
hazardous or noxious substance or waste which is regulated by the laws of any
state, local, federal or other governmental authority or jurisdiction, including
but not limited to the United States, the Republic of Ireland and the States of
Delaware and North Carolina, and includes but is not limited to (a) any oil or
petroleum compounds, flammable substances, explosives, radioactive materials, or
any other materials or pollutants which pose a hazard to persons or cause any
real property to be in violation of any Environmental Laws, (b) to the extent so
regulated, asbestos or any asbestos-containing material of any kind or
character, (c) polychlorinated biphenyls, as regulated by the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., (d) any materials or substances
designated as "hazardous substances" pursuant to (1) Section 311 of the Clean
Water Act, 33 U.S.C. Section 1251 et seq., or (2) Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., (e) "chemical substance," "new chemical substance," or
"hazardous chemical substance or mixture" pursuant to Sections 3, 6 and 7 of the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., and (f) any
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.; and (ii) as of any date of
determination, any additional substances or materials which now or hereafter may
be incorporated in or added to the definition of "chemical substance," "new
chemical substance," "hazardous chemical substance or mixture," "hazardous
waste," "hazardous substance" or "toxic substance" or similar substance for
purposes of any Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
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"INTANGIBLE ASSETS" means, collectively, (i) the Patent Assets, the
Copyright Assets, and the Mask Work Assets; and (ii) all other intangible
assets, properties and rights of Seller including, without limitation,
technology, know-how and technical and business trade secrets and all rights
therein (whether or not protectable under any Intellectual Property Rights)
existing as of the Closing Date.
"INTELLECTUAL PROPERTY RIGHTS" means, collectively, all of the
following worldwide intangible legal rights, including those existing or
acquired by ownership, license (to the extent such can be sublicensed) or other
legal operation, whether or not filed, perfected, registered or recorded,
existing as of the Closing Date in or to: (i) the Patent Assets; (ii) the
Copyright Assets; (iii) the Mask Work Assets; (iv) Seller's rights in trade
secrets; (v) all rights relating to the protection of the foregoing; and (vi)
all rights to sue or make any claims for any past, present or future
infringement, misappropriation or unauthorized use of any of the foregoing
rights and the right to all income, royalties, damages and other payments that
are now or may hereafter become due or payable with respect to any of the
foregoing rights, including without limitation damages for past, present or
future infringement, misappropriation or unauthorized use thereof.
"INTERNAL REVENUE CODE" means the U.S. Internal Revenue Code of 1986,
as amended, and the Treasury regulations (final and temporary) promulgated
thereunder and the administrative pronouncements issued by the Internal Revenue
Service relating thereto.
"KEY ASSETS" means the Purchased Assets, Licensed Technology
Deliverables and Circuits.
"LIABILITIES" (or when used with reference to a single item described
below, "LIABILITY") means debts, liabilities and obligations (whether pecuniary
or not, including without limitation obligations to perform or forbear from
performing acts or services), fines or penalties, whether accrued or fixed,
absolute or contingent, matured or unmatured, determined or determinable, known
or unknown, including without limitation those arising under any law, action or
governmental order, liabilities for Taxes and those arising under any contract,
agreement, arrangement, commitment or undertaking of any kind whatsoever
(whether written or oral, express or implied), including those arising under any
Seller Contract, whether or not related to the Products and/or the Storage
Products Business.
"LICENSED ASSETS" means the Intangible Assets and all Intellectual
Property Rights therein and thereto, but excluding the Listed Patent Assets, the
Listed Copyrights Assets, the Mask Work Assets, the Retained Assets and other
Intellectual Property Rights licensed to Seller without the rights to
sublicense.
"LICENSED TECHNOLOGY DELIVERABLES" means the deliverables listed on
SCHEDULE 3A hereto.
"MASK WORK ASSETS" means the mask works, whether or not registered,
including all registrations and applications therefor, listed on SCHEDULE 4
hereto; such schedule includes Seller's internal number for each such mask work
and correlates each mask work to the applicable Product(s).
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"MATERIAL" means any fact, event, action or failure to act, or other
circumstance with respect to, involving or affecting Seller, any Seller
Subsidiary or any other affiliate of Seller that: (i) involves in excess of
$100,000 or that results or is reasonably likely to result in a financial loss
of at least $100,000; (ii) involves exclusivity or non-competition covenants or
arrangements; or (iii) involves Intellectual Property Rights.
"MERGERS ACT" means the Mergers, Takeovers and Monopolies Control Act
(1978) (as amended) of Ireland.
"PATENT ASSETS" means all patents, patent applications, patent
disclosures and related patent rights, including any and all continuations,
divisions, reissues, reexaminations, or extensions thereof, which have been
filed, issued or acquired by Seller as of the Closing Date, all inventions
conceived of or reduced to practice as of the Closing Date, including those
listed on SCHEDULE 5 hereto (the "LISTED PATENT ASSETS"), subject to the
Cross-License Agreements.
"PERSON" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"PRODUCT DESIGNS" means the particular arrangement of the Circuits
that comprise the Products, as reflected in the layouts and schematic databases
listed on SCHEDULE 6. By way of clarification, "Product Design" does not include
the particular individual Circuits included in the Products.
"PRODUCTS" means the current products and products under development
of Seller listed in SCHEDULE 7 hereto, whether or not ever commercially offered.
"RETAINED ASSETS" means those tangible and intangible assets owned by
or licensed to Seller and any Seller Subsidiary or affiliate of Seller that are
necessary or required to enable Purchaser, following the Closing to own,
conduct, operate and continue the Storage Products Business substantially as
historically conducted or as proposed to be conducted through the Closing Date,
other than assets used on a merely incidental basis, that will not be sold to
Purchaser hereunder or licensed to Purchaser pursuant to the Technology and
Patent License Agreement, which assets are listed on SCHEDULE 8 hereto.
"SELLER CONTRACTS" means all leases, licenses and other agreements,
contracts, understandings, arrangements, commitments and purchase orders listed
on SCHEDULE 9 hereto.
"SELLER'S DISCLOSURE LETTER" means Seller's Disclosure Letter dated
as of the Effective Date which is being delivered to Purchaser concurrently with
the execution of this Agreement.
"SELLER'S KNOWLEDGE": A particular fact or other matter shall be
deemed to be within "Seller's knowledge" if any officer or, with respect to the
particular matters they are responsible for, any employee of Seller, any Seller
Subsidiary or any other affiliate of Seller, has knowledge of such fact or other
matter. An individual shall be deemed to have "knowledge" of a particular fact
or other matter if (a) such individual is actually aware of such fact or other
matter, or (b) such individual would reasonably be expected to be aware of such
fact by virtue of performing
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his or her duties. Notwithstanding the foregoing, solely for purposes of Section
3.17 below, an individual shall be deemed to "have knowledge" of a particular
fact or other matter only if such individual is actually aware of such fact or
other matter.
"SELLER SUBSIDIARY" shall mean any past or present subsidiary or
branch of Seller.
"SOLD TECHNOLOGY DELIVERABLES" means the deliverables listed on
SCHEDULE 3B hereto.
"STORAGE PERIPHERALS" means optical disk drives, tape drives,
removable disk drives, rigid disk drives, and any combination of the foregoing.
"STORAGE PRODUCTS BUSINESS" means Seller's business of designing,
developing, manufacturing, testing, marketing, licensing, selling, distributing,
using, modifying, operating, installing, servicing, supporting, maintaining,
repairing or otherwise using or commercially exploiting one or more of the
Products or the Product Designs for Storage Peripherals.
"TANGIBLE ASSETS" means, collectively, the Employee Assets and other
tangible personal property assets, wherever located, listed on SCHEDULE 10
hereto (the "TANGIBLE ASSETS SCHEDULE").
"TAX" or "TAXES" means all taxes or similar governmental charge,
impost or levy of any kind whatsoever (whether payable directly or by
withholding), including without limitation, income taxes, gross receipts taxes,
franchise taxes, transfer taxes or fees, stamp taxes, sales taxes, use taxes,
excise taxes, ad valorem taxes, value added taxes, documentary taxes, intangible
personal property taxes, withholding taxes, real or personal property taxes,
employee withholding taxes, worker's compensation, payroll taxes, unemployment
insurance, social security, minimum taxes or windfall profits taxes, together
with any related liabilities, penalties, fines, additions to tax or interest,
imposed by the United States, Ireland, The Netherlands, or any state, county,
provincial, local or foreign government or any instrumentality, subdivision or
agency thereof.
"THIRD PARTY ASSETS" means (i) all personal property assets, wherever
located, whether tangible or intangible that are licensed or leased to Seller,
any Seller Subsidiary or any other affiliate of Seller by a third party under
any Seller Contract; and (ii) all Seller's license or other rights to such
third-party assets under any Seller Contract.
"UNDERTAKINGS LAW" means the European Communities Safeguarding of
Employees Rights on Transfer of Undertakings Regulations 1980 which implements
the European Union Acquired Rights Directive 1977.
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ARTICLE II
ACQUISITION OF ASSETS
SECTION 2.01. Assets to Be Acquired.
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement (including without limitation the allocation provisions of Section
2.08), on the Closing Date Seller shall sell, assign, transfer, convey and
deliver to Purchaser and Sub (or cause to be sold, assigned, transferred,
conveyed and delivered to Purchaser and Sub) and Purchaser and Sub shall
purchase and acquire from Seller, free and clear of any and all Encumbrances
whatsoever, all right, title and interest in and to all of the following
(collectively, the "PURCHASED ASSETS"):
(i) the Products;
(ii) the Product Designs;
(iii) the Tangible Assets;
(iv) the Listed Patent Assets;
(v) an undivided one-half interest in the Co-Owned
Patents;
(vi) the Listed Copyright Assets;
(vii) the Mask Work Assets;
(viii) the Sold Technology Deliverables;
(ix) all worldwide Intellectual Property Rights of
Seller in and to all of the assets described in
clauses (ii) through (viii) above (collectively,
the "INTELLECTUAL PROPERTY ASSETS");
(x) the right to enforce confidentiality,
non-disclosure, employee invention assignment
and other proprietary rights agreements between
Seller and New Hires (as defined in Section
6.01(b) below) with respect to the Storage
Products Business;
(xi) all of Seller's rights under the Seller
Contracts, including Third Party Assets; and
(xii) true, accurate and complete copies of Seller's
marketing and sales information, pricing,
marketing plans, business plans, financial and
business projections and other files and records
pertaining specifically to the Storage Products
Business, but excluding any personnel files of
any past or present employee of Seller
(collectively, the "BUSINESS RECORDS").
(b) Licensed Assets. The parties acknowledge that certain assets
related to the Storage Products Business also are essential to other businesses
conducted by Seller.
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Accordingly, with respect to the Licensed Assets Seller shall provide Purchaser
a license on the terms and conditions of that certain Technology and Patent
License Agreement, in substantially the form of Exhibit A hereto, to be entered
into by the parties as of the Closing Date (the "TECHNOLOGY AND PATENT LICENSE
AGREEMENT").
(c) Other Assets. Should it be determined at any time after the
Closing Date that any tangible or intangible assets which, pursuant to this
Agreement, should have been transferred to Purchaser, are still in the
possession of Seller, Seller Subsidiaries or Affiliates of Seller, such assets
(and related rights) shall be delivered to Purchaser by Seller (or Seller shall
cause them to be delivered) promptly without additional charge.
SECTION 2.02. No Liabilities Assumed. As a material inducement and
consideration to Purchaser to enter into this Agreement and perform its
obligations hereunder, the parties agree that Purchaser shall assume no
obligations or Liabilities whatsoever from Seller or any Seller Subsidiary or
affiliate (whether now existing or hereafter arising), and Seller, all Seller
Subsidiaries and all Seller's other affiliates shall retain, and shall be solely
responsible and liable for paying, performing and discharging when due, all such
Liabilities (collectively, the "EXCLUDED LIABILITIES"). By way of example and
not by way of limitation, the Excluded Liabilities not being assumed by
Purchaser include those liabilities described on EXHIBIT B hereto.
SECTION 2.03. Purchase Price; Other Payments; Allocation of Purchase
Price.
(a) Payment at Closing. The aggregate purchase price for purchase of
the Purchased Assets (the "PURCHASE PRICE") of Twenty-Seven Million Dollars
($27,000,000) (the "CLOSING PAYMENT") shall be paid by Purchaser and Sub to
Seller on the Closing Date.
(b) Product Development Fee. Purchaser shall pay Seller an aggregate
of Seven Million Dollars ($7,000,000) as a product development fee ("DEVELOPMENT
FEE"), payable in two equal installments of Three Million Five Hundred Thousand
Dollars ($3,500,000) at the end of the first two fiscal quarters of Purchaser
following the Closing.
(c) Allocation and Characterization of Purchase Price and Other
Payments.
(i) Purchase Price. Prior to the Closing Date, Purchaser
and Seller shall use their reasonable efforts to agree to allocate, among the
Purchased Assets, in accordance with the allocation requirements of Section 1060
of the Internal Revenue Code, the Closing Payment. The allocation of the
Purchase Price agreed on by the parties pursuant to this Section shall be
reduced to a writing executed by Seller and Purchaser that shall be delivered by
Seller and Purchaser to each other at the Closing (the "PURCHASE PRICE
ALLOCATION AGREEMENT"). Any subsequent adjustments to the allocable Purchase
Price shall be reflected in the Purchase Price Allocation Agreement in a manner
consistent with Treasury Regulation Section 1.1060-lT(f).
(ii) Consistent Treatment and Characterization of Amounts.
For all Tax purposes Purchaser and Seller agree to report the transactions
contemplated in this Agreement in a manner consistent with the Purchase Price
Allocation Agreement, and will not take any position inconsistent therewith in
any Tax return, in any refund claim, in any litigation or
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otherwise, unless required to do so by a governmental authority. Seller and
Purchaser shall each be responsible for the preparation of their own Section
1060 statements and forms in accordance with applicable Tax laws, and each shall
execute and deliver to each other such statements and forms as are reasonably
requested by the other party.
SECTION 2.04. Closing. Subject to the terms and conditions of this
Agreement, the sale, purchase and transfer of the Business Assets and the
assumption of the Assumed Liabilities contemplated hereby shall take place at a
closing at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo Alto,
California (the "CLOSING") at 10:00 a.m., local time, on the second Business Day
after the satisfaction or waiver of the conditions to Closing set forth in
Article VIII or at such other time or on such other date or at such other place
as Seller and Purchaser may mutually agree in writing (the day on which the
Closing takes place being the "CLOSING DATE").
SECTION 2.05. Closing Deliveries by Seller. At the Closing, Seller
shall deliver or cause to be delivered to Purchaser:
(a) executed counterparts of all of the Ancillary Agreements to be
executed and entered into by Seller;
(b) the Purchase Price Allocation Agreement;
(c) a receipt for the Closing Payment; and
(d) all other items, tangibles, agreements, documents, certificates
and payments to be delivered by Seller at the Closing under Section 8.02 of this
Agreement or any other provision hereof or pursuant to any Ancillary Agreement.
SECTION 2.06. Closing Deliveries by Purchaser. At the Closing,
Purchaser and Sub shall deliver to Seller:
(a) the Closing Payment of $27,000,000 in cash (by wire transfer) in
accordance with Section 2.03 against receipt thereof from Seller;
(b) executed counterparts of all of the Ancillary Agreements to be
executed and entered into by Purchaser;
(c) the Purchase Price Allocation Agreement; and
(d) all other items, tangibles, agreements, documents, certificates
and payments to be delivered by Purchaser at the Closing under Section 8.01 of
this Agreement or any other provision hereof or pursuant to any Ancillary
Agreement.
SECTION 2.07. Unassignable Assets. Notwithstanding any other
provision of this Agreement or any of the Ancillary Agreements, but subject to
Section 8.02(q) hereof, to the extent that any of the Seller Contracts or any
other assets constituting part of the Purchased Assets are not assignable or
otherwise transferable to Purchaser and Sub, or if such assignment or transfer
would constitute a breach thereof or a violation of any applicable law, then
neither this Agreement nor such Ancillary Agreements shall constitute an
assignment or transfer (or an
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attempted assignment or transfer) thereof until such consent, approval or waiver
of such party or parties has been duly obtained. With respect to each Seller
Contract whose assignment or transfer to Purchaser or Sub requires the consent,
approval or waiver of another party thereto or any third party, Seller shall use
its best efforts to obtain such consent, approval or waiver of such other party
or parties or such third party to such assignment or transfer as promptly as
practicable, but in any event prior to the Closing Date. Purchaser and Sub agree
to cooperate with Seller and supply relevant information to such party or
parties or such third party in order to assist Seller in its obligations under
this Section. Notwithstanding the foregoing, nothing contained herein shall
obligate Seller or Purchaser to expend or pay any amount to third parties to
obtain any consents, approvals or waivers.
SECTION 2.08. Allocation of Assets. The Purchased Assets purchased
and acquired hereunder shall be sold and assigned to Purchaser and, at its
option, one or more subsidiaries of Purchaser and such assets and the
consideration therefor shall be allocated between Purchaser and such
subsidiaries as determined by Purchaser in its sole discretion and as reflected
in an agreement or memorandum executed by them.
SECTION 2.09. Non-U.S. Assets. From the Effective Date until the
Closing Date, Seller will, and will cause all Seller Subsidiaries and all
affiliates of Seller to, cooperate and assist Purchaser with the evaluation and
identification of Purchased Assets located in or related to countries other than
the United States.
SECTION 2.10. Further Assurances. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties will take such further action
(including the execution and delivery of such further instruments and documents)
as any other party reasonably may request. Seller will sign and deliver any and
all instruments and documents necessary or appropriate to fully effect and
perfect the transfer or license, as the case may be, to Purchaser and Sub (or if
Purchaser so elects, any Purchaser Subsidiary) of any and all of the Business
Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser and Sub that,
except as expressly set forth in the Seller's Disclosure Letter, all of the
following statements, representations and warranties are true and correct:
SECTION 3.01. Organization and Good Standing of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is in good standing in each
jurisdiction in which Business Assets are located. Seller has all requisite
corporate power and authority to carry on the Storage Products Business as now
conducted and to enter into this Agreement, the Ancillary Agreements and the
Seller Closing Documents (as defined in Section 8.02) and the transactions
contemplated hereby and thereby.
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SECTION 3.02. Authorization and Validity. All corporate action on the
part of Seller, its officers and directors necessary for the authorization,
execution and delivery of this Agreement, the Ancillary Agreements and the
Seller Closing Documents, the performance of all obligations of Seller hereunder
and thereunder, has been taken or will be taken prior to the Closing. This
Agreement and the Non-Competition Agreements have been, and at the Closing the
other Ancillary Agreements and the Seller Closing Documents will be, duly
executed and delivered by Seller. This Agreement and the Non-Competition
Agreements constitute, and, upon Seller's execution of each of the other
Ancillary Agreements and the Seller Closing Documents, each of the other
Ancillary Agreements and each of the Seller Closing Documents will constitute, a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally; and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or
other equitable remedies. The execution, delivery and performance by Seller of
this Agreement and each of the Ancillary Agreements have been duly and validly
approved and authorized by Seller's Board of Directors. No approval of Seller's
stockholders is required to effect the transactions contemplated by this
Agreement, the Ancillary Agreements or the Seller Closing Documents.
SECTION 3.03. Subsidiaries or Affiliates. Except as set forth in
SCHEDULE 11, none of the Purchased Assets are owned, licensed to, leased to or
otherwise held or used by any Seller Subsidiary or by any other affiliate of
Seller.
SECTION 3.04. No Conflict. The execution, delivery and performance of
this Agreement, the Ancillary Agreements and the Seller Closing Documents by
Seller and the consummation of the transactions contemplated hereby and thereby
do not and will not result in a violation or default in any material respect of:
(a) any provision of Seller's charter documents, (b) any judgment, order, writ
or decree applicable to Seller or to any of the Business Assets, (c) or
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a breach, violation or default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any of
the Seller Contracts or any material contract of Seller, or (d) result in the
creation of any material Encumbrance on any of the Business Assets.
SECTION 3.05. Consents.
(a) Consents and Approvals. No consent, approval, order or
authorization of or registration, qualification, designation, declaration or
filing with, any governmental entity on the part of Seller is required in
connection with the consummation of the transactions contemplated by this
Agreement, except for compliance with the HSR Act and the Mergers Act.
(b) Consents to Assign. SCHEDULE 10 sets forth a true and complete
list of each and every Purchased Asset, including Seller Contract, with respect
to which the consent or approval of any third party or governmental authority is
required in order for Seller or any of Seller's Subsidiaries or other affiliates
to assign or transfer to Purchaser or Sub any of the Purchased Assets or any
rights or obligations under Seller Contracts.
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SECTION 3.06. Tax Matters.
(a) Tax Assessments. There is no claim or assessment pending or, to
the knowledge of Seller or any branch of the Seller, threatened for any alleged
deficiency in Tax attributable to the affiliated group of which Seller is the
parent (the SELLER GROUP"), Seller, or any branch of the Seller relating to the
Business Assets, and neither Seller Group, Seller or any branch of the Seller
knows of any audit or investigation with respect to any liability of Seller for
Taxes attributable to the Seller Group, Seller or any branch of the Seller
relating to the Business Assets or any business activities related thereto.
(b) No Tax Liens. There are (and as of immediately following the
Closing there will be) no material Encumbrances or charges of any sort on any of
the Business Assets relating to or attributable to Taxes.
(c) Tax Exempt Use Property. None of the Business Assets are
"tax-exempt use property" within the meaning of Section 168(h) of the Internal
Revenue Code.
SECTION 3.07. Title to and Condition of Purchased Assets and Third
Party Assets; Sufficiency of Business Assets.
(a) Purchased Assets. Seller owns all the Purchased Assets and has
good and marketable title in and to all of the Purchased Assets, free and clear
of all material Encumbrances whatsoever, except Encumbrances listed in Section
3.07 of Seller's Disclosure Letter and the Cross-License Agreements listed in
Schedule 2A. Title to all the Purchased Assets is freely transferable from
Seller to Purchaser and Sub free and clear of all material Encumbrances without
obtaining the consent or approval of any person. All of the tangible personal
property included in the Purchased Assets is in good working condition and
repair, ordinary wear and tear excepted, and is suitable for the purposes for
which it is presently used. The current location of all tangible Purchased
Assets is set forth in Schedule 10, and Seller will not re-locate any material
tangible Purchased Assets from the location(s) shown for such Purchased Assets
on Schedule 10 without Purchaser's prior written consent. None of the Business
Assets (whether tangible or intangible) that were used in the Storage Products
Business as of December 31, 1997, which in the aggregate are material, have been
removed from use in such business since such date. The Tangible Asset Schedule
was prepared in the ordinary course, in a manner consistent with Seller's past
practice and in accordance with Seller's business records.
(b) Third Party Assets. Those assets which constitute Third Party
Assets are identified as such on SCHEDULE 9 hereto. Seller has the right to
transfer the Third Party Assets, without restriction and without degradation to
the rights assigned. Seller has paid in full all royalties, fees and any other
payments that have ever become due and payable under all Seller Contracts or
related to any of the Third Party Assets and no further royalties, license fees,
maintenance and support fees or any other payments whatsoever are due and
payable, nor will any further royalties, license fees, maintenance and support
fees or any other payments whatsoever become due and payable in the future,
under any license agreements included among the Seller Contracts or with respect
to any Business Assets under any circumstances. Schedule 9 indicates the amount
owing and payment schedule, if any, with respect to Seller Contracts and Third
Party Assets.
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(c) Sufficiency of Business Assets. The Business Assets constitute
all assets, properties, rights and Intellectual Property Rights that are
necessary or required to enable Purchaser, following the Closing, to own,
conduct, operate and continue the Storage Products Business substantially as
historically conducted and as proposed to be conducted by Seller through the
Closing Date, other than the Retained Assets, without: (i) the need for
Purchaser to acquire or license any other asset, property or Intellectual
Property Right, (ii) the breach or violation of any contract or commitment, and
(iii) to Seller's knowledge, infringement of any Intellectual Property Right of
any party. Except as may be set forth in the Disclosure Letter or any schedule
to this Agreement, none of the Business Assets are licensed or leased from any
third party and no royalties, license fees or similar payments are due or
payable (or may become due or payable) to any third party under any license,
lease or other agreement. Except as set forth in Schedule 2B, none of the
Purchased Assets are licensed to any third party, including any Seller
Subsidiary or any other affiliate of Seller.
SECTION 3.08. Seller Contracts. True and complete copies of the
documents listed in Schedule 9 have been made available to Purchaser. All Seller
Contracts are valid, in full force and effect, and enforceable in accordance
with their respective terms, and no party has repudiated or claimed a breach of
any provision thereof and no breach or default thereunder will result from this
Agreement, any of the Ancillary Agreements, or any of the transactions
contemplated hereby or thereby. Neither Seller nor, to the knowledge of Seller,
any other party to any Seller Contract is in material breach or default in
performance of any of their respective obligations thereunder, and no event
exists which, with the giving of notice or lapse of time or both, would
constitute a material breach, default or event of default on the part of Seller
or, to Seller's knowledge, on the part of any other party, to any Seller
Contract that is continuing unremedied. Those contracts, leases, licenses and
other agreements related to the Storage Products Business not listed in Schedule
10 are not in the aggregate material to the Storage Products Business.
SECTION 3.09. No Restrictive Agreements. No Business Asset is bound
or affected by, any judgment, injunction, order, decree, contract, covenant or
agreement (noncompete or otherwise) that restricts or prohibits (or purports to
restrict or prohibit) Seller (or would restrict Purchaser) from freely engaging
in the Storage Products Business as now conducted or proposed to be conducted by
Seller through the Closing Date or from competing in the mass storage business
anywhere in the world (including without limitation any contracts, covenants or
agreements restricting the geographic area in which Seller may sell, license,
market, distribute or support any Products or Business Assets) (collectively,
"RESTRICTIVE AGREEMENTS") other than the Non-Competition Agreements between
Seller and Purchaser to be entered into concurrently with the execution of this
Agreement.
SECTION 3.10. Litigation. There is no claim, action, suit,
arbitration, mediation, investigation or other proceeding of any nature pending
or, to the best of Seller's knowledge, threatened, at law or in equity, by way
of arbitration or before any court, governmental department, commission, board
or agency that: (i) may adversely affect, contest or challenge Seller's
authority, right or ability to sell or convey any of the Business Assets to
Purchaser or Sub hereunder or otherwise perform Seller's obligations under this
Agreement or any of the Ancillary Agreements; (ii) challenges or contests
Seller's right, title or ownership of any of the Business Assets or seeks to
impose an Encumbrance on, or a transfer of title or ownership of, any Business
Asset; (iii) asserts that any Business Asset, or any action taken by any
employee, consultant or
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contractor of Seller, any Seller Subsidiary or any other affiliate of Seller
with respect to any Business Asset, infringes or misappropriates any
Intellectual Property Rights of any third party; (iv) seeks to enjoin, prevent
or hinder operation of the Storage Products Business, the sale, license,
marketing or distribution of any of the Products or the consummation of any of
the transactions contemplated by this Agreement or any of the Ancillary
Agreements; (v) to the knowledge of Seller, would impair or have an adverse
affect on Purchaser's or Sub's right or ability to use or exploit any of the
Business Assets or impair or have an adverse effect on the value of any Business
Asset; or (vi) involves or relates to any potentially material claim against
Seller by any creditor of Seller related to the Storage Products Business. There
are no judgments, decrees, injunctions or orders of any court, governmental
department, commission, agency, instrumentality or arbitrator pending or binding
against Seller which affect any of the Business Assets or Purchaser's ability to
hire any Employee.
SECTION 3.11. Compliance with Laws. Seller has complied in all
material respects with and has not received any notices of violation with
respect to, any Irish, United States or non-U.S., federal, state or local
statute, law or regulation (including any Environmental Law) applicable to the
Storage Products Business or any of the Business Assets.
SECTION 3.12. No Representation to Employees. Seller has made no
representation to any employee, consultant or contractor of Seller, any Seller
Subsidiary or any other affiliate of Seller that Purchaser can or will terminate
the employment of its employees only upon certain terms or conditions or only on
certain grounds or that such employment is anything other than "at will".
SECTION 3.13. Employees.
(a) Employee List. Set forth in SCHEDULE 13 is a complete and
accurate list of all the employees of Seller, any Seller Subsidiary or affiliate
of Seller who work in the Storage Products Business. Schedule 13 also contains a
complete and accurate list of all consultants currently hired, retained or
engaged by Seller or by any Seller Subsidiary or any other affiliate of Seller
to perform any work or services related to the Products and/or the Storage
Products Business (collectively "CONSULTANTS" and each individually a
"CONSULTANT"). Seller has provided to Purchaser a true and accurate list of all
locations at which Employees (as defined in Section 6.01) and/or Consultants are
working as of the date hereof. With respect to "New Hires" (as defined in
Section 6.01), Schedule 13 also contains the date of hire and years of
employment or service. Seller has provided to Purchaser a true and accurate list
for each New Hire of the current annual base salary and (in the case of
Consultants) current compensation arrangement for each Consultant, their status
as exempt or non-exempt, all sick or vacation benefits accrued or payable, all
bonuses, profit sharing, or commissions accrued or payable, any special
compensatory or reimbursement arrangements, comp time or other arrangements with
such Employees and any other compensatory agreements between such Employee and
Seller. In addition, Seller has provided to Purchaser a list of all employees or
Consultants no longer providing services to Seller who did work in the Storage
Products Business at any time on or after January 1, 1995.
(b) Employment and Consulting Agreements. Schedule 13 includes a
complete and accurate list of (i) all employment contracts, agreements or
arrangements with or related to any
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New Hire (if any) that are (or will prior to the Closing be) in effect and (ii)
all consulting or similar agreements related to any Consultant that are (or will
at the Closing be) in effect.
(c) No Terminations Planned; No Restrictions. Seller has not received
any notice, nor, to Seller's knowledge is there any reason to believe, that any
executive or key employee of or Consultant to the Storage Products Business unit
or any group of employees working on or contributing to the Storage Products
Business has any plans to terminate his, her or their employment with Seller. To
Seller's knowledge, no such executive or key employee or Consultant is subject
to any agreement, obligation, order or other legal hindrance that impedes or
might impede such executive or key employee from devoting his or her full
business time to the affairs of Seller prior to the Closing Date and, if such
person becomes an employee of Purchaser, to the affairs of Purchaser after the
Closing Date.
SECTION 3.14. Pension and Employee Benefit Matters. Neither Seller
nor any entity which, within the last 5 years, has been under common control of
or affiliated with Seller (an "ERISA AFFILIATE") within the meaning of Section
414(b), (c) or (m) of the Internal Revenue Code, has ever been obligated to
contribute to any "multi-employer plan" as such term is defined in Section 3(37)
of ERISA. No material liability to the Pension Benefit Guaranty Corporation is
expected to be incurred in connection with the transactions contemplated hereby.
SCHEDULE 13 includes a true and complete list of all Employees, who are or may
become entitled to benefits under any severance agreement as of the Closing
(other than an arrangement generally applicable to all or substantially all
Employees), and the terms thereof.
SECTION 3.15. Supplier and Customer Relationships. To date no
Products have been sold. SCHEDULE 14 lists the potential customers who are
currently evaluating prototypes of the Products, whether pursuant to written
beta test, submission or evaluation agreements (collectively "EVALUATION
AGREEMENTS") with Seller or otherwise. Seller has good commercial working
relationships with its suppliers for the Storage Products Business and since
January 1, 1997, no supplier accounting for two percent (2%) or more of Seller's
purchases of supplies related to the Storage Products Business has canceled or
otherwise terminated its relationship with Seller, decreased or limited
materially its materials supplied to Seller from the corresponding period in
1996, or, to Seller's knowledge, threatened to take any such action.
SECTION 3.16. Product Liability. Neither Seller nor any Seller
Subsidiary has any Liability (and, to Seller's knowledge, there is no basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against Seller or any Seller Subsidiary or any
affiliate of Seller giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession or use of any
Product or prototype of any Product manufactured or delivered by Seller or any
Seller Subsidiary or any affiliate of Seller prior to the Closing Date.
SECTION 3.17. Intellectual Property Rights.
(a) Ownership. Seller is the sole and exclusive owner or has the
right to use the Key Assets pursuant to license, sublicense, agreement, or other
valid permission, all Intellectual Property Rights necessary or desirable for
the operation of the Storage Products Business as presently conducted and as
presently proposed to be conducted, except for those Intellectual
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Property Rights incorporated into or forming a part of or critical to the
development, manufacture or use of the Products identified on the applicable
Schedules as being licensed to Seller by third parties, and except for rights
granted to Seller under the Cross License Agreements. Except for rights granted
to Seller under the Cross-License Agreements, each Intellectual Property Right
owned, licensed to or used by Seller in the Storage Products Business
immediately prior to the Closing Date hereunder will be owned or licensed to and
available for use by Purchaser and Sub in the identical manner used by Seller as
of December 31, 1997 with respect to read channel and pre-amp product
development.
(b) Assets Sufficient. To Seller's knowledge, except as indicated in
Schedule 2A, the Business Assets include all assets, properties and Intellectual
Property Rights necessary to enable Purchaser and Sub to continue to develop and
test the Products in identical manner of Seller's Product developing and
testing. Except as indicated in Schedule 2A, to Seller's knowledge, the Business
Assets include all assets, properties and Intellectual Property Rights necessary
to enable Purchaser and Sub to manufacture, use, and sell the Products, provide
technical support therefor and to conduct the Storage Products Business in the
manner in which such business was conducted by Seller on December 31, 1997, and
as such business is proposed to be conducted through the Closing Date.
(c) No Infringement. The Products and, as and to the extent used in
the development of or integrated or incorporated in the Products, the Key Assets
and other Business Assets have not infringed or violated and currently do not
infringe or violate upon, or misappropriate any copyright, mask work or trade
secret, or to Seller's knowledge, any patent or other intellectual property
rights (other than trademarks) of any third party, and no third party has
asserted or threatened to assert against Seller any claim of infringement or
misappropriation of any such rights. To Seller's knowledge, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any of the Intellectual Property Rights in any manner affecting
the Storage Products Business. None of the Intellectual Property Rights is owned
by or registered in the name of any current owner (other than Seller) or former
owner, shareholder, partner, director, executive, officer, employee, salesman,
agent, customer, contractor or representative of Seller; nor does any such
person have any interest therein or right thereto, including (but not limited
to) the right to royalty or other payments. No other representation or warranty
in this Section 3.17 shall be deemed to cover matters covered by this Section
3.17(c).
(d) Recorded Intellectual Property Rights and Licenses. Schedules 5,
1, 4 and 2B, when taken together, identify: (i) each Listed Patent Asset, Listed
Copyright Asset, and mask work (and/or registration thereof) which has been
granted or registered and issued to Seller in any jurisdiction, (ii) each
pending Listed Patent Asset application or application for registration of a
Listed Copyright Asset, Product mask work or similar right which Seller has made
in any jurisdiction, (iii) all unregistered copyright works and mask works
included within the Technology Deliverables and (iv) each license, agreement, or
other permission which Seller has granted to any third party with respect to any
Purchased Assets or, to the extent that they relate to the Products or their
development, the Licensed Assets. Seller has delivered to Purchaser correct and
complete copies of all such patents, patent applications, copyrights and mask
work registrations covering the Product Designs and all applications, licenses,
agreements and permissions (as amended to date) required to make, use or sell
Products, other than the Cross License Agreements listed in Schedule 2A, for
which Seller has provided Purchaser with
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accurate abstracts of the license grants by Seller, and Seller has made
available to Purchaser correct and complete copies of all other written
documentation evidencing ownership or other rights of Seller, as the case may
be, of each such item. Seller has provided Purchaser with accurate abstracts of
the Cross-License Agreements listed in Schedule 2B. Seller has not filed any
copyright or mask work registrations or applications therefore related to the
Storage Products Business in the United States or any foreign country. Except
for rights licensed to the Seller pursuant to the Cross-License Agreements,
Seller has the exclusive right, to the extent such right exists, to file,
prosecute, and maintain patent applications and applications to register
copyrights and mask works related to or included in the Key Assets and the
patents and registrations that issue therefrom. All fees to maintain Seller's
rights in the Intellectual Property Rights in and to the Purchased Assets that
are due on or before the Closing Date, including (without limitation)
registration, maintenance and prosecution fees, and all professional fees
incurred in connection therewith, have been paid.
(e) Restrictions. With respect to each Intellectual Property Right,
license, agreement or other permission required to be identified in Schedules 1,
4, 5 and 9, to the extent that the subject Intellectual Property Right covers or
embodies Purchased Assets: (i) Seller possesses all right, title and interest in
and to such Intellectual Property Right, license, agreement or permission free
and clear of any Encumbrance or other restriction; and (ii) no action, suit,
proceeding, hearing, investigation, complaint, claim or demand is pending or, to
Seller's knowledge, is threatened, which challenges the legality, validity,
enforceability, use or ownership of such Intellectual Property Rights, license,
agreement or permission.
(f) Licenses. Except for rights licensed by Seller pursuant to the
Cross-License Agreements, Schedule 9 and Schedule 2A set forth and summarize
each license Seller has granted to any third party with respect to the Key
Assets in connection with the manufacture, use or sale of Products for Storage
Peripherals. Such Schedules 9 and 2A also sets forth and summarizes each
Intellectual Property Right that a third party owns and that Seller uses
pursuant to a license, sublicense, agreement or other permission in connection
with the manufacture, use or sale of Products. Except for the Cross-License
Agreements, Seller has delivered to Purchaser correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each Intellectual Property Right required to be identified in
such Schedule 9, except for rights under the Cross-License Agreements: (i) the
license, sublicense, agreement or permission covering the item is legal, valid,
binding, enforceable and in full force and effect; (ii) the license, sublicense,
agreement or permission will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms to Purchaser's and Sub's benefit
immediately following the Closing and all consents to the assignment of each
Seller Contract (including without limitation each Seller Contract that is a
license, sublicense, agreement, permission or covenant not to compete together
with all Intellectual Property Rights relating thereto) needed to assign any
such Seller Contract to Purchaser and/or Sub or any other subsidiary of
Purchaser designated by Purchaser have been obtained or will be obtained prior
to Closing; (iii) the license, sublicense, agreement or permission does not
restrict Seller's ability to do business in any jurisdiction or with respect to
the read channel and preamp market or industry; (iv) Seller is not in breach or
default of, and to Seller's knowledge, no other party to any such license,
sublicense, agreement or permission is in breach or default of, and no event has
occurred which, with notice or lapse of time or both, would constitute a breach
or default of, or permit
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termination, modification or acceleration of, any such license, sublicense
agreement or permission; (v) to Seller's knowledge, no party to the license,
sublicense, agreement or permission has repudiated or contested any provision
thereof; (vi) with respect to each sublicense, to Seller's knowledge, the
representations and warranties set forth in clauses (i) through (v) above are
true and correct with respect to the underlying license; (vii) no action, suit,
proceeding, hearing, investigation, complaint, claim, or demand is pending to
which Seller is a party, participant or recipient or, to Seller's knowledge, is
threatened which challenges the legality, validity or enforceability of any such
license, sublicense, agreement or permission or any Intellectual Property Right
governed thereby; and (viii) except as provided in Schedule 2B, Seller has not
granted any sublicense or similar right with respect to the license, sublicense,
agreement or permission related to the manufacture, use or sale of Products.
Neither Seller, nor any Seller Subsidiary nor any affiliate of Seller is liable
for, or has made any contract or arrangement whereby it may become liable to,
any person for any royalty, fee or other compensation for the ownership, use,
license, sale, distribution, manufacture, reproduction or disposition of any
Purchased Asset or any Licensed Asset. Except as provided in Schedule 2A, no
person other than Seller holds any license or other right granted or authorized
by or received from Seller or any affiliate or predecessor in interest to Seller
to manufacture, modify, distribute or market any of the Products or has granted
rights under the Intellectual Property Rights pertaining to Product Designs. No
person (other than Purchaser and Sub) will be or become entitled to receive a
copy of source code of any software or other tangible deliverable included among
the Purchased Assets as a result of this Agreement, any Ancillary Agreement or
any other agreement or transaction contemplated by this Agreement and no person
holds or has been granted access to any copy of source code of any software or
Confidential Information constituting or constituted in a Key Asset other than
Confidential Information that is customarily shared with customers and potential
customers of products like the Products.
(g) Employee Invention Agreements. All employees, contractors and
consultants of Seller, any Seller Subsidiary or any other affiliate of Seller
(including but not limited to all the Employees and all the Consultants) and any
other third parties who have been involved in the development of any Product or
any Purchased Asset, have executed invention assignment and confidentiality
agreements in the form delivered to Purchaser's counsel, and all employees and
consultants of Seller who have access to confidential information or trade
secrets authored, created or developed in the conduct of the Storage Products
Business and/or the Purchased Assets have executed nondisclosure agreements in
the form delivered to Purchaser's counsel. Seller has taken reasonable steps,
consistent with industry standards, to protect the secrecy and confidentiality
of all nonpublic information pertaining to the Products and other Key Assets,
the secrecy of which is customarily protected in the semiconductor device
industry, including (without limitation) the marking of all Seller Confidential
Information (as defined below) with appropriate "Proprietary" or "Confidential"
legends, the establishment of policies for the handling, disclosure and use of
confidential or propriety information and the acquisition of valid written
non-disclosure agreements from any party receiving the same.
(h) Nondisclosure Agreements. No third party is in possession of any
confidential information pertaining to the design of any Product, except for
prototype evaluation units provided by Seller to potential customers. Seller has
not knowingly taken or knowingly failed to take any action that, directly or
indirectly, has caused any Listed Patent Assets or Listed
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Copyright Assets to enter the public domain, or has in any way affected its
absolute and unconditional ownership of Intellectual Property Rights in and to
the Product Designs. All use, disclosure or appropriation of confidential or
proprietary information related to the Storage Products Business not owned by
Seller has been pursuant to the terms of a written agreement between Seller and
the owner of such information, or is otherwise lawful.
(i) Seller Contracts. Except as provided in Schedule 9, the Seller
Contracts include all contracts or licenses to which Seller is or has been a
party or, to Seller's knowledge, that are or may be necessary for Purchaser and
Sub to hold in order to operate the Storage Products Business after the Closing
and/or to manufacture, have manufactured, use, sell, lease, license, market,
distribute, install, service, support or otherwise commercially exploit any or
all of the Products or, subject to the Technology and Patent License Agreement,
Purchased Assets without: (i) the need to purchase, license or acquire any other
asset or property that is the subject of a Seller Contract; (ii) violating any
contractual rights of any third party; or (iii) to Seller's knowledge,
infringing, misappropriating or misusing any software, technology, Industrial
Property or Intellectual Property Rights of any third party.
(j) Status of Product Development. Seller has in all material
respects made a full, complete and accurate disclosure to Purchaser regarding
the state of development of the Products and the use of development tools and
other development resources used by Seller (and Seller's contract personnel) in
the development of the Products.
(k) Product Compliance. All of the Products will perform (including
but not limited to the processing of any data) in the same manner during and
after the year 2000 as they do before the year 2000, without the need to modify
or alter any of such Products in any respect.
(l) No Government Funding. No governmental or third party funding,
grants or resources were utilized in connection with designing, developing or
manufacturing the Products or otherwise conducting the Storage Products Business
and no governmental entity has any rights in or to any of the Key Assets,
Products or Intellectual Property Rights related thereto.
SECTION 3.18. Brokers. Neither Seller, any Seller Subsidiary nor any
of their affiliates has employed any broker, finder, investment banker or agent,
incurred or agreed to pay any brokerage fee, finder's fee or commission with
respect to the transactions contemplated by this Agreement, or dealt with anyone
purporting to act in the capacity of a broker, finder, investment banker or
agent with respect thereto.
SECTION 3.19. Environmental Matters.
(a) Environmental Obligations. Seller, each Seller Subsidiary and
each other affiliate of Seller is conducting, and at all times has conducted,
the Storage Products Business and its operations at the facilities or sites at
which the Storage Products Business is now or has previously been conducted by
Seller, any Seller Subsidiary or any other affiliate of Seller, or any of their
predecessors-in-interest (collectively, the "FACILITIES"), in accordance with
and in material compliance with all Environmental Laws.
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(b) No Outstanding Orders or Actions. There are no outstanding
orders, injunctions or decrees against Seller, nor are there any pending or
threatened investigations of any kind against Seller, related to the Storage
Products Business concerning any Environmental Laws.
(c) No Waste Disposal. All Hazardous Substances and waste materials
generated, used, transported, treated, stored or disposed of in connection with
the Storage Products Business have been handled, stored, treated and disposed of
in accordance with applicable Environmental Laws.
SECTION 3.20. Insurance. Seller has policies of insurance (i)
covering risk of loss on the Purchased Assets, (ii) covering liability for fire,
property damage and personal injury, and (iii) for business interruption. All
such insurance policies are valid, in full force and effect and enforceable in
accordance with their respective terms and will be maintained in effect until
the Closing Date.
SECTION 3.21. Disclosure. Seller has fully provided Purchaser with
all the information (orally or in writing) that Purchaser has reasonably
requested for deciding whether to enter into this Agreement and the transactions
contemplated hereby, including (but not limited to) the status of product
development. This Agreement, the Schedules attached hereto, the Seller
Disclosure Letter, the Seller Closing Documents and the Ancillary Agreements,
and all other information (oral and written) relating to the Products and the
Storage Products Business delivered in connection herewith, when taken together,
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated herein or therein or necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that all of the
following statements, representations and warranties are true, accurate and
correct:
SECTION 4.01. Organization and Good Standing. Each of Purchaser and
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction and is in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to carry on its business as now conducted and to enter into this
Agreement, the Ancillary Agreements and the Purchaser Closing Documents (as
defined), as applicable, and the transactions contemplated hereby and thereby.
SECTION 4.02. Authorization. All corporate action on the part of each
of Purchaser and Sub, its officers and directors necessary for the
authorization, execution and delivery of this Agreement, the Ancillary
Agreements and the Purchaser Closing Documents, the performance of all
obligations of Purchaser and Sub hereunder and thereunder, has been taken or
will be taken prior to the Closing. This Agreement and the Non-Competition
Agreements constitute, and the other Ancillary Agreements and the Purchaser
Closing Documents when executed and delivered, will constitute, valid and
legally binding obligations of Purchaser and Sub, as applicable,
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enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. The execution, delivery and
performance by each of Purchaser and Sub of this Agreement and each of the
Ancillary Agreements, as applicable, have been duly and validly approved by its
Board of Directors. No approval of the stockholders of Purchaser or Sub is
required to effect the transactions contemplated by this Agreement, the
Ancillary Agreements or the Purchaser Closing Documents.
SECTION 4.03. Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental entity on the part of Purchaser or Sub is required
in connection with the consummation of the transactions contemplated by this
Agreement, except for compliance with the HSR Act and the Mergers Act.
SECTION 4.04. Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against Purchaser or Sub that
questions the validity of this Agreement, the Ancillary Agreements or the
Purchaser Closing Documents, or the right of Purchaser or Sub to enter into this
Agreement, the Ancillary Agreements or the Purchaser Closing Documents or to
consummate the transactions contemplated hereby or thereby.
SECTION 4.05. Compliance with Other Instruments and Laws. The
execution, delivery and performance of this Agreement, the Ancillary Agreements
and the Purchaser Closing Documents by each of Purchaser and Sub and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in a violation or default in any material respect of: (a) any
provision of the charter documents of Purchaser or Sub, or (b) any judgment,
order, writ, or decree applicable to the assets of Purchaser or Sub, or (c) or
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a breach, violation or default) under any material
contract to which it is a party. Neither Purchaser nor Sub is in violation or
default in any material respect of any provision of its charter documents, or of
any instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound that could reasonably be expected to have a material
adverse effect on its business, or, to the best of its knowledge, of any
provision of any federal or state statute, rule or regulation applicable to it
that could reasonably be expected to have a material adverse effect on it.
SECTION 4.06. Brokers. Neither Purchaser, Sub nor any of their
affiliates has employed any broker, finder or agent, incurred or agreed to pay
any brokerage fee, finder's fee or commission with respect to the transactions
contemplated by this Agreement, or dealt with anyone purporting to act in the
capacity of a broker, finder or agent with respect thereto.
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ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business Prior to the Closing. Seller
covenants and agrees that, between the date hereof and the Closing Date, it will
(except as Purchaser otherwise agrees in its sole discretion, which as to clause
(d) below will not unreasonably be withheld):
(a) not sell, transfer, assign, convey, license, move, relocate,
encumber or otherwise dispose of any of the Business Assets or permit any Seller
Subsidiary or any other affiliate of Seller to do so;
(b) conduct, at Seller's expense, the Storage Products Business in
the ordinary course and consistent with Seller's past practice (taking into
account the sale of the Business Assets contemplated hereby and Seller's other
agreements hereunder) except for such actions of Seller as may be contemplated
by this Agreement or agreed to by Purchaser in a writing signed by Purchaser;
(c) not transfer any Employee (as defined in the first sentence of
Section 6.01(a)) to any other division or position of employment within Seller
or any of Seller's Subsidiaries or any other affiliates of Seller;
(d) not terminate the employment of any Employee (as defined in the
first sentence of Section 6.01(a));
(e) not encourage or otherwise act to cause any Employee not to
accept any offer of employment by Purchaser made pursuant to Section 6.01
hereof;
(f) not change the base salaries or bonus programs of any Employee or
establish a bonus plan or any new employee benefits for any Employee without
Purchaser's prior written approval;
(g) continue to provide Purchaser with reasonable access to and the
opportunity to meet and interview each Employee for the purpose of negotiating
offers of employment contingent upon the consummation of the sale and transfer
of the Business Assets to Purchaser and Sub and the other transactions
contemplated hereby (Seller expressly acknowledges that it consents to such
activities undertaken by Purchaser prior to the Effective Date);
(h) use Seller's best efforts to secure and preserve good and
marketable title in Seller's name in and to all of the Business Assets, free of
all material Encumbrances, and to cause the conditions to Closing set forth in
Article VIII to be fulfilled as promptly as possible;
(i) terminate any license rights held by any Seller Subsidiary or any
other affiliate of Seller with respect to any of the Purchased Assets; and
(j) terminate or cause to be released or expunged all Encumbrances on
any Purchased Assets.
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SECTION 5.02. Interim Sales Representation and Marketing Cooperation.
(a) Appointment as Interim Period Sales Representative. Seller hereby
authorizes Purchaser, between the Effective Date and the earlier of (i) the
Closing Date or (ii) the termination of this Agreement in accordance with its
terms (the "INTERIM PERIOD"), to market and to act as a sales representative for
Products on the terms and conditions of the existing Joint Marketing and Sales
Representative Agreement between Purchaser and Seller, dated December 1, 1997,
which agreement shall remain in full force and effect until the Closing, at
which time it shall be terminated.
(b) Recognition of Revenue Accruing Pre and Post Closing. No sales of
the Products have occurred to date and none are expected to occur prior to the
Closing Date. Revenues accrued per GAAP as a result of deliveries after Closing
of Products sold in connection with Evaluation Agreements existing prior to the
Closing Date will be for Purchaser's account, and Seller will not be entitled to
any compensation with respect thereto, except as expressly provided in Sections
2.03(b) and (d).
(c) Seller Non-disturbance of Prospects. To avoid impairing
negotiations between Purchaser and any prospective customer ("PROSPECT"),
neither Seller nor any Seller Subsidiary nor any person or entity acting upon
Seller's or any Seller Subsidiary's instructions will, without Purchaser's prior
written consent, contact any such Prospects, or cause to be communicated to any
such Prospect any proposal with respect to any Product, except that Seller will
upon Purchaser's request cooperate with Purchaser in dealing with each Prospect.
If Purchaser ceases to actively pursue any Prospect as a customer for Products,
Purchaser will so notify Seller in which case the restrictions of this
subsection will cease to apply as to the Prospect specified in such notice.
(d) Assumption and Disclaimer as to Obligations. All Liabilities
arising under any Evaluation Agreement existing prior to the Closing Date will
be Excluded Liabilities except as expressly provided in this clause (d). If
Closing never occurs, Purchaser will never have and will not assume any
Liabilities or obligations under any Evaluation Agreement, and all such
Liabilities or obligations will remain Excluded Liabilities. If Closing does
occur, then notwithstanding anything in Article II hereof to the contrary, each
Evaluation Agreement shall become an Seller Contract. In no event will Purchaser
be liable or responsible for paying any of Seller's sales personnel in
connection with any transactions contemplated by this Section 5.02.
SECTION 5.03. Consent of Third Parties. Prior to the Closing Date,
Seller shall obtain the consent in writing of all persons, if any, necessary to
permit Seller to assign and transfer all of the Purchased Assets (including, but
not limited to, the Seller Contracts) to Purchaser, free and clear of all
material Encumbrances.
SECTION 5.04. Future Agreements. In the event Seller enters into any
material agreement between the date of this Agreement and the Closing that
relates to the Storage Products Business or Products, at the request of
Purchaser, Seller agrees to include any such agreement within the Seller
Contracts.
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SECTION 5.05. Certain Notifications. At all times prior to the
Closing, Seller shall promptly notify Purchaser in writing of the occurrence of
any event which will result, or has a reasonable prospect of resulting, in the
failure to satisfy any of the conditions specified in Article VIII hereof.
SECTION 5.06. Post-Closing Access to Information. If, after the
Closing Date, in order properly to operate the Storage Products Business or
utilize the Business Assets, or prepare documents or reports required to be
filed with governmental entities or prepare Purchaser's or Sub's financial
statements for the Storage Products Business, it is reasonably necessary that
Purchaser obtain additional information within Seller's possession relating to
the Storage Products Business or the Business Assets, Seller shall furnish or
cause its representatives to furnish such information to Purchaser as promptly
as possible. Such information shall include, without limitation, all agreements
between Seller and any person relating to the Storage Products Business or the
Business Assets. Seller agrees to maintain any and all information and records
regarding its business and operations which are not transferred to Purchaser
pursuant to this Agreement necessary to permit Purchaser to calculate the
availability to it of Tax credits for increasing research activities under
Section 41 of the Internal Revenue Code. Seller shall maintain and make
available the information and records specified in this Section for a period of
seven (7) years after the Closing Date.
SECTION 5.07. Payroll Information. Following execution of this
Agreement, Seller will notify Purchaser of the name, telephone, fax and
electronic mail address of the Seller employee who is principally responsible
for administering payroll for the Employees. Seller shall use its best efforts
(to the extent practicable) to provide to Purchaser, within five (5) days of the
Closing Date, all W-2 information for calendar 1998 with respect to each United
States Employee and all information regarding Seller's payments for unemployment
insurance (including FUTA and SDU), paid by Seller in respect of each United
States Employee and similar information with respect to each non-U.S. Employee,
as required by the applicable jurisdiction.
SECTION 5.08. Pre-Closing Access to Information. From the date hereof
to the Closing Date, Seller will afford to the representatives of Purchaser,
including its counsel and auditors, during normal business hours, access to any
and all of the Business Assets and information with respect to the Storage
Products Business to the end that Purchaser may have a reasonable opportunity to
make such a full investigation of the Business Assets and the Storage Products
Business in advance of the Closing Date as it shall reasonably desire, and the
officers of Seller will confer with representatives of Purchaser and will
furnish to Purchaser, either orally or by means of such records, documents, and
memoranda as are available or reasonably capable of preparation, such
information as Purchaser may reasonably request, and Seller will furnish to
Purchaser's auditors all consents and authority that they may reasonably request
in connection with any such examination. In addition, Seller and Purchaser shall
cooperate on Tax information and record-keeping matters with regard to the
transition of the ownership of the Purchased Assets and the Storage Products
Business.
SECTION 5.09. Taxes. Seller shall, to the extent that failure to do
so could adversely affect the Storage Products Business or the Business Assets,
(a) continue to file within the time period for filing all returns and reports
relating to Taxes, and such returns and reports shall be true, correct and
complete, and (b) pay when due any and all Taxes attributable to or levied or
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imposed upon (i) the Business Assets used in the Storage Products Business for
periods (or portions thereof) through the Closing Date and (ii) the operations
of the Seller.
SECTION 5.10. Confidentiality.
(a) Existing Agreement. The terms of the Mutual Confidential
Disclosure Agreement dated as of January 13, 1998 (the "EXISTING CONFIDENTIALITY
AGREEMENT") between Seller and Purchaser are hereby incorporated herein by
reference and shall continue in full force and effect until the Closing Date, at
which time the Existing Confidentiality Agreement shall terminate. If this
Agreement is terminated prior to the Closing for any reason then the Existing
Confidentiality Agreement shall continue in full force and effect.
(b) Seller's Confidential Information. Excluding Acquired
Confidential Information (as defined below), all tangible manifestations of
confidential and/or proprietary information of Seller disclosed to Purchaser in
the course of negotiating the transaction contemplated by this Agreement
("SELLER'S CONFIDENTIAL INFORMATION") will be held in confidence and not
disclosed by Purchaser or any of its employees, affiliates or stockholders for a
period of five (5) years from the Closing Date and will be promptly destroyed by
Purchaser or returned to Seller, upon Seller's written request to Purchaser,
provided that Purchaser will not at any time use, or disclose to others, any
Licensed Technology Deliverables (in tangible form) for any purpose other than
the development of read channels and pre-amps for Storage Peripherals.
Purchaser's employees, affiliates and stockholders will not be given access to
Seller Confidential Information except on a "need to know" basis. It is agreed
that Purchaser Confidential Information will not include information that: (a)
is proven to have been known to Purchaser prior to receipt of such information
from the Seller; (b) is disclosed by a third party having the legal right to
disclose such information and who owes no obligation of confidence to the
Seller; (c) is now, or later becomes part of the general public knowledge or
literature in the art, other than as a result of a breach of this Agreement by
Purchaser; or (d) is independently developed by Purchaser without the use of any
Seller Confidential Information. Notwithstanding anything to the contrary,
Purchaser may use for any commercial purpose Confidential Information received
from Seller (whether or not such Confidential Information constitutes Purchased
Assets or Licensed Assets), provided that such Confidential Information is
Residual Information (as defined below) and provided that the right to use
Residual Information shall not be deemed a grant of rights under any patents or
copyrights of Seller. For purposes of this Agreement, "RESIDUAL INFORMATION"
means (i) information that has been remembered by Purchaser's consultants and
employees (including but not limited to employees that once were employed by
Seller) without referring to such information in a tangible form received from
Seller, and (ii) any tangible item created by a Purchaser employee or consultant
that may embody such information that has been remembered by such employee or
consultant without referring to such information in a tangible form received
from Seller. Purchaser shall not instruct its consultants or employees to
memorize Seller's Confidential Information so that it can be used as Residual
Information or can be disseminated for unauthorized use.
(c) Purchaser's Confidential Information. All copies of financial
information, marketing and sales information, pricing, marketing plans, business
plans, financial and business projections, manufacturing processes and
procedures, formulae, methodologies, inventions, product designs, product
specifications and drawings, and other confidential and/or proprietary
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information of Purchaser disclosed to Seller in the course of negotiating the
transaction contemplated by this Agreement ("PURCHASER CONFIDENTIAL
INFORMATION") will be held in confidence and not used or disclosed by Seller or
any of its employees, affiliates or stockholders for a period of five (5) years
from the Closing Date and will be promptly destroyed by Seller or returned to
Purchaser, upon Purchaser's written request to Seller. Seller's employees,
affiliates and stockholders will not be given access to Purchaser Confidential
Information except on a "need to know" basis. It is agreed that Purchaser
Confidential Information will not include information that: (a) is proven to
have been known to Seller prior to receipt of such information from the
Purchaser; (b) is disclosed by a third party having the legal right to disclose
such information and who owes no obligation of confidence to the Purchaser; (c)
is now, or later becomes part of the general public knowledge or literature in
the art, other than as a result of a breach of this Agreement by Seller; or (d)
is independently developed by Seller without the use of any Purchaser
Confidential Information.
(d) Acquired Confidential Information. Except for marketing and sales
information which has been publicly disseminated to Seller's prospective
customers for the Storage Products Business prior to the Effective Date in the
ordinary course of business consistent with past business practice, all copies
of financial information, marketing and sales information, pricing, marketing
plans, business plans, financial and business projections, customer lists,
methodologies, inventions, software, know-how, product designs, product
specifications and drawings, and other confidential and/or proprietary
information which constitutes Purchased Assets (collectively, "ACQUIRED
CONFIDENTIAL INFORMATION") will be maintained by Seller in confidence at all
times after the Effective Date of this Agreement in the same manner and to the
same extent that Seller, acting reasonably, maintains Seller's Confidential
Information in confidence. At all times following the Closing, Seller will: (i)
continue to hold all Acquired Confidential Information in strict confidence,
(ii) will not use for itself or third parties any of Acquired Confidential
Information which constitutes or is constituted in Purchased Assets to any third
party, (iii) will not disclose to third parties any of Acquired Confidential
Information which constitutes or is constituted in Purchased Assets to any third
party, and (iv) upon Purchaser's or Sub's request, promptly destroy or deliver
to Purchaser and/or Sub any Acquired Confidential Information which constitutes
or is constituted in Purchased Assets in Seller's possession or control; except
that Seller may internally use the original copies of all Business Records
solely to prepare and file Tax returns and prepare Seller's financial
statements, and Seller may disclose any Acquired Confidential Information as may
be required to comply with requests from all governmental agencies, including
without limitation the SEC; provided that Seller must provide Purchaser with
prior written notice of any proposed disclosure to government agencies and with
respect to the SEC, an opportunity to seek confidential treatment of such
proposed disclosure. It is agreed that Acquired Confidential Information will
not include information that is now, or later becomes, part of the general
public knowledge or literature in the art, other than as a result of a breach of
this Agreement or the Existing Confidentiality Agreement by Seller.
SECTION 5.11. No Other Bids. Until the earlier to occur of (a) the
Closing or (b) the termination of this Agreement pursuant to its terms, Seller
shall not, and Seller shall not authorize any of its officers, directors,
employees, agents or other representatives to, directly or indirectly, (i)
initiate, solicit or encourage (including by way of furnishing evaluation
material or other information regarding the Storage Products Business or the
Business Assets) any inquiries,
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or make any statements to third parties which may reasonably be expected to lead
to any proposal, concerning the sale of the Storage Products Business or all or
a portion of the Business Assets, or (ii) negotiate, engage in any substantive
discussions, or enter into any agreement, with any person concerning the sale of
the Storage Products Business or the Business Assets.
SECTION 5.12. Public Announcements. On and prior to the Closing Date,
Purchaser and Seller shall advise and confer with each other prior to the
issuance of any reports, statements or releases concerning this Agreement
(including the exhibits hereto) and the transactions contemplated herein.
Neither Purchaser nor Seller will make any public disclosure prior to the
Closing or with respect to the Closing unless both parties agree on the text and
timing of such public disclosure, except as required by law. Nothing contained
in this Section shall prevent any party at any time from furnishing any
information pursuant to the requirements of any governmental entity.
SECTION 5.13. Books and Records. If, in order properly to prepare
documents required to be filed with governmental authorities (including Tax
authorities) or its financial statements, it is necessary that any party hereto
or any successors be furnished with additional information relating to the
Business Assets, the Assumed Liabilities or the Storage Products Business, and
such information is in the possession of any other party hereto, such party
agrees to use its good faith efforts to promptly furnish such information to the
party needing such information, at the cost and expense of the party being
furnished such information. From and after the date of this Agreement and
continuing beyond the Closing, Seller shall cooperate with Purchaser and provide
to Purchaser at Purchaser's expense all financial information that may be
required to enable Purchaser to comply with all applicable laws, rules and
regulations, and any governmental filing requirements, whether imposed by the
Federal Trade Commission or otherwise, with respect to reporting and reflecting
the transactions contemplated by this Agreement.
SECTION 5.14. Regulatory and Other Authorizations; Consents.
(a) Efforts. Each party hereto will use its reasonable best efforts
to obtain all authorizations, consents, orders and approvals of all United
States, Irish and other non-U.S., federal, state and local regulatory bodies and
officials that may be or become necessary for the execution and delivery of, and
the performance of its obligations pursuant to, this Agreement and the Ancillary
Agreements and will cooperate fully with the other party in promptly seeking to
obtain all such authorizations, consents, orders and approvals. Each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and the required filings under the Mergers Act with
respect to the transactions contemplated hereby as promptly as is practicable
after the date hereof and to supply promptly any additional information and
documentary material that may be requested by any governmental authority
pursuant to the HSR Act or the Mergers Act. The parties hereto will not take any
action that will have the effect of delaying, impairing or impeding the receipt
of any required approvals. Without limiting the generality of the parties'
undertakings pursuant to this Section, the parties shall use their reasonable
best efforts to prevent the entry in a judicial or administrative proceeding
brought under any antitrust law by any Government Antitrust Authority or any
other party of any permanent or preliminary injunction or other order that would
make consummation of the acquisition of the Business Assets in accordance with
the terms of this Agreement unlawful or that would prevent or delay such
consummation.
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(b) Communications. Each party hereto shall promptly inform the other
of any material communication between such party and the Federal Trade
Commission, the Department of Justice or any other United States federal or
state, or non-U.S. government or governmental authority regarding any of the
transactions contemplated hereby. If any party or any affiliate of such party
receives a request for additional information or for documents or any material
from any such government or governmental authority with respect to the
transactions contemplated hereby, then such party shall endeavor in good faith
to make or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. Further, no written materials shall be submitted by any party to
the Federal Trade Commission, the Department of Justice or any other United
States federal or state, or non-U.S. governmental agency in connection with HSR
Act compliance or the merger control or competition regulations of any other
country (including without limitation, the Mergers Act), nor shall any oral
communications be initiated with such governmental entities by any party,
without prior disclosure to and coordination with the other parties and their
counsel. Each party hereto will cooperate in connection with reaching any
understandings, undertakings or agreements (oral or written) involving the
Federal Trade Commission, the Department of Justice or any other United States
federal or state, or non-U.S. governmental authority in connection with the
transactions contemplated hereby.
SECTION 5.15. Solvency . Seller is solvent and neither intends or
expects to file or seek relief under the United States Bankruptcy Code or any
other insolvency or similar law.
SECTION 5.16. Further Actions. Each of the parties hereto shall, at
its own expense, execute and deliver such documents and other papers and take
such further actions as may be reasonably required to carry out the provisions
of this Agreement and the Ancillary Agreements and to give effect to the
transactions contemplated by this Agreement and the Ancillary Agreements. In the
event that any Subsidiary or affiliate of Seller owns or holds rights to any of
the Business Assets, Seller covenants and agrees to cause each such Subsidiary
or affiliate to take whatever action and execute whatever documents as are
necessary to implement this Agreement and the Ancillary Agreements.
SECTION 5.17. Further Asset Transfer. From and after the date of the
Closing, Seller agrees to convey, transfer, and assign to Purchaser, free and
clear of all Encumbrances, any tangible or intangible rights, properties or
assets then held by the Seller the conveyance, transfer or assignment of which
would have been necessary for representations and warranties of the Seller
herein to be true and correct as of the date of the Closing, or the conveyance,
transfer or assignment of which was or is required by the covenants of the
Seller contained in this Agreement.
SECTION 5.18. Technology and Patent License Agreement. At the
Closing, the Technology and Patent License Agreement, in substantially the form
of EXHIBIT A, shall be executed and delivered by Seller and Purchaser.
SECTION 5.19. Non-Competition Agreement. Concurrently with the
execution of this Agreement, Seller and Purchaser shall execute and deliver
Non-Competition Agreements in the form of EXHIBIT C attached hereto (the
"NON-COMPETITION AGREEMENTS").
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SECTION 5.20. Transfer of Assets. Seller shall take, or shall cause
its subsidiaries and affiliates to take, all action necessary to transfer all
right, title and interest in and to the Purchased Assets to Analog Devices, Inc.
prior to the Closing.
SECTION 5.21. Export Compliance. Without prior authorization of the
United States Office of Export Administration, neither Seller nor Purchaser
shall knowingly export or reexport (including but not limited to delivery to a
foreign national) directly or indirectly any technical data received from the
other party, any technical data relating to the commodities received from the
other party or any immediate products (including processes and services)
produced directly by use of any of such technical data to any country to the
extent such export or reexport violates the Export Control Regulations of the
Bureau of International Commerce of the United States Department of Commerce.
SECTION 5.22. Survival of Covenants. Each of the covenants set forth
in Sections 5.02(b), 5.02(c), 5.06, 5.07, 5.09, 5.10(b), 5.10(c), 5.10(d), 5.13,
5.16, 5.17, 5.20 and 5.21 shall survive the Closing. The covenants set forth in
Section 5.10(a) and 5.12 above shall survive the termination of this Agreement
for any reason.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Right to Offer Employment.
(a) Employees. SCHEDULE 13 contains a current list (the "PRELIMINARY
LIST") of each employee of Seller, of any of Seller's Subsidiaries or of any
other affiliates of Seller who works in, or provides services in connection
with, the Storage Products Business (each an "EMPLOYEE"). At least five (5) days
prior to the Closing Date, Seller shall update the list of the Employees (the
"FINAL LIST") and shall identify those Employees who are active Employees of the
Storage Products Business as of that date, including those on vacation, sick
leave, disability leave, family leave or personal leave of absence and which
shall separately identify those Employees who are on a workers'
compensation-related or disability leave. For purposes of this Article VI,
"EMPLOYEES" means only those individuals included on the Final List.
(b) Offers of Employment. At Purchaser's request, Seller shall
cooperate with Purchaser in identifying those Employees that Purchaser may wish
to hire and in facilitating the employment by Purchaser, conditioned upon the
Closing, of those Employees (including any Employees who become such after the
Effective Date) whom Purchaser elects to employ. Prior to the Closing, Purchaser
shall have the right to contact such Employees at reasonable times and places
for the purpose of making offers of employment with Purchaser (in each case such
offers of employment shall be contingent on consummation of the transactions
contemplated by this Agreement). (Seller hereby expressly consents to offers of
employment being extended prior to or after the Effective Date.) Seller agrees
to use its best efforts to (i) retain Employees as employees of Seller through
the Closing Date, and (ii) assist Purchaser in securing the employment on the
Closing Date of those Employees to whom Purchaser (or an affiliate designated by
Purchaser) makes offers of employment; provided, however, that Seller shall not
be required to incur any financial obligation beyond continuing to pay for
current employee
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compensation and benefits through the Closing Date, except as otherwise required
by this Agreement, and further provided that Seller shall not be restricted from
terminating any Employee for cause if Purchaser is advised a reasonable period
of time in advance of such action. Seller shall not transfer any Employee to
employment with Seller outside of the Storage Products Business prior to the
Closing without the consent of Purchaser. Seller shall notify Purchaser promptly
if any Employee terminates employment with Seller after the date of this
Agreement but prior to the Closing. Each such Employee who is employed by Seller
on the Closing Date and who actually accepts an offer of employment with
Purchaser (or any affiliate designated by Purchaser) effective as of or promptly
following the Closing Date as a result of an offer of employment made by
Purchaser is hereafter referred to as a "NEW HIRE". Seller will provide each New
Hire a period equal to the balance of the term of his or her option to exercise
any outstanding options to purchase Seller securities held by such New Hires and
shall as of the Closing Date vest all outstanding unvested options held by such
New Hire. Seller hereby consents to the hiring of such New Hires by Purchaser
and waives, with respect to the employment by Purchaser of such New Hires, any
claims or rights Seller may have against Purchaser with respect thereto and
against any such Employee under any non-competition, confidentiality or
employment agreement with respect to the Storage Products Business. Purchaser
shall not, however, be obligated to offer employment to any Employee and the
parties hereby acknowledge that Purchaser is under no obligation whatsoever to
employ any current or future employees of Seller or any of its affiliates. Such
offers of employment as may be extended by Purchaser to Employees who are on a
workers' compensation-related or disability leave or a Family Medical Leave Act
leave or other statutory leave shall be conditioned upon their return from such
leave in accordance with Seller's leave of absence policy.
(c) Employee Compensation. Purchaser shall be liable for and
obligated to pay and indemnify, and hold Seller and its affiliates harmless
from, any and all expenses, contracts, agreements, commitments, obligations,
claims, suits, and other liabilities of any nature whatsoever, whether known or
unknown, accrued or not accrued, fixed or contingent, or arising hereafter,
directly or indirectly, with respect to (i) the employment by Purchaser or
termination of employment by Purchaser of any current or future employee or
consultant of Purchaser or any of its affiliates, including without limitation,
the employment or termination of a New Hire after the Closing Date, whether in
connection with the transactions contemplated hereby or otherwise; (ii) any
claims of discrimination under state or federal law provided such claims arise
from the New Hire's employment or service with or termination by Purchaser after
the Closing Date; (iii) any other claims or obligations arising out of the terms
and conditions of employment of any person by Purchaser whether for salary,
wages, bonuses, profit sharing, commissions, severance, vacation pay, sick pay
or otherwise; (iv) any duties or obligations of Purchaser or administrators
under any existing or future employee benefit plans or arrangements maintained
by Purchaser with respect to its employees; or (v) any present or future
obligations or liabilities of Purchaser to prior, existing or future employees
of Purchaser.
SECTION 6.02. Employment Taxes. Seller shall be responsible for any
withholding or employment Taxes with respect to any Employees which accrue or
become payable during the period of such Employee's employment or service with
Seller or any affiliate of Seller or arise out of the termination of such
person's employment with Seller or any affiliate of Seller. Seller shall be
responsible for filing all United States and non-U.S. federal, state and local
employment
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Tax returns with respect to such Employees attributable to periods of employment
or service with Seller or any affiliate of Seller.
SECTION 6.03. Termination of Employment. Seller agrees to comply with
the provisions of the Undertakings Law and any other United States or non-U.S.
federal, state or local statute or regulation regarding termination of
employment, plant closing or layoffs and to perform all obligations required by
Seller with respect to the cessation of any operations of the Storage Products
Business or any other business of Seller or reductions in workforce or the
termination, re-assignment, re-location or change in position of any Employee
(or other employee of Seller or of any of Seller's Subsidiaries or any other
affiliate of Seller) prior to, on or after the Closing Date. Seller shall
indemnify and hold Purchaser and Sub harmless with respect to any liability
under the Undertakings Law or other applicable United States or non-U.S.
federal, state or local statute or regulation affecting termination of
employment arising in connection with the transactions contemplated by this
Agreement.
SECTION 6.04. No Employment Obligations Assumed; Vesting. Without
limiting Sections 3.13 and 3.14, Seller shall be liable for and obligated to pay
and indemnify and hold Purchaser and its affiliates harmless from any and all
expenses, contracts, agreements, commitments, obligations, claims, suits, and
other Liabilities of any nature whatsoever, whether known or unknown, accrued or
not accrued, fixed or contingent or arising hereafter, directly or indirectly,
with respect to (i) any of Seller's obligations under this Article VI; (ii) the
employment or termination of employment by Seller of any current or future
employee or consultant of Seller or any of its affiliates, including without
limitation Employees or Consultants, whether in connection with the transactions
contemplated hereby or otherwise; (iii) any claims of discrimination under
United States or non-U.S., federal, state or local law provided such claims
arise from such Employee's employment or service with or termination by Seller;
(iv) any other claims or obligations arising out of the terms and conditions of
employment (including under any Seller agreement), whether for salary, wages,
bonuses, profit sharing, commissions, severance, vacation pay, sick pay or
otherwise relating to employment by Seller; (v) any duties or obligations of
Seller or administrators under any existing or future employee benefit plans of
Seller or any of its affiliates; or (vi) any present or future Liabilities of
Seller or any of its affiliates to prior, existing or future employees of Seller
or any of its affiliates, whether or not specifically described in this Article
VI. Seller shall pay to all terminated Employees, including New Hires, any
Liability for accrued vacation, sick leave or similar benefits with respect to
such Employees attributable to periods of employment or service with Seller,
consistent with Seller's policies and applicable law, and shall make such
payment within the statutory time period therefor but in no event later than
five days after such Employee's employment with Seller is terminated. As of the
Hire Date of each New Hire, Seller shall fully vest such New Hire under all
applicable qualified and non-qualified plans of Seller. Purchaser shall be
responsible for any Liability for any employment contract or employment
contractual obligations to New Hires entered into by Purchaser. Purchaser shall
be responsible for any Liability with respect to any claims of discrimination
under United States, non-U.S. federal, state or local law arising on or after a
New Hire's Hire Date.
SECTION 6.05. COBRA and Insurance Coverage. Seller shall be
responsible for any COBRA coverage continuation notices or similar employee
benefit type notices required to be provided with respect to any Employees under
applicable laws.
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SECTION 6.06. Non-U.S. Employees. Without limiting any other
provision hereof, Seller acknowledges and agrees that if Purchaser elects to
offer employment to some but not all Employees located in particular non-U.S.
jurisdictions, or if requisite notice prior to the Effective Date or the Closing
Date is not given to certain non-U.S. Employees or non-U.S. governmental
agencies regarding possible employment transitions to Purchaser of certain
Employees, certain non-U.S. laws, rules or regulations may be violated or may
not be complied with, possibly resulting in Liability, possibly including
without limitation a need to pay or accrue severance, a need for Seller to
continue employing non-U.S. Employees for some mandated period, a need for
Purchaser or a Purchaser Subsidiary to commence employing non-U.S. Employees
that Purchaser does not wish to employ ("MANDATED EMPLOYEES"), a need for
Purchaser to pay salary to Mandated Employees and then severance to them upon
terminating them as soon as legally permissible, an obligation of Purchaser to
honor non-U.S. Employees' pension obligations, and fines, sanctions and
penalties imposed on Seller or Purchaser or related parties and related
Liabilities with respect thereto and Liabilities associated with claims brought
against Seller or Purchaser or related parties by non-U.S. Employees or non-U.S.
governmental agencies or Mandated Employees with respect to any of the foregoing
(collectively, "FOREIGN EMPLOYEE LIABILITIES"). Nevertheless, without limiting
any other provision hereof, Seller agrees to indemnify, hold harmless and defend
Purchaser from and against any and all such Foreign Employee Liabilities,
including without limitation those arising under the Undertakings Law, and to
take all actions required to avoid (where possible) or minimize such Foreign
Employee Liabilities, including without limitation, paying or accruing severance
or other amounts and giving all notices and obtaining all approvals and paying
all fines required to do so, without regard to the limitations on
indemnification provided in Article IX hereof. Purchaser agrees to exercise
commercially reasonable efforts to minimize Foreign Employee Liabilities, but
shall have no liability for failing to do so and no actual or alleged failure to
do so shall relieve Seller from any of Seller's obligations or Liabilities under
this Section.
SECTION 6.07. General Matters.
(a) Compensation Program. Purchaser and Seller shall work together to
provide an incentive program for Employees to whom Purchaser offers employment
to accept such offers. Purchaser shall, among other things, grant options to
purchase shares of Purchaser's stock to New Hires, pay a joining bonus to each
New Hire, pay the reasonable costs of relocation of New Hires and his/her family
to the location selected by Purchaser, and enroll the New Hire in Purchaser's
standard employee benefit programs, subject to Purchaser's standard policies
applicable thereto.
(b) Immigration, Visas. Purchaser shall be responsible for obtaining
any required visas or other immigration approvals to allow New Hires to become
employed by Purchaser at whatever location is specified by Purchaser. Seller
shall cooperate with and provide information reasonably requested with respect
to such efforts.
(c) Indemnity. Seller shall be responsible for any Liability for
severance, termination or like payments to any Employee that accrues or becomes
payable during the period of such Employee's employment or service with Seller
or any affiliate of Seller or arise out of the termination of such person's
employment with Seller or any affiliate of Seller, whether occurring prior to or
following the Closing Date and whether arising pursuant to the Undertakings Law
or otherwise. Seller shall defend and indemnify Purchaser and Sub and hold
Purchaser and Sub
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harmless from and against all Liabilities to Purchaser or Sub to the extent that
the same arise as a result of any Employee's alleging that the acquisition of
the Business Assets hereunder and the hiring (or non-hiring) of Employees by
Purchaser on the Closing Date constitutes a termination entitling such Employee
to severance or any similar benefit or right pursuant to a plan maintained by
Seller or pursuant to applicable statutes. Notwithstanding anything to the
contrary herein, there shall be no monetary or time limitation or "basket" on
Seller's liability to Purchaser and Sub in Article IX hereof or elsewhere under
this Section 6.07(c).
(d) No Terminations. Seller covenants and agrees that it will not
terminate any Employee or Consultant who does not become a New Hire and that
such Employees and Consultants shall be assigned by Seller to perform services
pursuant to that certain R&D Services and Transition Support Agreement (as
defined in Section 8.01(e) below) to be entered into by Seller and Purchaser at
the Closing and that Seller presently intends to reassign (in a manner that
would not constitute a constructive termination under applicable law) each such
Employee and Consultant within Seller's organization at the expiration of the
R&D Services and Transition Support Agreement.
SECTION 6.08. No Solicitation. Except as provided by law, for a
period of one (1) year after the Closing Date, without Purchaser's written
permission, Seller shall not hire or employ any New Hire, and for a period of
three (3) years after the Closing Date, without Purchaser's written permission,
Seller shall not actively solicit any New Hire to terminate his or her
employment with Purchaser or to become an employee of Seller. Except as provided
by law, for a period of one (1) year after the Closing Date, without Seller's
written permission, Purchaser shall not hire or employ any employee of Seller
assigned to work on the R&D Services and Transition Support Agreement ("R&D
EMPLOYEE"), and for a period of three (3) years after the Closing Date,
Purchaser shall not actively solicit any R&D Employee to terminate his or her
employment with Seller or to become an employee of Purchaser, without the prior
written consent of Seller. For purposes of this Section, the term "actively
solicit" shall not mean or include the placement of advertisements,
participation in career days, utilizing headhunters or placement agencies or
responding to unsolicited inquiries, applications or resumes.
SECTION 6.09. No Rights Conferred Upon Employees. Nothing in this
Article VI or any other provision of this Agreement shall confer any rights or
remedies on any employee (including without limitation any Employee, New Hire or
R&D Employee) and no employee (including without limitation any Employee, New
Hire or R&D Employee) shall be a third party beneficiary with respect to any
covenant, representation or agreement in this Agreement.
SECTION 6.10. Survivability. Each of the agreements and covenants set
forth in this Article VI shall survive the Closing.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Transaction Taxes; Representation. Seller shall be
responsible for, and shall defend, indemnify and hold Purchaser and Sub harmless
against and in respect of, any and all excise, value added, registration, stamp,
property, documentary, transfer, sales, use and
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similar Taxes, levies, charges and fees (including all real estate transfer
taxes) incurred, or that may be payable to any taxing authority (other than the
State of Colorado), in connection with, the transactions (including without
limitation the sale, transfer, and delivery of the Purchased Assets, acquisition
of the other Business Assets and the assumption of the Assumed Liabilities)
contemplated by this Agreement (collectively, "TRANSACTION TAXES").
SECTION 7.02. Parties' Responsibility. Seller is and shall remain
solely responsible for all tax matters arising from or relating to the Business
Assets and related businesses on or prior to the Closing Date ("PRE-CLOSING
PERIOD"). Seller shall indemnify and hold harmless Purchaser and Sub from any
liability for, or arising out of or based upon, or relating to any tax matter
arising from the Business Assets and related businesses during the Pre-Closing
Period. Purchaser and Sub shall be solely responsible for all tax matters
arising from or relating to the Purchased Assets and related businesses
beginning after the Closing date ("POST-CLOSING PERIOD"). Purchaser and Sub
shall indemnify and hold harmless Seller from any liability for, or arising out
of or based upon, or relating to any tax matter arising from the Purchased
Assets and related businesses during the Post-Closing Period. Seller, Purchaser
and Sub shall cooperate concerning all tax matters relating to this division of
responsibility, including, but not limited to, the filing of Tax Returns and
other governmental filings associated therewith.
SECTION 7.03. No Limitation. Notwithstanding anything to the contrary
in Article IX or elsewhere herein, there shall be no limitation or "basket" on
the amount of Seller's liability with respect to its indemnification obligations
under Section 7.01 or on Seller or Purchaser or Sub's liability with respect to
their respective indemnification obligations under Section 7.02 hereof, and
Seller, Purchaser, Sub or their successors and assigns may assert any such
indemnity claim at any time prior to expiration of the applicable legal statute
of limitations applicable to the subject matter of the claim underlying the
claim for indemnification under applicable law.
SECTION 7.04. Treatment of Indemnity Payments. All payments made by
Seller or Purchaser, as the case may be, to or for the benefit of the other
party pursuant to any indemnification obligations under this Agreement shall be
treated as adjustments to the Purchase Price for Tax purposes and such agreed
treatment shall govern for purposes of this Agreement, unless otherwise required
by law.
ARTICLE VIII
CONDITIONS TO THE CLOSING
SECTION 8.01. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Accuracy of Representations and Warranties; Covenants. The
representations and warranties of Purchaser contained in Article IV of this
Agreement shall be true and correct in all material respects as of the Closing,
with the same force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, and all the
covenants contained in this Agreement to be complied with by Purchaser on or
before the Closing shall have been complied with in all material respects, and
Seller shall have received a certificate of Purchaser to such effect signed by a
duly authorized officer thereof (such
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certificate, together with the Purchase Price Allocation Agreement, shall
constitute the "PURCHASER CLOSING Documents").
(b) HSR Act and Merger Act. Any applicable waiting periods under the
HSR Act applicable to the transactions contemplated by this Agreement shall have
expired without a second request or early termination shall have been granted.
The parties shall have complied with all applicable requirements of the Mergers
Act and any governmental approval or consent required in connection therewith
shall have been received.
(c) No Order. No non-U.S. or United States federal, state or other
governmental authority or other agency or commission or non-U.S. or United
States federal, state or other court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and has the effect of making the transactions contemplated by this
Agreement and/or the Ancillary Agreements illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
parties hereto shall use their best efforts to have any such order or injunction
vacated.
(d) No Litigation. No suit, claim, cause of action, arbitration,
mediation, investigation or other proceeding under which a third party or
governmental entity is contesting, challenging or seeking to alter, enjoin or
adversely affect the transfer of the Business Assets contemplated by this
Agreement or any other transaction contemplated by this Agreement, will be
pending or threatened.
(e) R&D Transition Support Agreement. Seller and Purchaser shall have
negotiated, executed and delivered an R&D Services and Transition Support
Agreement, in form and substance satisfactory to Seller and its counsel, that
incorporates the terms specified on EXHIBIT D hereto (the "R&D SERVICES AND
TRANSITION SUPPORT AGREEMENT").
(f) Ancillary Agreements. Purchaser and Sub shall have executed and
delivered counterparts of each of the Ancillary Agreements not referenced in
clause (e) above to which Purchaser or Sub, respectively, is a signatory and
Purchaser and Sub shall have made all payments and performed all obligations
required to be completed by each of them prior to or at the Closing under all of
the Ancillary Agreements.
(g) Purchase Price Allocation Agreement. Purchaser shall have
executed and delivered to Seller the Purchase Price Allocation Agreement.
(h) Closing Payment. Purchaser and Sub shall have made the Closing
Payment to Seller in the manner contemplated by Section 2.03.
SECTION 8.02. Conditions to Obligations of Purchaser. The obligations
of Purchaser and Sub to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Accuracy of Representations and Warranties; Covenants. The
representations and warranties of Seller contained in Article III of this
Agreement (as qualified by Seller's Disclosure Letter) shall be true and correct
in all material respects as of the Closing, with the same force and
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effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, and all the covenants contained in
this Agreement to be complied with by Seller on or before the Closing shall have
been complied with in all material respects, and Purchaser and Sub shall have
received a certificate of Seller, dated as of the Closing Date, to such effect
signed by a duly authorized officer thereof.
(b) No Material Adverse Change. There shall have been no material
adverse effect in or with respect to Seller's right, title or interest in or to
any of the Business Assets; and no material Business Asset shall have been
subject to any damage, injury, loss, casualty or theft (whether or not covered
by insurance); and at least twenty of the New Hires and four of the five key
employees shall be able and available to commence employment with Purchaser on
the Closing Date; and Purchaser and Sub will have received a certificate to that
effect, dated as of the Closing Date, executed by a duly authorized officer of
Seller.
(c) Conduct of Seller's Business in Ordinary Course. From the
Effective Date to the Closing Date, Seller will have conducted the Storage
Products Business only in the ordinary course, consistent with Seller's past
practices, except for actions expressly permitted or contemplated by this
Agreement, matters incident to carrying out this Agreement, or such further
matters as may be consented to by Purchaser and Sub in writing, and Purchaser
and Sub will have received a certificate to such effect, dated as of the Closing
Date, executed by a duly authorized officer of Seller.
(d) Intellectual Property Assignments. Purchaser shall have received
from Seller: (i) assignments substantially in the forms of EXHIBIT E (the
"PATENT ASSIGNMENTS"), by which Seller shall assign to Purchaser and Sub the
Listed Patent Assets and an undivided interest in the Co-Owned Patents, executed
on Seller's behalf by an officer of Seller with his or her execution notarized,
in a form acceptable for recording with the United States Patent and Trademark
Office; and (ii) assignments from Seller to Purchaser and Sub of all registered
copyrights and mask works included in the Purchased Assets, duly executed on
behalf of Seller by an officer and notarized, and in a form acceptable for
recording with the United States Copyright Office in substantially the forms of
EXHIBIT F attached hereto (the "COPYRIGHT ASSIGNMENTS") and EXHIBIT G attached
hereto (the "MASK WORK ASSIGNMENTS").
(e) Bills of Sale. Bills of Sale substantially in the forms of
EXHIBIT H shall have been executed and delivered by Seller at the Closing.
(f) Delivery. Purchaser and its legal counsel shall be satisfied that
all Business Assets shall have been duly delivered by or for Seller to Purchaser
and Sub as required by this Agreement. All software and intangible deliverables
included in the Business Assets and all other Business Assets that can be
delivered electronically, will have been delivered to Purchaser electronically
to Purchaser's facilities at Longmont, Colorado, U.S.A. and all Business Assets
that cannot be delivered electronically will have been delivered to Purchaser
FOB at its Longmont, Colorado, U.S.A. facility or at another location specified
by Purchaser, at Purchaser's option, and in such manner as Purchaser directs, in
each case at Seller's cost and expense (except that the Purchaser and/or Sub
shall reimburse Seller for one-half of the freight costs of shipping assets to
Longmont, Colorado).
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(g) HSR Act and Mergers Act. Any applicable waiting periods under the
HSR Act and the Mergers Act applicable to the transactions contemplated by this
Agreement shall have expired without a second request or early termination shall
have been granted. The parties shall have complied with all applicable
requirements of the Mergers Act and any governmental approval or consent
required in connection therewith shall have been received.
(h) No Order. No Irish or other non-U.S. or United States federal,
state or other governmental authority or other agency or commission or non-U.S.
or United States federal, state or other court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and has the effect of making the transactions
contemplated by this Agreement and/or the Ancillary Agreements illegal or
otherwise restraining or prohibiting consummation of such transactions;
provided, however, that the parties hereto shall use their best efforts to have
any such order or injunction vacated.
(i) No Litigation. No suit, claim, cause of action, arbitration,
mediation, investigation or other proceeding under which a third party or
government entity is contesting, challenging or seeking to alter, enjoin or
adversely affect the Business Assets or the transactions contemplated by this
Agreement will be pending or threatened.
(j) R&D Services and Transition Support Agreement. Seller and
Purchaser shall have negotiated, executed and delivered the R&D Services and
Transition Support Agreement, in form and substance satisfactory to Purchaser
and its counsel, which shall incorporate the terms specified on EXHIBIT D
hereto.
(k) Foundry Agreement. Seller and Purchaser shall have negotiated,
executed and delivered a Foundry Agreement, in form and substance satisfactory
to Purchaser and its counsel, that incorporates the terms specified on EXHIBIT I
hereto (the "FOUNDRY AGREEMENT").
(l) Ancillary Agreements. Seller shall have executed and delivered
counterparts of each of the Ancillary Agreements not referenced in clauses (j)
and (k) above and provided all deliverables and performed all obligations
required to be completed by Seller prior to or at the Closing under all of the
Ancillary Agreements.
(m) Purchase Price Allocation Agreement. Seller shall have executed
and delivered to Purchaser the Purchase Price Allocation Agreement.
(n) Receipt. A duly authorized officer of Seller shall have executed
and delivered to Purchaser a written receipt for the Closing Payment.
(o) No Withdrawal of Acceptances by Employees Offered Employment. At
least twenty (20) of the Employees listed on Schedule 13 and at least four of
the five key Employees identified in a letter from Purchaser to Seller dated as
of the Effective Date referencing this Subsection 8.02(o) shall not have
withdrawn their acceptances of the written offers of employment extended to them
by Purchaser.
(p) Proceedings and Documents Satisfactory. All proceedings,
corporate or other, to be provided or undertaken by Seller in connection with
the transactions contemplated by this
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Agreement, and all documents incident thereto, shall be reasonably satisfactory
in form and substance to counsel to Purchaser.
(q) Third Party Consents Obtained. Seller shall have obtained all
consents, waivers and approvals from third parties and governmental entities
necessary to effect the assignment and transfer to Purchaser of the Purchased
Assets for which such consents, waivers and approvals are required to sell,
assign, license or otherwise transfer such Purchased Assets to Purchaser as
contemplated by this Agreement and the Ancillary Agreements.
(r) Transfer of Assets. Seller shall have taken, or shall cause its
subsidiaries and affiliates to have taken, all action necessary to transfer all
right, title and interest in and to the Purchased Assets to Analog Devices, Inc.
prior to the Closing.
(s) Opinions. Purchaser and Sub will have received favorable opinions
of Seller's counsel, Hale and Dorr LLP and/or A&L Goodbody, with respect to the
matters set forth in EXHIBIT J attached hereto.
(t) Bulk Sale Compliance. Seller shall have fully complied with all
bulk sales or bulk transfer notices and other requirements under the laws of all
applicable jurisdictions and provided proof thereof to Purchaser.
(u) Transaction Taxes. Purchaser shall have received proof of payment
by Seller of all applicable Transaction Taxes, if any, except those imposed by
the State of Colorado.
The various certificates, documents, opinions and schedules
deliverable at Closing by or on behalf of Seller are referred to herein as the
"SELLER CLOSING DOCUMENTS".
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Loss Defined; Indemnitees. For purposes of this Article
IX, the term "LOSS" will mean and include any and all Liability, loss, damage,
claim, expense, cost, fine, fee, penalty, obligation, injury or amounts paid in
settlement, including, without limitation, those resulting from any and all
claims, actions, suits, demands, assessments, investigations, judgments, orders,
awards, arbitrations, settlements or other proceedings, together with reasonable
costs and expenses, including the reasonable attorneys' and experts' fees, court
costs, arbitration costs, filing fees and other legal costs and expenses
relating thereto. As used in this Article IX, the term "PURCHASER INDEMNITEES"
means and includes Purchaser, Sub and any present or future officer, director,
employee, affiliate, stockholder or agent of Purchaser or Sub and its or their
respective successors and assigns. As used in this Article IX, the term "SELLER
INDEMNITEES" means and includes Seller and any present or future officer,
director, employee, affiliate, stockholder or agent of Seller and its respective
successors and assigns.
SECTION 9.02. General Indemnification by Seller. Seller agrees,
subject to the other terms, conditions and limitations of this Agreement
(including the provisions of Section 9.06 hereof), to indemnify Purchaser, Sub
and each of the other Purchaser Indemnitees against, and to
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hold Purchaser, Sub and each of the other Purchaser Indemnitees harmless from,
all Loss arising out of, resulting from, caused by or attributable to:
(a) the failure of any representation or warranty of Seller contained
in this Agreement (including any schedule or exhibit hereto), to be true and
correct as of the Effective Date or as of the Closing Date or the failure of any
representation or warranty contained in the Ancillary Agreements or the Seller
Closing Documents to be true and correct as of the Closing Date;
(b) the breach or violation by Seller of any covenant or agreement of
Seller contained in this Agreement (including any schedule or exhibit hereto),
the Ancillary Agreements or the Seller Closing Documents;
(c) any of the Excluded Assets or any of the Excluded Liabilities or
any other obligations or Liability of Seller not expressly assumed by Purchaser
under this Agreement;
(d) the operation or management of the Storage Products Business or
the Business Assets at any time or times on or prior to the Closing Date
(including without limitation any and all Taxes arising out of, or payable with
respect to, Seller's business operations through the Closing Date) and any
charges or actions brought by employees, agents or representatives of Seller
arising out of or based upon events occurring on or prior to the Closing Date;
(e) Liability for (or any Liability applicable to Purchaser, Sub or
any other Purchaser Indemnitee as a result of) noncompliance with any bulk
sales, bulk transfer, fraudulent conveyance or similar laws applicable to the
transactions contemplated by this Agreement or any claim asserting that any
transactions contemplated by this Agreement constitutes a fraudulent conveyance
or any similar claim;
(f) any demand, claim, debt, suit, cause of action, arbitration or
other proceeding that is made or asserted by any third party arising out of any
product or service that was sold, licensed or otherwise provided by Seller to
third parties (either prior to, on or after the Closing);
(g) any demand, claim, debt, suit, cause of action, arbitration or
other proceeding made or asserted against Purchaser arising because of the
failure to comply with any applicable bulk sale or similar asset transfer laws;
(h) any (A) Foreign Employee Liabilities (including without
limitation those arising under the Undertakings Law); or (B) demand, claim,
debt, suit, cause of action, arbitration, investigation or other proceeding made
or asserted by any Mandated Employee or any other employee or independent
contractor of Seller, any Seller Subsidiary or any affiliate of Seller or any
former employee or independent contractor of Seller, any Seller Subsidiary or
any affiliate of Seller, that relates in any manner to any alleged, actual or
constructive termination by Seller, any Seller Subsidiary or any affiliate of
Seller of such person's employment or the services of such person, or that
involves a claim of adverse employment action, discrimination, relocation,
promotion, demotion, unequal pay or any other matter relating to the employment
of such person by Seller, any Seller Subsidiary or any affiliate of Seller;
(i) termination by Seller, any Seller Subsidiary or any affiliate of
Seller of the employment of any of the Employees at any time prior to, on or
after the Closing Date, severance
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benefits related to any Employee's termination of employment with Seller, any
Seller Subsidiary or any Seller affiliate, and any failure by Seller, any Seller
Subsidiary or any Seller affiliate to pay or withhold any Taxes payable with
respect to the employment by Seller, any Seller Subsidiary or any Seller
affiliate of any Employee or any failure by Purchaser to hire such Employee;
(j) any Transaction Taxes payable on or with respect to the purchase,
sale, transfer or delivery of the Purchased Assets hereunder (other than those
imposed by the State of Colorado);
(k) any Encumbrance upon the Purchased Assets existing at the Closing
or arising as a result of the transactions contemplated by this Agreement,
without regard to the Seller Basket provided in Section 9.06(a);
(l) the failure of the Tangible Assets delivered to Purchaser at
Longmont, Colorado to conform to the Tangible Assets Schedule, without regard to
the Seller Basket provided in Section 9.06(a); and
(m) the failure of Seller to comply with any Environmental Law.
SECTION 9.03 Infringement Indemnification by Seller.
(a) Indemnity Obligation. Subject to Section 9.06, Seller agrees to
indemnify Purchaser, Sub and each of the other Purchaser Indemnitees against,
and to hold Purchaser, Sub and each of the other Purchaser Indemnitees harmless
from, all Losses not exceeding the "Maximum Amount" (as defined below) that are
payable to third parties arising out of, resulting from, caused by or
attributable to any violation or infringement by the Products or the use of any
Business Assets in the manner used by Seller prior to the Closing, of any
copyright, mask work, trade secret, or other intellectual property or related
right of any third party other than trademarks, but excluding any violation or
infringement primarily based on (i) a modification of the Products or other
Business Assets, other than a modification provided by Seller, if the violation
or infringement would not have occurred but for the particular modification,
(ii) a combination, other than a combination provided by Seller, of the
Products, or components or elements of a Product, with other products,
components, elements or technologies not provided by Seller, if the violation or
infringement would not have resulted but for the particular combination, or
(iii) which would not have resulted but for Purchaser's failure to implement a
"Design Around" (as defined in that certain Design Letter, dated of even date
herewith between Seller and Purchaser). "MAXIMUM AMOUNT" shall mean (A) the
lesser of (1) Twenty Million Dollars ($20,000,000), less any amounts previously
paid by Seller under Section 9.02, and (2) the total amount of all royalties
paid or accrued for payment, or later accrued for payment under the Technology
and Patent License Agreement, both before and after a Claim is made, (B) less
any amounts previously paid by Seller to Purchaser under this Section 9.03. For
clarification, the aggregate Maximum Amount payable under this Section 9.03
shall in no event exceed the amount of all royalties paid or accrued for
payment, or later accrued for payment under the Technology and Patent License
Agreement, both before and after a Claim is made.
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(b) Infringed Patent Licenses. Upon the occurrence of a "Patent
Indemnity Event" (defined below), Seller shall use diligent efforts, not to
exceed commercially reasonable efforts, to obtain for Purchaser, at Seller's
sole cost and expense not to exceed the Maximum Amount, a license ("3RD PARTY
LICENSE") from the third party owner of any patent ("PATENT OWNER") that is the
subject of the Patent Indemnity Event, granting Purchaser and its affiliates the
right to manufacture, have manufactured, use, sell and import read channel and
magneto resistive preamp Products for Storage Peripherals, and to grant
sublicenses of any such rights. For purposes of this Agreement, "PATENT
INDEMNITY EVENT" means the occurrence of any of the following events (including
any combination of events):
(i) A written claim of patent infringement by a Product
is received from a third party and Purchaser's
patent counsel determines that the claim is valid
("TYPE A INDEMNITY EVENT"); or
(ii) A claim for injunctive relief has been sought
against Purchaser, and Purchaser's patent counsel
determines that injunctive relief is likely to be
granted to a third party due to patent infringement
by a Product ("TYPE B INDEMNITY EVENT"); or
(iii) Injunctive relief due to a claim for patent
infringement by a Product is granted to a third
party ("TYPE C INDEMNITY EVENT").
If for any reason Purchaser does not obtain the 3rd Party License by
the "Required License Date" (as defined below), then, at Purchaser's option,
Purchaser may obtain the 3rd Party License directly from the Patent Owner and
receive, promptly upon request to Seller, reimbursement ("FEE REIMBURSEMENT")
from Seller. However, the aggregate Fee Reimbursement from all Patent Owners
shall not exceed the Maximum Amount, nor shall the Fee Reimbursement include
amounts, if any, paid to the Patent Owner for license rights in respect of
intellectual property not infringed by the Products. If the 3rd Party License
covers any such additional license rights, then the Fee Reimbursement shall be
calculated as a fraction of the total 3rd Party License fees. Such fraction
shall correspond to the proportional economic value of the intellectual property
that is infringed by the Products (as compared to all intellectual property
rights granted under the 3rd Party License). Purchaser may offset royalties
under the Technology and Patent License Agreement against Fee Reimbursement
amounts not yet received by Purchaser. "REQUIRED LICENSE DATE" means the date
that the 3rd Party License is required, calculated as the earliest of (a) ninety
(90) days after a Type A Indemnity Event, (b) sixty (60) days after a Type B
Indemnity Event, and (c) thirty (30) days after a Type C Indemnity Event.
(c) Design Around Abandonment. Seller shall have no indemnity
obligation under Section 9.03(a) above for any violation or infringement
referred to in that certain Design Letter if Purchaser has instructed engineers
performing work on the Design Arounds pursuant to the R&D Services and
Transition Support Agreement to abandon development ("ABANDONMENT INSTRUCTION")
of applicable Design Arounds and the Design Arounds, if implemented by
Purchaser, would have avoided the violation or infringement. An assignment of
one or more engineers to particular tasks of relatively short duration (measured
in terms of days) not related to Design Arounds development, or to perform a
function that can be performed
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contemporaneously with such engineer's Design Arounds development activities,
will not be deemed to be an Abandonment Instruction.
(d) .6 Micron and .35 Micron Product Patent Limitation. Seller shall
have no indemnity obligation under Section 9.03(a) above for any patent
violation or infringement that arises with respect to any product that is not a
.6 micron or .35 micron product if the corresponding .6 micron and .35 micron
Products do not violate or infringe such patent.
SECTION 9.04. Indemnification by Purchaser. Purchaser agrees, subject
to the other terms, conditions and limitations of this Agreement (including the
provisions of Section 9.06 hereof), to indemnify Seller and each of the other
Seller Indemnitees against, and to hold Seller and each of the other Seller
Indemnitees harmless from, all Loss arising out of, resulting from, caused by or
attributable to:
(a) the failure of any representation or warranty of Purchaser
contained in this Agreement (including any schedule or exhibit hereto), to be
true and correct as of the Effective Date or as of the Closing Date or the
failure of any representation or warranty contained in the Ancillary Agreements
or the Purchaser Closing Documents to be true and correct as of the Closing
Date;
(b) the breach or violation by Purchaser of any covenant or agreement
of Purchaser contained in this Agreement (including any schedule or exhibit
hereto), the Ancillary Agreements or the Purchaser Closing Documents;
(c) the operation of the Storage Products Business by Purchaser after
the Closing Date;
(d) any demand, claim, debt, suit, cause of action, arbitration or
other proceeding (including, but not limited to, a warranty claim, a strict
product liability claim or any other claim) that is made or asserted by any
third party that relates to any product defects, including latent defects, of
any product or service, including any of the Products, provided by Purchaser to
any customer after Closing unless such Products are produced after the Closing
Date and contain a design defect based on unmodified designs transferred as part
of the Business Assets; and
(e) any demand, claim, debt, suit, cause of action or proceeding made
or asserted by any employee or independent contractor or any former employee or
independent contractor of Purchaser, that relates in any manner to any
termination after the Closing Date by Purchaser of a New Hire or any other
matter relating to Purchaser's employment of a New Hire after the Closing Date;
provided however, that nothing in this Section 9.04 shall impose on Purchaser
any duty to indemnify Seller for any Excluded Liabilities.
SECTION 9.05. Procedures for Indemnification.
(a) As used herein, an "INDEMNIFIED PARTY" means a Purchaser
Indemnitee seeking indemnification pursuant to Section 9.02 or Section 9.03
hereof or a Seller Indemnitee seeking indemnification pursuant to Section 9.04
hereof. The Indemnified Party agrees to give the other
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party ("INDEMNITOR") prompt written notice of any event, or any claim, action,
suit, demand, assessment, investigation, arbitration or other proceeding by or
in respect of a third party (a "THIRD PARTY CLAIM") of which it has knowledge,
for which such Indemnified Party is entitled to indemnification under this
Article IX (including in any case copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). No delay
on the part of an Indemnified Party in giving the Indemnitor notice of a Third
Party Claim shall relieve the Indemnitor from any obligation hereunder unless
(and then solely to the extent) that the Indemnitor is prejudiced thereby.
(b) The Indemnitor will have the right, at its sole cost and expense,
to defend the Indemnified Party against the Third Party Claim with counsel of
the Indemnitor's choice that is reasonably satisfactory to the Indemnified Party
so long as (i) the Indemnitor notifies the Indemnified Party in writing within
ten (10) days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnitor intends to undertake such defense, (ii) the Indemnitor
provides each Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnitor will have the financial resources to
defend against the Third Party Claim and fulfill its Indemnification obligations
hereunder, (iii) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of the
Indemnified Party, (v) the Indemnitor conducts the defense of the Third Party
Claim actively and diligently; and (vi) the counsel chosen by the Indemnitor
does not have any conflict of interest in representing the interests of the
Indemnified Party.
(c) So long as the Indemnitor is conducting the defense of the Third
Party Claim in accordance with Section 9.05(b) above, (i) the Indemnified Party
may retain separate co-counsel and participate in the defense of the Third Party
Claim at its own cost and expense (except as provided below) and shall have the
right to receive copies of all pleadings, notices and communications with
respect to the Third Party Claim to the extent no privilege is thereby waived,
(ii) the Indemnified Party may participate in settlement negotiations with
respect to the Third Party Claim, and (iii) the Indemnitor will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim unless (A) each affected Indemnified Party consents thereto in
writing (which consent will not unreasonably be withheld) or (B) the settlement,
compromise or consent includes an unconditional release from all Liability with
respect to the claim in favor of each affected Indemnified Party.
Notwithstanding the foregoing, if an Indemnified Party is offered a written
settlement proposal by a third party that has as its sole component the payment
of money by the Indemnified Party and the Indemnitor recommends to the
Indemnified Parties in writing that they accept such settlement proposal (the
"SANCTIONED SETTLEMENT") and the Indemnified Parties refuse to accept such
settlement proposal, in such event if the ultimate settlement terms agreed to by
the Indemnified Party with such third party or the final monetary damages award
against the Indemnified Parties after exhaustion of all appeals either referred
to as (the "FINAL SETTLEMENT AMOUNT"), is greater than the amount of the
Sanctioned Settlement, the Indemnified Party shall be responsible for the
differential between the Final Settlement Amount and the Sanctioned Settlement
and the Indemnitor's liability shall be limited to the amount specified in the
Sanctioned Settlement.
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(d) If the Indemnitor does not elect to assume control of or
otherwise participate in the defense or settlement of any Third Party Claim, or
if the Indemnitor does so elect but any of the conditions in Section 9.05(b)
above is or becomes unsatisfied, or if the Indemnitor ceases to any time to
actively defend the Third Party Claim, then, (i) the Indemnified Party may
defend against and consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim, provided, however, that the
Indemnitor (A) shall have the right to receive copies of all pleadings, notices
and communications with respect to the Third Party Claim so long as the receipt
of such documents by the Indemnitor does not affect any attorney-client
privilege relating to the Indemnified Party, and (B) may participate in
settlement negotiations with respect to the Third Party Claim and the
Indemnified Party shall not enter into any settlement without the prior written
consent of the Indemnitor (which consent shall not be unreasonably withheld),
(ii) the Indemnitor will reimburse the Indemnified Party promptly and
periodically for all costs and expenses incurred in defending against the Third
Party Claim (including without limitation reasonable attorneys' and experts'
fees and expenses and court and arbitration costs), and (iii) the Indemnitor
will remain responsible for any Loss the Indemnified Party may suffer resulting
from, arising out of, relating to or caused by the Third Party Claim to the
fullest extent provided in this Article IX.
SECTION 9.06. Limitations on Indemnification.
(a) Limits on Seller Indemnification. Seller's liability to indemnify
Purchaser and other Indemnified Parties for Loss under this Article IX shall not
be subject to any limitation except as set forth below in clauses (i) and (ii)
of this Section 9.06(a) or except as set forth in Section 9.03 with respect to
infringement indemnification:
(i) Seller shall not be required to provide indemnification
under this Article IX unless and until the aggregate Loss for which one or more
Purchaser Indemnitees seeks indemnification hereunder exceeds an aggregate of
Two Hundred Fifty Thousand Dollars ($250,000) (the "SELLER BASKET"), in which
event Seller shall be liable to indemnify the Purchaser Indemnitees for all
Loss, including any Loss within the Seller Basket.
(ii) The maximum aggregate Loss recoverable by Purchaser
Indemnitees (considered together as a group) against Seller under this Article
IX shall not exceed Twenty Million Dollars ($20,000,000) (the "SELLER CAP").
Notwithstanding the foregoing, Purchaser and any other Indemnified
Party shall be entitled to recover any Loss arising from (i) fraud or willful
misconduct on the part of Seller, (ii) the failure of any representation or
warranty of Seller contained in Article VII to be true and correct as of the
Closing or (iii) the rescission of or injunction against any transaction
contemplated by this Agreement, in each case regardless of the Seller Basket
and/or the Seller Cap provisions contained in this Section 9.06(a).
(b) Limits on Purchaser Indemnification. Purchaser's liability to
indemnify Seller Indemnitees for Loss under Section 9.04 shall be subject to the
limitations as set forth below in clauses (i) and (ii):
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(i) Purchaser shall not be required to provide
indemnification under this Article IX unless and until the aggregate Loss for
which one or more Seller Indemnitees seeks indemnification hereunder exceeds an
aggregate of Two Hundred Fifty Thousand Dollars ($250,000) (the "PURCHASER
BASKET"), in which event Purchaser shall be liable to indemnify the Seller
Indemnitees for all Loss, including any Loss within the Purchaser Basket.
(ii) The maximum aggregate Loss recoverable by Seller
Indemnitees (considered together as a group) against Purchaser under this
Article IX shall not exceed Five Million Dollars ($5,000,000) (the "PURCHASER
CAP").
The Purchaser Basket and Purchaser Cap shall not apply to the failure
by Purchaser to pay Seller the Development Fee or the consideration specified in
Section 4 of the Technology and Patent License Agreement; provided, however,
that the foregoing shall not prevent Purchaser from exercising the set off
rights provided in Section 9.07.
(c) Time Limits. Notwithstanding anything herein to the contrary, no
claim for indemnification under this Article IX may be brought after the third
(3rd) anniversary of the Closing Date; provided, however, that with respect to
the representations and warranties of Seller contained in Sections 3.07, 3.17
and 3.19 of this Agreement and with respect to claims pursuant to the
intellectual property indemnity provided in Section 9.03 above, a claim for
indemnification under this Article IX may be brought until the fifth (5th)
anniversary of the Closing Date or the end of the statutory period, whichever is
longer. To preserve a claim for indemnification under this Article IX, an
Indemnified Party need only provide written notice in reasonable detail of such
claim to the Indemnitor prior to the expiration of the applicable time limit (if
any) described in the preceding sentence; and if an Indemnified Party provides
such notice prior to the expiration of such time limit, such Indemnified Party
may pursue such claim for indemnification after the expiration of such time
limit.
SECTION 9.07. Setoff Rights. In addition to its foregoing rights
under this Article IX, Purchaser and Sub may offset the amount of any Loss for
which Purchaser and Sub are entitled to indemnification under this Article IX as
a credit against Purchaser's and Sub's obligations under Article II hereof to
pay Seller the Development Fee and to pay Seller amounts payable pursuant to any
of the Ancillary Agreements, and Purchaser and Sub may effect such offset by
withholding payment to Seller of the applicable amount from the Development Fee
and/or from amounts payable to Seller pursuant to the Ancillary Agreements.
- -Purchaser and Sub may set off a Loss under the preceding sentence even if the
Basket is not yet exceeded. Purchaser shall give Seller written notice of its
intent to withhold and set off any part of the Development Fee or amounts
payable pursuant to the Ancillary Agreements and an opportunity for fifteen (15)
days to object thereto in writing, provided that the basis of the objection is
specified in detail. To ensure that Purchaser and Sub will be able to exercise
its rights under this Section 9.07, Seller shall not, directly or indirectly,
assign or transfer to any other person any right to receive any portion of the
Development Fee or the amounts payable pursuant to the Ancillary Agreements.
SECTION 9.08. No Limitation on Other Rights or Injunctive Relief. The
foregoing provisions of Article IX, together with the other specific
indemnifications and allocations of liability specified in other Sections or
Articles of this Agreement and/or the Ancillary Agreements, are the sole remedy
of an Indemnified Party for a breach of a representation,
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warranty, covenant or agreement of the other party contained in this Agreement;
provided, however, that nothing herein shall be deemed to restrict a party's
ability to seek and obtain injunctive relief.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of Seller and Purchaser; or
(b) by either Purchaser or Seller at any time prior to Closing, if
the other commits a material breach of this Agreement that is not cured within
ten (10) days after notice thereof; or
(c) by either Seller or Purchaser, if the Closing shall not have
occurred prior to May 2, 1998; provided, however, that the right to terminate
this Agreement under this Section 10.01(c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to occur prior
to such date; or
(d) by either Seller or Purchaser if there shall have been
instituted, pending or threatened (and not withdrawn) any action or proceeding
by any governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, or there
shall be in effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prevent consummation of any of the transactions contemplated by this
Agreement or the Ancillary Agreements, or seeking to prohibit or limit Purchaser
or any of its subsidiaries from exercising all material rights and privileges
pertaining to the Business Assets or the ownership, use or operation by
Purchaser or any of its subsidiaries of all or a material portion of the
Business Assets, or seeking to compel Purchaser or any of its subsidiaries to
dispose of or hold separate all or any material portion of the Business Assets.
SECTION 10.02. Effect of Termination. In the event of termination of
this Agreement as provided in Section 10.01, this Agreement shall forthwith
become void (excepting only those provisions hereof that by their terms survive
the termination of this Agreement) and there shall be no liability on the part
of any party hereto; provided that nothing herein shall relieve either party
from liability for any willful breach hereof.
SECTION 10.03. Waiver. At any time prior to the Closing, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party to be bound thereby.
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ARTICLE XI
DISPUTE RESOLUTION
SECTION 11.01. Management Negotiation.
(a) Purchaser and Seller shall attempt to resolve disputes between
the Purchaser and the Seller arising out of or in connection with this Agreement
through good faith negotiations as provided herein. The parties agree that
disputes shall be fully discussed by the functional representatives of Purchaser
and the Seller involved in the dispute in an attempt to achieve a prompt
resolution of such dispute. In the event that such dispute shall not be promptly
resolved by the mutual agreement of the functional representatives of Purchaser
and Seller, the dispute shall be submitted to senior management representatives
of each of Purchaser and Seller. Such senior management representatives of
Purchaser and Seller shall meet and fully discuss such dispute in an attempt to
achieve a prompt resolution of the dispute. If such dispute is not promptly
resolved by the mutual agreement of such senior management representatives of
Purchaser and Seller, each of Purchaser and Seller shall be free to exercise any
of the remedies available to it (i) pursuant to the terms of this Agreement or
(ii) otherwise at law or in equity.
(b) Purchaser and Seller acknowledge that, from time to time, certain
material disputes arising out of or in connection with this Agreement may
objectively require immediate resolution. Accordingly, any such dispute may, at
the option of either the Purchaser or the Seller, be processed through an
abbreviated mediation process. Such abbreviated mediation process shall entail
submitting any such dispute to the senior management representatives of each of
the Purchaser and Seller designated by each of the Purchaser and the Seller for
a prompt and expeditious resolution. In the event that a prompt and expeditious
resolution of such dispute is not achieved through the mutual agreement of such
senior management representatives of the Purchaser and the Seller, each of
Purchaser and Seller shall be free to exercise any of the remedies available to
it (i) pursuant to the terms of this Agreement or (ii) otherwise at law or in
equity.
(c) Each of Purchaser and Seller agrees to act reasonably and in good
faith in connection with all matters arising out of or in connection with this
Agreement that are submitted to the mediation process set forth in this Article
XI.
SECTION 11.02. Waiver of Jury Trial. The parties hereby waive trial
by jury in any litigation in any court with respect to, in connection with, or
arising out of this Agreement, the Ancillary Agreements or the transactions
contemplated thereby.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. Expenses. All costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
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SECTION 12.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Seller:
Analog Devices, Inc.
Three Technology Way
Norwood, MA 02062-9106
Attention: President and General Counsel
Telecopy: (781) 461-3491
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Paul P. Brountas, Esq.
Telecopy: (617) 526-5000
(b) if to Purchaser or Sub:
Adaptec, Inc.
691 South Milpitas Boulevard
Milpitas, CA 95035
Attention: President and General Counsel
Telecopy: (408) 957-7137
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Dennis R. DeBroeck, Esq.
Timothy A. Covington, Esq.
Telecopy: (650) 494-1417
SECTION 12.03. Public Announcements. Except as may otherwise be
required by law, neither party shall make or cause to be made any public
announcements in respect of this Agreement or the transactions contemplated
herein or otherwise communicate with any news media without the prior written
consent of the other party. Upon execution of this Agreement the parties shall
issue a joint press release.
SECTION 12.04. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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SECTION 12.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 12.06. Entire Agreement. This Agreement, the Ancillary
Agreements and the Purchase Price Allocation Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and undertakings with respect
to the subject matter hereof, both written and oral. Upon the effectiveness of
the Closing, the Existing Confidentiality Agreement shall terminate.
SECTION 12.07. Assignment. This Agreement shall not be assigned by
Purchaser or Seller without the prior written consent of the non-assigning
party; provided, however, that Purchaser and/or Sub may assign all or a portion
of its rights and obligations hereunder to one or more wholly-owned subsidiaries
or affiliates of Purchaser.
SECTION 12.08. No Third-Party Beneficiaries. This Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other person
or entity any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 12.09. Amendment; Waiver. This Agreement may not be amended
or modified except by an instrument in writing signed by Seller and Purchaser
(which instrument will bind Sub). Waiver of any term or condition of this
Agreement shall only be effective if in writing and shall not be construed as a
waiver of any subsequent breach or waiver of the same term or condition, or a
waiver of any other term or condition of this Agreement.
SECTION 12.10. Governing Law; Jurisdiction and Venue. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of California applicable to contracts executed in and to be performed by
residents of California within that State. Seller consents to submit to the
jurisdiction of any federal or state court located in the State of California
and agrees not to object to venue in the federal or state courts located in
Santa Clara County, California. The provisions of the U.N. Convention on
Contracts for the International Sale of Goods shall not apply to this Agreement.
SECTION 12.11. Construction of "Seller". Except as the context
otherwise requires, the term "Seller", wherever used in this Agreement, shall be
deemed to refer to each, any and/or all of Analog Devices, Inc. and each Seller
Subsidiary who owns or holds rights to any of the Purchased Assets or Licensed
Assets as of the Effective Date.
SECTION 12.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when
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executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, Seller, Purchaser and Sub have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
"SELLER" "PURCHASER"
ANALOG DEVICES, INC. ADAPTEC, INC.
By: [SIG] By: /s/ F. GRANT SAVIERS
Name: Name: F. Grant Saviers
Title: V.P. Finance and CFO Title: Chairman, President & CEO
"SUB"
ADAPTEC SINGAPORE MFG. (S) PTE. LTD.
By: /s/ F. GRANT SAVIERS
Name: F. Grant Saviers
Title: Director
[SIGNATURE PAGE TO ASSET ACQUISITION AGREEMENT]
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