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Exhibit 2.2
ASSET ACQUISITION AGREEMENT
DATED AS OF JANUARY 15, 1999
AMONG
ADAPTEC, INC.,
ADAPTEC MFG. (S) PTE. LTD.
AND
STMICROELECTRONICS, INC.
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ASSET ACQUISITION AGREEMENT
This ASSET ACQUISITION AGREEMENT (this "AGREEMENT") is made and entered
into as of January 15, 1999 (the "EFFECTIVE DATE"), by and among Adaptec, Inc.,
a Delaware corporation ("AIM"), Adaptec Mfg. (S) Pte. Ltd., a wholly-owned
Singapore subsidiary of AIM ("AMS" and, together with AIM, "SELLER") and
STMicroelectronics, Inc., a Delaware corporation ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and assign to Purchaser, and Purchaser
desires to purchase and acquire from Seller, certain assets associated with
Seller's Desktop Peripherals Business (as defined below), all upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, AIM desires to grant to Purchaser, and Purchaser desires to
receive from AIM licenses to certain intellectual property rights of AIM in
connection with the design, development and manufacture of Products and
commercial exploitation of technology associated with the Desktop Peripherals
Business; and
WHEREAS, in connection with the sale of assets and grant of licenses
described above, Seller will permit Purchaser to make offers of employment and
hire employees of Seller who have worked in the Desktop Peripherals 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 agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" or "ASSOCIATE" shall have those meanings ascribed to such
terms by Rule 405 promulgated under the 1933 Act.
"ANCILLARY AGREEMENTS" means, collectively, the Bill of Sale, the
Assignment and Assumption Agreement, the License Agreement, the Facilities
Agreement and the Manufacturing Agreement.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement substantially in the form of EXHIBIT A.
"ASSUMED LIABILITIES" means (i) any and all liabilities of Seller under
the Seller Contracts to the extent that such liabilities arise, are incurred or
require performance of an action on or
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subsequent to the Closing Date, (ii) subject to the provisions of Section 10.4,
any and all Warranty Claims (as defined in Section 10.4), and (iii) the
liabilities and obligations listed on SCHEDULE 1 hereto.
"BILL OF SALE" means the Bill of Sale substantially in the forms of
EXHIBIT B.
"BUSINESS ASSETS" means the Purchased Assets and the Licensed Assets.
"CIRCUITS" means discrete circuits that provide one or more
functionalities that are a subset of the aggregate functionalities of a Product.
"CLOSING ACCOUNTS RECEIVABLE" means Seller's accounts receivable,
unbilled receivables, notes and other amounts receivable from third parties in
respect of Products sold by Seller, determined as of the date two business days
prior to the Closing Date.
"DESKTOP PERIPHERALS 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 Product Designs.
"ENCUMBRANCE" means any pledge, lien, collateral assignment, security
interest, mortgage, deed of trust, title retention, conditional sale or other
security arrangement, or adverse claim of title or ownership, other than those
which do not materially detract from or interfere with the ownership of the
properties subject thereto.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended, and the rulings and regulations promulgated thereunder.
"EXCLUDED ASSETS" means all assets of Seller other than the Purchased
Assets and the Licensed Assets, including, without limitation, (i) all Seller's
cash, bank accounts and securities; (ii) all insurance policies of Seller and
all rights of Seller of every nature and description under or arising out of
such insurance policies; (iii) claims for refunds of Taxes paid by Seller prior
to the Closing Date; (iv) 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; (v) except as otherwise provided herein, Seller's
right, title and interest in the name "Adaptec" or any variation or combination
thereof, or Seller's other trademarks, monograms or logos; and (vi) the assets
listed on SCHEDULE 13.
"FACILITIES AGREEMENT" means an agreement between Seller and Purchaser
providing for the occupancy and use by Purchaser of certain facilities of Seller
in substantially the form attached as EXHIBIT C hereto.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INTANGIBLE ASSETS" means, collectively, the intangible assets,
properties and rights of Seller listed on SCHEDULE 2 hereto.
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"INTELLECTUAL PROPERTY RIGHTS" means any and all existing or future
patent rights (including patent applications and disclosures), rights of
priority, mask work rights, industrial design rights, copyrights, moral rights,
rights of Seller in trade secrets, know-how and any other intellectual property
rights recognized in any country or jurisdiction of the world.
"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.
"INVENTORY" means the finished Products described on SCHEDULE 3, as
added to as a result of the creation of additional finished Products, or the
repurchase of unsold Products pursuant to outstanding agreements with
distributors, and/or subtracted from as a result of sales of finished Products,
in each case, during the period between the Effective Date and the date two
business days prior to the Closing Date. The Purchase Price shall be (x)
adjusted upward in an amount equal to Seller's actual cost to manufacture the
additional finished Products added to Inventory during such period (provided,
that the amount of upward adjustments in respect of Products repurchased from
distributors shall not exceed $250,000), (y) adjusted downward in an amount
equal to Seller's actual cost to manufacture the finished Products sold during
such period and (z) in the event that the Closing shall occur after January 8,
1998, adjusted upward or downward in an amount equal to the reserve applied to
the Inventory on the date of determination on a basis consistent with Seller's
past practice. Such additions to and subtractions from the Inventory shall be
referred to herein as the "INVENTORY ADJUSTMENTS" and the net result of such
upward and downward adjustments to the Purchase Price shall be referred to
herein as the "NET INVENTORY PRICE ADJUSTMENT."
"LICENSE AGREEMENT" means the Desktop Electronics Technology and Patent
License Agreement between AIM and Purchaser substantially in the form of EXHIBIT
D hereto.
"LICENSED ASSETS" means the Licensed Assets and Licensed Patents
collectively, as such terms are defined in the License Agreement.
"MANUFACTURING AGREEMENT" means an agreement between Seller and
Purchaser providing for the fabrication, manufacturing and testing of Products,
elements and works-in progress thereof, for a period not to exceed nine months
following the Closing Date, in substantially the form attached as EXHIBIT E
hereto.
"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.
"PRODUCTS" means the products and products under development of Seller
listed in SCHEDULE 4 hereto.
"PRODUCT DESIGN" means the particular arrangement of Circuits that
comprise and implement the aggregate functionalities of a Product, as reflected
in the layouts and schematic databases listed on SCHEDULE 5. For clarification,
a "Product Design" does not include the particular individual Circuits included
in a Product.
"PURCHASED TECHNOLOGY DELIVERABLES" means the deliverables listed on
SCHEDULE 8.
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"PURCHASER'S DISCLOSURE LETTER" means Purchaser's Disclosure Letter
dated as of the Effective Date which is being delivered to Seller concurrently
with the execution of this Agreement.
"SELLER CONTRACTS" means those leases, licenses, agreements, contracts,
understandings, arrangements, commitments and purchase orders listed on SCHEDULE
6 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" or "KNOWLEDGE OF SELLER": A particular fact or
other matter shall be deemed to be within "Seller's knowledge" if any
director-level or more senior officer of Seller is actually aware of such fact
or other matter.
"TANGIBLE ASSETS" means (x) the tangible personal property assets listed
on SCHEDULE 7 hereto, subject to revision based upon a fixed assets inventory to
be conducted within ten business days after the Effective Date, and (y) the
personal computers, work stations, laboratory equipment, printers associated
with personal computers, and network servers which are fully dedicated to the
Desktop Peripherals Business and are not part of Seller's facilities
infrastructure, which assets listed in clause (y): (1) are owned by Seller and
currently utilized by Employees (as defined in Section 3.11) in the ordinary
course of performing their duties for the Desktop Peripherals Business
(excluding such assets used only on an incidental basis), and (2) shall not
exceed $1,000,000 in aggregate value, and (3) shall be listed on a schedule to
be delivered to Purchaser at the Closing. The Tangible Assets listed in clause
(y) shall not include the fabrication, manufacturing, testing or packaging
equipment used in the production of the Products, telecommunications equipment
(including cellular telephones and pagers), projectors, furniture, fixtures,
copiers or office supplies.
"TAX" or "TAXES" means all taxes or similar governmental charge 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
any governmental agency.
"THIRD PARTY ASSETS" means (i) the personal property assets, tangible
and intangible, licensed or leased to Seller by third parties under certain
Seller Contracts and (ii) Seller's license or other rights to such third-party
assets under such Seller Contracts.
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ARTICLE II
ACQUISITION OF ASSETS
SECTION 2.1. Assets to Be Acquired and Licensed.
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Purchaser (or cause to be sold, assigned, transferred, conveyed and
delivered to Purchaser) and Purchaser shall purchase and acquire from Seller,
free and clear of all Encumbrances, all right, title and interest in and to all
of the following (collectively, the "PURCHASED ASSETS"):
(i) the Intangible Assets (including all Intellectual Property
Rights therein and thereto);
(ii) the Inventory (subject to the Inventory Adjustments);
(iii) the Product Designs;
(iv) the Tangible Assets;
(v) the Purchased Technology Deliverables;
(vi) the right to enforce confidentiality, non-disclosure,
employee invention assignment and other proprietary rights
agreements between Seller and Hired Employees (as defined in
Article VI below) with respect to the Desktop Peripherals
Business;
(vii) all of Seller's rights under the Seller Contracts, including
Third Party Assets;
(viii) copies of Seller's marketing and sales information, pricing,
marketing plans, business plans, financial and business
projections and other files and records which pertain
exclusively to the Desktop Peripherals Business, but
excluding any personnel files of any Employee; and
(ix) the goodwill associated with the foregoing.
(b) Licensed Assets. The parties acknowledge that, in addition to the
Purchased Assets, certain assets related to the Desktop Peripherals Business
also are essential to other businesses conducted by Seller or licensed by Seller
to third parties. Accordingly, with respect to the Licensed Assets, at the
Closing, AIM shall grant to Purchaser licenses to and deliver the Licensed
Assets on the terms and conditions set forth in the License Agreement.
(c) Excluded Assets. The parties agree that Seller is not selling or
assigning to Purchaser, and the Purchased Assets do not include, any of the
Licensed Assets or the Excluded Assets.
(d) Trademark License. Subject to the terms and conditions of this
Agreement, as of the Closing, Seller hereby grants to Purchaser and Purchaser
accepts a worldwide, nontransferable, fully-paid and royalty-free right and
license under any rights Adaptec may have in
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the Adaptec Marks, to reproduce and affix: (i) through the end-of-life of each
Product, the Adaptec trademark "AIC" to units of the Products as embedded as of
the Closing Date in the mask works for such Products; (ii) for one year after
the Closing Date, the Adaptec trademark "AIC" in price lists, literature and
advertising for the Products; and (iii) on a Product-by-Product basis, until the
sale by Purchaser of all Inventory of such Product transferred to Purchaser on
the Closing Date, the Adaptec trademarks "Adaptec" and the stylized "A" logo on
the device packaging for the Products (such Adaptec trademarks collectively, the
"ADAPTEC MARKS"). Purchaser agrees to cease using the Adaptec Marks upon the
expiration of the licenses herein granted. Purchaser acknowledges and agrees
that Seller owns and will continue to own all right, title and interest in and
to the Adaptec Marks and in any and all goodwill therein and thereto, whether
arising as a result of Purchaser's use of the Adaptec Marks or otherwise.
Purchaser hereby assigns and, if and as Seller may request in the future, agrees
to assign and affirm assignment to Seller of all such right, title and interest
in the Adaptec Marks and related goodwill. If requested by Seller, Purchaser
will cooperate with Seller in securing any trademark registrations and other
indicia of ownership for which Purchaser's cooperation is required as a matter
of applicable local law as a result of Purchaser's use of the Adaptec Marks.
Purchaser agrees to use the Adaptec Marks in substantially the same manner of
current use by Seller unless otherwise agreed by Seller in writing. Without
limiting the preceding sentence, without the prior written consent of Seller
(which consent shall not be unreasonably withheld), Purchaser agrees not to
combine, alter or obscure the Adaptec Marks in any way or authorize any third
party to do so.
SECTION 2.2. Liabilities Assumed and Excluded.
(a) As a material inducement and consideration to Seller to enter into
this Agreement and perform its obligations hereunder, at the Closing, Purchaser
shall assume, pay, perform and discharge the Assumed Liabilities.
(b) Except for the Assumed Liabilities, Purchaser shall not assume or
otherwise become obligated to pay, perform or discharge any liabilities, debts
or obligations of Seller and Seller shall retain, and shall be solely
responsible and liable for paying, performing and discharging when due, all of
Seller's liabilities other than the Assumed Liabilities.
SECTION 2.3. Purchase Price; Allocation.
(a) Purchase Price. In consideration of the sale, transfer and
assignment of the Purchased Assets to Purchaser and the license of the Licensed
Assets to Purchaser, Purchaser agrees to pay to Seller at the Closing the sum of
(x) $73,000,000 (seventy-three million United States dollars) plus or minus (y)
the Net Inventory Price Adjustment (collectively, the "PURCHASE PRICE") in cash.
(b) Allocation.
(i) Purchase Price. Purchaser and Seller shall use all commercially
reasonable efforts to agree upon an allocation of the Purchase Price among the
Business Assets, in accordance with the allocation requirements of Section 1060
of the Internal Revenue Code. Purchaser and Seller agree to commence discussions
regarding the allocation as soon as practicable, but in no event later than 30
days, following the Closing Date. The allocation of the Purchase Price agreed
upon by the parties pursuant to this Section shall be reduced to a writing
executed and delivered by Seller and Purchaser to each other (the "PURCHASE
PRICE ALLOCATION
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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 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 2.4. Closing. Subject to the terms and conditions of this
Agreement, the sale, purchase, license and transfer of the Business Assets and
the assumption of the Assumed Liabilities shall take place at a closing (the
"CLOSING") at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo
Alto, California 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 2.5. Closing Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser or Purchaser's affiliates
designated by Purchaser:
(i) all Business Assets to the facility or other location specified by
Purchaser, in such manner as Purchaser directs, in each case at Seller's cost
and expense; provided, that if Purchaser directs that any Business Assets be
delivered to a location more than fifty miles from either Seller's facilities at
Milpitas, California or Longmont, Colorado, depending on which location such
Business Asset is located, such delivery shall be at Purchaser's sole cost and
expense;
(ii) executed counterparts of each Ancillary Agreement to which Seller
is a party;
(iii) (x) assignments substantially in the forms of EXHIBIT H (the
"PATENT ASSIGNMENTS"), by which Seller shall assign to Purchaser the patents
included in the Purchased Assets, 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 (y) assignments from
Seller to Purchaser of all registered 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 I attached hereto (the "MASK WORK
ASSIGNMENTS"); and
(iv) all other items required to be delivered by Seller at the Closing
pursuant to Section 8.2 of this Agreement or any other provision hereof or any
Ancillary Agreement.
SECTION 2.6. Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller:
(i) payment of the full amount of the Purchase Price by wire transfer of
immediately available funds to an account of Seller designated to Purchaser;
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(ii) executed counterparts of each Ancillary Agreement to which
Purchaser is a party; and
(iii) all other items required to be delivered by Purchaser at the
Closing pursuant to Section 8.1 of this Agreement or any other provision hereof
or any Ancillary Agreement.
SECTION 2.7. Unassignable Assets. Notwithstanding any other provision of
this Agreement or any of the Ancillary Agreements, 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 or if any of the
Licensed Assets may not be licensed to Purchaser without the consent, approval
or waiver of another party thereto or any third party (including any
governmental agency), or if such assignment, transfer or license would
constitute a breach thereof or a violation of any applicable law or agreement
with any third party, then neither this Agreement nor such Ancillary Agreements
shall constitute an assignment or transfer (or an 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 or Licensed
Asset whose assignment, transfer or license to Purchaser requires the consent,
approval or waiver of another party thereto or any third party, Seller shall use
all commercially reasonable 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. To the extent that the consents, approvals
and waivers referred to in this Section are not obtained by Seller, Seller shall
use all commercially reasonable efforts to (a) provide to Purchaser, at the
request and expense of Purchaser, the financial and business benefits of such
Seller Contract or Licensed Asset and (b) enforce, at the request and expense of
Purchaser, for the account of Purchaser, any rights of Seller arising from any
such Seller Contract (including without limitation the right to elect to
terminate such Seller Contract in accordance with the terms thereof upon the
advice of Purchaser). With regard to the expenses described in the preceding
sentence, Purchaser shall only be responsible for the direct expenses of Seller
in connection therewith, and if only a portion of such benefits are provided to
Purchaser, Purchaser and Seller shall agree in good faith upon a reasonable pro
rata payment by Purchaser of the expenses incurred in connection with such
benefits. Purchaser agrees 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser 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 3.1. Organization and Good Standing of Seller. Each of AIM and
AMS is a corporation or similar entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Seller has all
requisite corporate power and authority to carry on the Desktop Peripherals
Business as now conducted and to enter into this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby.
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SECTION 3.2. Authorization and Validity. The execution and delivery of
this Agreement and the Ancillary Agreements and the performance of all
obligations of Seller hereunder and thereunder, has been duly and validly
authorized by all necessary corporate and shareholder action on the part of
Seller. This Agreement has been, and at the Closing the other Ancillary
Agreements will be, duly executed and delivered by Seller. This Agreement
constitutes, and, upon Seller's execution of each of the other Ancillary
Agreements, each of the other Ancillary Agreements 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.
SECTION 3.3. No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Seller and the consummation of
the transactions contemplated hereby and thereby, subject to compliance with the
consents required in SCHEDULE 9, do not and will not (a) result in a violation
or default in any material respect of any provision of Seller's charter
documents or any judgment, order, writ or decree applicable to Seller, (b)
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 (c) result in the creation of any material Encumbrance
on any of the Business Assets.
SECTION 3.4. Consents. 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 and the
Ancillary Agreements, except for compliance with the requirements of the HSR
Act. SCHEDULE 9 sets forth a true and complete list of each and every Business
Asset with respect to which the consent or approval of any third party or
governmental authority is required in order for Seller to assign, transfer or
license to Purchaser any of the Business Assets or any rights or obligations
under Seller Contracts.
SECTION 3.5. Title to Purchased Assets and Third Party Assets.
(a) Purchased Assets. Seller owns all the Purchased Assets (other than
Third Party Assets) and has good and marketable title in and to all of the
Purchased Assets (other than Third Party Assets), free and clear of all
Encumbrances whatsoever. Title to all the Purchased Assets (other than Third
Party Assets) is freely transferable from Seller to Purchaser free and clear of
all Encumbrances. The Tangible Assets are in good operating condition and
repair, subject to normal wear and tear.
(b) Third Party Assets. Except as set forth on SCHEDULE 9, Seller has
the right to transfer the Third Party Assets, without restriction and without
material degradation to the rights assigned.
SECTION 3.6. Seller Contracts. True and complete copies of the Seller
Contracts have been made available to Purchaser. To Seller's knowledge, the
Seller Contracts are valid, in full force and effect, and enforceable in
accordance with their respective terms (except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and as limited
by laws relating to
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the availability of specific performance, injunctive relief or other equitable
remedies). Neither Seller nor, to Seller's knowledge, 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.
SECTION 3.7. Litigation. There is no claim, action, suit, arbitration,
mediation, investigation or other proceeding of any nature pending or, to
Seller's knowledge, threatened, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency that
adversely affects, contests or challenges Seller's authority, right or ability
to sell, convey or license any of the Business Assets to Purchaser hereunder or
otherwise perform Seller's obligations under this Agreement or any of the
Ancillary Agreements. There are no judgments, decrees, injunctions or orders of
any court, governmental department, commission, agency, instrumentality or
arbitrator pending or binding against Seller which adversely affect any of the
Business Assets.
SECTION 3.8. Intellectual Property Rights.
(a) Ownership. Seller owns or has the right to use pursuant to license,
sublicense, agreement, or other valid permission, all Intellectual Property
Rights in the Intangible Assets, Product Designs and Purchased Technology
Deliverables. Seller has taken reasonable steps to maintain and protect all
Intellectual Property Rights in the Intangible Assets, Product Designs and
Purchased Technology Deliverables.
(b) Non-Infringement. To Seller's knowledge, the Business Assets (other
than Third Party Assets) have not infringed or violated and currently do not
infringe, violate, or misappropriate any 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 and to the Business
Assets (other than Third Party Assets).
(c) Licenses. SCHEDULE 10 sets forth each material license Seller has
granted to any third party with respect to any Business Asset. SCHEDULE 10 sets
forth each material Intellectual Property Right in connection with the
development, manufacture, use or sale of the Products that a third party owns
and that Seller uses pursuant to a license, sublicense, agreement or other
permission, except for licenses entered into in the ordinary course of the
Desktop Peripherals Business or standard "shrink-wrap" licenses for
off-the-shelf software products.
SECTION 3.9. Compliance with Laws. To Seller's knowledge, Seller has
complied in all material respects with and has not received any notices of
violation with respect to, any federal, state or local statute, law or
regulation of any country of the world applicable to any of the Business Assets.
SECTION 3.10. Tax Matters.
(a) Tax Assessments. There is no claim or assessment pending or, to the
knowledge of Seller, threatened, for any alleged deficiency in Tax attributable
to Seller or the affiliated group of which Seller is a member (the "SELLER
GROUP"), relating to the Business Assets, and, to the
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knowledge of Seller, there is no audit or investigation with respect to any
liability of Seller or the Seller Group for Taxes relating to the Business
Assets.
(b) No Tax Liens. There are (and as of immediately following the Closing
there will be) no Encumbrances on any of the Business Assets relating to or
attributable to Taxes.
SECTION 3.11. Employees. Set forth in SCHEDULE 11 is a complete and
accurate list, as of the Effective Date, of the employees of Seller who
currently work full-time in the Desktop Peripherals Business ("EMPLOYEES"),
including, for each Employee, such Employee's title, date of hire and adjusted
service date and location at which such Employee is working as of the Effective
Date. SCHEDULE 11 sets forth, for each Employee, a true and accurate list of the
current annual base salary, their status as exempt or non-exempt, 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.
SECTION 3.12. 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 liability to the Pension Benefit Guaranty Corporation is expected
to be incurred in connection with the transactions contemplated hereby.
SECTION 3.13. Customers. SCHEDULE 12 is a true and complete list of all
customers of the Desktop Peripherals Business as of the Effective Date
("CUSTOMERS"). Seller has good commercial working relationships with each of its
Customers.
SECTION 3.14. Year 2000 Matters. None of the Products are date or time
sensitive.
SECTION 3.15. Brokers. Other than Bear, Stearns & Co., Inc., the fees
and expenses of whom shall be paid by Seller, Seller has not 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 3.16. Restrictive Agreements. No Business Asset is bound or
affected by any judgment, injunction, order or agreement that restricts or
prohibits its use, or following the Closing, would restrict or prohibit its use,
in the Desktop Peripherals Business as presently conducted by Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that, except as set
forth in the Purchaser's Disclosure Letter, all of the following statements,
representations and warranties are true, accurate and correct:
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SECTION 4.1. Organization and Good Standing. Purchaser is a corporation
or similar entity 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 in each jurisdiction in which it conducts
business. Purchaser has all requisite corporate power and authority to carry on
its business as now conducted and to enter into this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby.
SECTION 4.2. Authorization and Validity. The execution and delivery of
this Agreement and the Ancillary Agreements and the performance of all
obligations of Purchaser hereunder and thereunder, has been duly and validly
authorized by all necessary corporate and shareholder action on the part of
Purchaser. This Agreement has been, and at the Closing the other Ancillary
Agreements will be, duly executed and delivered by Purchaser. This Agreement
constitutes, and the other Ancillary Agreements when executed and delivered,
will constitute, valid and legally binding obligations of Purchaser, as
applicable, 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.
SECTION 4.3. No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Purchaser and the consummation of
the transactions contemplated hereby and thereby do not and will not (a) result
in a violation or default in any material respect of any provision of
Purchaser's charter documents or any judgment, order, writ or decree applicable
to Purchaser, or (b) 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 material contract of Purchaser or (c) result in the
creation of any material Encumbrance on any of Purchaser's assets.
SECTION 4.4. Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental entity or third party on the part of Purchaser is required in
connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, except for compliance with the
requirements of the HSR Act.
SECTION 4.5. Litigation. There is no claim, action, suit, arbitration,
mediation, investigation or other proceeding of any nature pending or, to
Purchaser's knowledge, threatened, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency that may
adversely affect, contest or challenge Purchaser's authority, right or ability
to purchase or receive licenses to any of the Business Assets from Seller
hereunder or otherwise perform Purchaser's obligations under this Agreement or
any of the Ancillary Agreements.
SECTION 4.6. Brokers. Neither Purchaser, nor any of its 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 5.1. Conduct of Business Prior to the Closing. Seller agrees
that, from the Effective Date and continuing until the earlier of the Closing
Date or the termination of this Agreement according to its terms, Seller will
carry on the Desktop Peripherals Business in the ordinary course and consistent
with Seller's past practice (taking into account the sale of the Purchased
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. Without limiting the foregoing, during the period described in the
preceding sentence, except in the ordinary course and consistent with Seller's
past practice or as agreed to by Purchaser, Seller agrees not to: (i) sell,
transfer, assign, convey, license, move, relocate, encumber or otherwise dispose
of any of the Purchased Assets; (ii) transfer any Employee to any other division
or position of employment within Seller; (iii) terminate the employment of any
Employee; (iv) materially change the base salary or bonus of any Employee or
establish a bonus plan or any new employee benefits for any Employee without
Purchaser's prior written approval; or (v) encourage any Employee to accept any
offer of employment other than by Purchaser.
SECTION 5.2. Consent of Third Parties. Seller shall use all commercially
reasonable efforts to obtain the consent in writing of all persons, if any,
necessary to permit Seller to assign and transfer all of the Purchased Assets
free and clear of all material Encumbrances, and license all of the Licensed
Assets, to Purchaser.
SECTION 5.3. Access to Information. From the Effective Date until the
earlier of the Closing Date or the termination of this Agreement according to
its terms, 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 to the end that Purchaser may have a reasonable opportunity to
make such a full investigation of the Business Assets 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.
SECTION 5.4. Use of Facilities; Manufacturing Services. For a period of
up to three months following the Closing Date, Seller shall permit Purchaser to
occupy and use certain facilities of the Seller, according to the terms and
conditions of the Facilities Agreement. For a period of up to nine months
following the Closing Date, Seller will provide Purchaser with certain
fabrication, manufacturing and testing services for the Products, according to
the terms and conditions of the Manufacturing Agreement.
SECTION 5.5 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 required to carry out the provisions of this Agreement
and the Ancillary Agreements, to cause the conditions to Closing set forth in
Article VIII to be fulfilled as promptly as possible, and to give effect to the
transactions contemplated by this Agreement and the Ancillary Agreements. In
case at any time after the Closing Date any further action is necessary or
desirable to carry out the provisions of this Agreement or the Ancillary
Agreements, each of the parties will take such
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further action (including the execution and delivery of such further instruments
and documents). 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 of the Business Assets. If the
Employee interviews described in clause (ii) of the penultimate sentence of
Section 6.1 identify tangible assets which are owned by Seller, are not being
transferred to Purchaser pursuant to this Agreement, and are used by an Employee
in the ordinary course of performing services in the Desktop Peripherals
Business, Seller and Purchaser shall, in good faith, determine whether such
asset should be (1) transferred to Purchaser without additional cost, (2) sold
to Purchaser in a separate transaction for additional consideration or (3)
retained by Seller.
SECTION 5.6. Confidentiality.
(a) 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 information of a party (the "DISCLOSING PARTY")
disclosed to the other party (the "NON-DISCLOSING PARTY") in the course of
negotiating the transactions contemplated by this Agreement ("CONFIDENTIAL
INFORMATION") will be held in strict confidence and not used or disclosed by the
Non-Disclosing Party or any of its employees, affiliates or stockholders and,
upon termination of this Agreement in accordance with its terms and upon the
Disclosing Party's written request to the Non-Disclosing Party, will be promptly
destroyed by the Non-Disclosing Party or returned to the Disclosing Party. The
Non-Disclosing Party's employees, affiliates and stockholders will not be given
access to Confidential Information except on a "need to know" basis. It is
agreed that Confidential Information will not include information that: (a) is
proven to have been known to the Non-Disclosing Party prior to receipt of such
information from the Disclosing Party; (b) is disclosed by a third party having
the legal right to disclose such information and who owes no obligation of
confidence to the Disclosing Party; (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 the Non-Disclosing Party; or (d) is proven to be
independently developed by the Disclosing Party without the use of any
Confidential Information. The provisions of this Section 5.6(a) shall supersede
the provisions of the letter agreement, dated as of October 6, 1998, between
Purchaser and Bear Stearns & Co., Inc., on behalf of Seller (the
"CONFIDENTIALITY AGREEMENT"); provided, however, that upon the termination or
expiration of this Agreement, the Confidentiality Agreement shall continue in
full force and effect as a binding agreement between Purchaser and Seller.
(b) At all times following the Closing, Seller will: (i) continue to
hold all Confidential Information which constitutes Purchased Assets
(collectively, "ACQUIRED CONFIDENTIAL INFORMATION") in strict confidence, (ii)
will not use for itself or third parties any Acquired Confidential Information,
and (iii) upon Purchaser's request, promptly destroy or deliver to Purchaser any
Acquired Confidential Information in Seller's possession or control; provided,
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; provided,
further, that Seller must provide Purchaser with prior written notice of any
proposed disclosure to government agencies and with respect to the U.S.
Securities and Exchange Commission, 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
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breach of this Agreement by Seller. Following the Closing, Purchaser's
obligations pursuant to Section 5.6(a) shall terminate with respect to
Confidential Information which constitutes Acquired Confidential Information.
SECTION 5.7. 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 hereby.
Purchaser and Seller will agree in good faith on the text and timing of any
public disclosure prior to the Closing or with respect to such matters, except
as may be required by law, court process, securities exchange listing agreement
or the rules of the National Association of Securities Dealers.
SECTION 5.8. 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, and such information is in the possession of any other party
hereto, such party agrees to use all commercially reasonable 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
Effective Date and continuing after 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, with respect to reporting and reflecting the transactions
contemplated by this Agreement and the Ancillary Agreements.
SECTION 5.9. Regulatory and Other Authorizations; Consents.
(a) Efforts. Each party hereto will use all commercially reasonable
efforts to obtain all authorizations, consents, orders and approvals of all
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
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. 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 all commercially reasonable
efforts to prevent the entry in a judicial or administrative proceeding brought
under any antitrust or similar law by the Federal Trade Commission, the
Department of Justice or any other United States federal or state, or non-U.S.
government or governmental authority (an "ANTITRUST AUTHORITY") or any other
party of any permanent or preliminary injunction or other order that would make
consummation of the acquisition of the Purchased Assets in accordance with the
terms of this Agreement unlawful or that would prevent or delay such
consummation. In connection therewith, if any administrative or judicial action
or proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any antitrust or
similar law, each of the parties hereto shall cooperate and use all commercially
reasonable efforts to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether
17
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents, or restricts consummation of any such transaction, unless by mutual
agreement the parties decide that litigation is not in their respective best
interests.
(b) Communications. Each party hereto shall promptly inform the other of
any communication between such party and an Antitrust 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 an Antitrust Authority, or an Antirust Authority makes any
objection with respect to the transactions contemplated hereby, then such party
shall use all commercially reasonable efforts to promptly resolve such request
or such objections. Each party shall use all commercially reasonable efforts to
provide prior disclosure to, and coordinate with the other parties and their
counsel in connection with the submission of written materials by such party to
an Antitrust Authority in connection with HSR Act compliance or the merger
control or competition regulations of any other country, and prior to initiating
any oral communications with such Antitrust Authorities by such party. Each
party hereto will cooperate in connection with reaching any understandings,
undertakings or agreements (oral or written) involving an Antitrust Authority in
connection with the transactions contemplated hereby.
SECTION 5.10. Taxes. To the extent that failure to do so could
materially adversely affect the Business Assets, Seller shall, (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 imposed upon the
Business Assets for periods (or portions thereof) through the Closing Date.
SECTION 5.11. 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 5.12. 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 Desktop Peripherals Business or the
Business Assets) any inquiries, or make any statements to third parties which
may reasonably be expected to lead to any proposal, concerning the sale of the
Desktop Peripherals 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 Business Assets.
SECTION 5.13. Accounts Receivable.
(a) Promptly, but in no event more than fifteen business days, following
the Effective Date, Purchaser shall arrange with a bank or other financial
institution approved in writing by Seller (THE "A/R BANK") to open a "lockbox"
bank account (THE "LOCKBOX ACCOUNT") for the purpose of receiving payments of
accounts receivable in respect of the Desktop Peripherals
18
Business, including the Closing Accounts Receivable. Seller and Purchaser shall
agree in good faith upon written instructions to be given to the A/R Bank (which
shall be irrevocable unless rescinded by both Seller and Purchaser) which shall
provide that (i) all deposits to and withdrawals from such account shall be
promptly reported to both Seller and Purchaser, (ii) that such account shall be
managed in accordance with the provisions of this Section, and (iii) that upon
receipt of written notice by either Seller or Purchaser that a dispute regarding
such account has arisen between the parties, that no amounts shall be paid out
of such account until the A/R Bank has received written notice from both parties
that such dispute has been resolved.
(b) Not less than two days prior to the Closing, Seller shall deliver to
Purchaser a detailed summary (by customer and Product) of the Closing Accounts
Receivable. Immediately following the Closing, Seller shall send to each
customer of the Desktop Peripherals Business who owes a receivable included in
the Closing Accounts Receivable (such receivable, a "RCAR"), an instruction that
all receivables in respect of Products sold to such customer shall be paid to
the Lockbox Account. Purchaser will use its good faith efforts to have each such
customer pay in full all receivables included in the Closing Accounts
Receivable. The parties agree that for any customer which has a RCAR, all
payments received from or on behalf of such customer for a Product which is
included in a RCAR (whether or not such payment is in respect of the RCAR) shall
be allocated to the RCAR for such Product of such customer. Upon payment in full
of all RCARs of a customer, Purchaser shall have no further obligations under
this Section in respect of the receivables of such customer.
(c) The A/R Bank shall promptly transfer all payments deposited into the
Lockbox Account in respect of RCARs (or allocated to RCARs pursuant to paragraph
(b) of this Section) 95 % to Seller and 5% to Purchaser. Purchaser will allow
Seller and its representatives to have reasonable access to the books and
records of Purchaser in order to verify ongoing compliance by Purchaser with its
covenants set forth in this Section.
SECTION 5.14. Third Party Software. In respect of any software owned by
a third party and loaded on any hardware purchased by Purchaser under this
Agreement, Purchaser shall promptly either obtain a license for such software or
destroy such software. Purchaser shall be liable for, and shall indemnify and
hold harmless Seller from, any and all liabilities and expenses (including the
fees and expenses of counsel) arising in connection with Purchaser's failure to
obtain such licenses or destroy such software.
SECTION 5.15. Third Party Tools. Seller shall use all commercially
reasonable efforts to have licenses to the third party tools (as set forth in
Schedule 13) transferred to Purchaser, which licenses shall be in an amount
approximately equal to the number of Hired Employees.
SECTION 5.16. Survival of Covenants. Each of the covenants set forth in
Sections 5.4, 5.5, 5.6, 5.7, 5.8, 5.10, 5.12, 5.13, 5.14, 5.15 and 5.16 shall
survive the Closing. The covenants set forth in Sections 5.6(a) and 5.7 shall
survive the termination or expiration of this Agreement according to their
terms.
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ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.1. Offers to Employees; Hired Employees.
(a) Within ten business days after the Effective Date, Purchaser agrees
to make written offers of employment to at least 90% of the Employees, which
offers ("QUALIFIED OFFERS") shall contain (i) salary and benefits terms in the
aggregate comparable to, or more favorable to the Employee than, the terms of
such Employee's employment with Seller and (ii) any other terms and conditions
agreed upon in writing by Seller and Purchaser. Each Qualified Offer shall be
contingent upon, and effective upon, the Closing. Seller agrees that, from the
Effective Date and continuing until the earlier of the Closing Date or the
termination of this Agreement according to its terms, Seller will provide
Purchaser with reasonable access to and the opportunity to meet and interview
each Employee for the purposes of (i) negotiating offers of employment
contingent upon the Closing and (ii) identifying the assets and tools used by
such Employee in the ordinary course of performing services in the Desktop
Peripherals Business. Upon any termination of this Agreement, the
non-solicitation and non-employment provisions of the Confidentiality Agreement
shall be in full force and effect.
(b) An Employee hired by Purchaser pursuant to a Qualified Offer shall
be referred to herein as a "HIRED EMPLOYEE." Purchaser agrees that each Hired
Employee shall, for the purposes of any benefits or privileges accruing to
employees of Purchaser or its affiliates based upon seniority or length of
service, be given full credit for such Hired Employee's period of employment
with Seller, and that each Qualified Offer shall include such commitment.
SECTION 6.2. Employee Obligations of Purchaser. Purchaser shall be
liable for and shall indemnify and hold Seller and its affiliates harmless from,
any and all liabilities with respect to (i) the employment by Purchaser or
termination of employment by Purchaser of any past, current or future employee
or consultant of Purchaser or any of its affiliates, including without
limitation, Hired Employees after the Closing Date (collectively, "PURCHASER
EMPLOYEES"), whether in connection with the transactions contemplated hereby or
otherwise; (ii) any claims of discrimination under state or federal law arising
from a Purchaser Employee's employment or service with or termination by
Purchaser; (iii) any withholding or employment Taxes with respect to any
Purchaser Employees which accrue or become payable during the period of such
Purchaser Employee's employment or service with Purchaser or any affiliate of
Purchaser or arise out of the termination of such person's employment with
Purchaser or any affiliate of Purchaser; (iv) any other claims or obligations
arising out of the terms and conditions of employment by Purchaser or any of its
affiliates of any Purchaser Employee, whether for salary, wages, bonuses, profit
sharing, commissions, severance, vacation pay, sick pay or otherwise; or (v) any
duties or obligations of Purchaser or administrators under any existing or
future employee benefit plans or arrangements maintained by Purchaser with
respect to Purchaser Employees. Purchaser shall be responsible for filing all
employment Tax returns with respect to Purchaser Employees attributable to
periods of employment or service with Purchaser or any affiliate of Purchaser.
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SECTION 6.3. Employee Obligations of Seller.
(a) Seller shall be liable for and shall indemnify and hold Purchaser
and its affiliates harmless from, any and all liabilities with respect to: (i)
the employment by Seller or termination of employment by Seller of any past,
current or future employee or consultant of Seller or any of its affiliates
(collectively, "SELLER EMPLOYEES"); (ii) any claims of discrimination under
state or federal law arising from a Seller Employee's employment or service with
or termination by Seller; (iii) any withholding or employment Taxes with respect
to any Seller Employees which accrue or become payable during the period of such
Seller 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; (iv) any other claims or obligations arising out of the
terms and conditions of employment by Seller or any of its affiliates of any
Seller Employee, whether for salary, wages, bonuses, profit sharing,
commissions, severance, vacation pay, sick pay or otherwise; or (v) any duties
or obligations of Seller or administrators under any existing or future employee
benefit plans or arrangements maintained by Seller with respect to Seller
Employees. Seller shall be responsible for filing all employment Tax returns
with respect to Seller Employees attributable to periods of employment or
service with Seller or any affiliate of Seller.
(b) Seller shall pay to all Employees (including, without limitation,
Hired Employees) terminated by Seller, any liability for accrued vacation, sick
leave or similar accrued 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.
(c) Seller agrees to comply with the provisions of any 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 Desktop Peripherals Business or the termination,
re-assignment, re-location or change in position of any Employee in connection
with the transactions contemplated hereby.
SECTION 6.4. No Solicitation; No Hire. Except as provided by law, for a
period of one year after the Closing Date, without Purchaser's written
permission, Seller shall not actively solicit any Employee to become an employee
of Seller or any Hired Employee to terminate his or her employment with
Purchaser. 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. Seller shall not hire or rehire for a period
of ninety days after the Closing any Employee to whom Purchaser makes a
Qualified Offer.
SECTION 6.5. Survival. Each of the agreements and covenants set forth in
this Article VI shall survive the Closing.
ARTICLE VII
TAX MATTERS
SECTION 7.1. Transaction Taxes. Purchaser shall be responsible for, and
shall defend, indemnify and hold harmless Seller from and against any and all
excise, value added, registration,
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stamp, property, documentary, transfer, sales, use and similar Taxes, levies,
charges and fees (including all real estate transfer taxes) incurred, or that
may be payable to any taxing authority, in connection with, the transactions
contemplated by this Agreement (collectively, "TRANSACTION TAXES"). Seller and
Purchaser shall use all commercially reasonable efforts to cooperate in order to
minimize the Transaction Taxes and any Taxes to be paid or withheld in
connection with the transactions contemplated by the License Agreement.
SECTION 7.2. Other Taxes. Seller is and shall remain solely responsible
for all tax matters arising from or relating to the Purchased Assets and related
businesses on or prior to the Closing Date ("PRE-CLOSING PERIOD"). Seller shall
indemnify and hold harmless Purchaser 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 Pre-Closing Period. Purchaser 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 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
and Purchaser 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.
ARTICLE VIII
CONDITIONS TO THE CLOSING
SECTION 8.1. 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 (as qualified by Purchaser's Disclosure Letter) 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, 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, dated as of the Closing Date, to such effect signed by
an officer thereof.
(b) HSR Act; No Order. Any waiting periods under the HSR Act applicable
to the transactions contemplated by this Agreement shall have expired or been
terminated. No federal, state or other governmental authority or other agency or
commission or 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 all commercially reasonable efforts to have any such
order or injunction vacated.
(c) Opinion. Seller shall have received an opinion of Purchaser's
counsel with respect to each of the matters set forth in EXHIBIT F hereto.
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SECTION 8.2. Conditions to Obligations of Purchaser. The obligations of
Purchaser 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 effect as if
made as of the Closing, 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 shall have received a certificate of
Seller, dated as of the Closing Date, to such effect signed by an officer
thereof.
(b) HSR Act; No Order. Any waiting periods under the HSR Act applicable
to the transactions contemplated by this Agreement shall have expired or been
terminated. No federal, state or other governmental authority or other agency or
commission or 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 all commercially reasonable efforts to have any such
order or injunction vacated.
(c) Opinion. Purchaser will have received an opinion of AIM's counsel,
Fenwick & West LLP, with respect to each of the matters set forth in EXHIBIT G
hereto.
(d) Inventory. Seller shall have determined the Inventory Adjustments
and calculated the Net Inventory Price Adjustment, and delivered to Purchaser a
detailed summary thereof, certified by an officer of Seller as true, accurate
and complete.
(e) No Material Adverse Change. There shall have been no material
adverse change in or with respect to the value of the Business Assets.
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.1. 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 Seller or Purchaser at any time prior to Closing, if the
other commits a material breach of this Agreement that is not cured within
twenty days after written notice thereof; or
(c) by either Seller or Purchaser, if the Closing shall not have
occurred prior to the six month anniversary of the Effective Date; provided,
however, that the right to terminate this Agreement under this Section 9.1(c)
shall not be available to any party whose failure to fulfill any
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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 a permanent injunction or other
order by any federal, state or foreign court of competent jurisdiction which
would make illegal or otherwise restrain or prohibit the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements shall
have been issued and shall have become final and nonappealable.
SECTION 9.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, 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 9.3. 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.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Loss Defined; Indemnitees. For purposes of this Article X,
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, 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 X, the term "PURCHASER INDEMNITEES" means and includes Purchaser and any
present or future officer, director, employee, affiliate, stockholder or agent
of Purchaser and its successors and assigns. As used in this Article X, the term
"SELLER INDEMNITEES" means and includes Seller and any present or future
officer, director, employee, affiliate, stockholder or agent of Seller and its
successors and assigns.
SECTION 10.2. Indemnification by Seller. Seller agrees, subject to the
other terms, conditions and limitations of this Agreement (including the
provisions of Section 10.6(a) hereof), to indemnify the Purchaser Indemnitees
against, and to hold the 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 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) or
the Ancillary Agreements;
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(c) except for the Assumed Liabilities, the operation or management of
the Desktop Peripherals Business or the Business Assets at any time or times on
or prior to the Closing Date and, except as otherwise provided in Article VI
hereof, 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;
(d) any material Encumbrance upon the Purchased Assets existing at the
Closing;
(e) any of the Excluded Assets or any other obligation or liability of
Seller not expressly assumed by Purchaser under this Agreement or the Ancillary
Agreements; or
(f) liability for noncompliance with any bulk sales, bulk transfer or
fraudulent conveyance laws applicable to the transactions contemplated by this
Agreement.
SECTION 10.3. Indemnification by Purchaser. Purchaser agrees, subject to
the other terms, conditions and limitations of this Agreement (including the
provisions of Section 10.6(b) hereof), to indemnify the Seller Indemnitees
against, and to hold the 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 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)
or the Ancillary Agreements;
(c) the Assumed Liabilities (provided that Warranty Claims shall be
covered under the provisions of Section 10.4); or
(d) the operation of the Desktop Peripherals Business and sale and
license of the Products by Purchaser after the Closing Date.
SECTION 10.4. Warranty Claims. Seller and Purchaser acknowledge that,
after the Closing, Purchaser will be in a better position to satisfy any
warranty claim, product liability claim or any other claim that is made or
asserted by any third party that relates to any product defects of any of the
Products, or any returned Products (collectively, "WARRANTY CLAIMS"). Purchaser
agrees to satisfy all Warranty Claims, and, without regard to the provisions of
Section 10.6(b), indemnify the Seller Indemnitees against, and to hold the
Seller Indemnitees harmless from, all Loss arising out of, resulting from,
caused by or attributable to any Warranty Claims, whether arising out of the
sale by Seller of Products prior to the Closing ("PRE-CLOSING WARRANTY CLAIMS"),
or the sale of Products by Purchaser after the Closing; provided, that, with
respect to Losses arising out of Pre-Closing Warranty Claims: (1) Purchaser
shall indemnify and hold the Seller Indemnitees harmless only for the first
$150,000 of such Pre-Closing Warranty Claims, and (2) subject to the
satisfaction of such $150,000 amount, Seller shall indemnify and hold the
Purchaser Indemnitees harmless from all Losses arising out of Pre-Closing
Warranty Claims in excess of such $150,000 amount. The Purchaser Indemnitees may
not bring any claim for indemnification by Seller under this Section 4 in
respect of Pre-Closing Warranty Claims after the one year anniversary of the
Closing Date.
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SECTION 10.5. Procedures for Indemnification.
(a) As used herein, an "INDEMNIFIED PARTY" means a Purchaser Indemnitee
seeking indemnification pursuant to Section 10.2 hereof or a Seller Indemnitee
seeking indemnification pursuant to Section 10.3 hereof. The Indemnified Party
agrees to give the other 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 X (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 the Indemnitor is prejudiced thereby.
(b) Within twenty days of delivery of such written notice, the
Indemnitor may, at the expense of the Indemnitor, elect to take all necessary
steps properly to contest any Third Party Claim or to prosecute such Third Party
Claim to conclusion or settlement; provided, that without the prior written
consent of an Indemnified Party, the Indemnitor will not enter into any
settlement of a Third Party Claim which would lead to liability or create any
financial or other obligation on the part of such Indemnified Party for which
such Indemnified Party is not indemnified hereunder. If the Indemnitor makes the
foregoing election, an Indemnified Party will have the right to participate at
its own expense in all proceedings. If the Indemnitor does not make such
election or if the Indemnitor fails to take reasonable steps necessary to
diligently defend such Third Party Claim within twenty days after receiving
notice from the Indemnified Party that the Indemnified Party believes that the
Indemnitor has failed to take such steps, an Indemnified Party shall be free to
handle the prosecution or defense of any such Third Party Claim, will take all
necessary steps to contest the Third Party Claim or to prosecute such Third
Party Claim to conclusion or settlement satisfactory to such Indemnified Party
at the sole cost and expense of the Indemnitor (including reasonable attorney's
and expert's fees and expenses and court and arbitration costs), will notify the
Indemnitor of the progress of any such Third Party Claim, will permit the
Indemnitor, at the sole cost of the Indemnitor, to participate in such
prosecution or defense and will provide the Indemnitor with reasonable access to
all relevant information and documentation relating to the Third Party Claim and
the prosecution or defense thereof. In any case, the party not in control of the
Third Party Claim will cooperate with the other party in the conduct of the
prosecution or defense of such Third Party Claim. 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 Party in writing that it
accept such settlement proposal (the "SANCTIONED SETTLEMENT") and the
Indemnified Party refuses 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 Party (either,
a "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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SECTION 10.6. Limitations on Indemnification.
(a) Limits on Seller Indemnification.
(i) Seller shall not be required to provide indemnification under
Section 10.2 unless and until the aggregate Loss for which one or more Purchaser
Indemnitees seeks indemnification thereunder exceeds an aggregate of five
hundred thousand dollars ($500,000), in which event Seller shall be liable to
indemnify the Purchaser Indemnitees for aggregate Loss which exceeds five
hundred thousand dollars ($500,000).
(ii) The maximum aggregate Loss recoverable by Purchaser Indemnitees
(considered together as a group) against Seller under Section 10.2 and 10.4, in
the aggregate, shall not exceed ten million dollars ($10,000,000).
(b) Limits on Purchaser Indemnification.
(i) Purchaser shall not be required to provide indemnification under
Section 10.3 unless and until the aggregate Loss for which one or more Seller
Indemnitees seeks indemnification thereunder exceeds an aggregate of five
hundred thousand dollars ($500,000), in which event Purchaser shall be liable to
indemnify the Seller Indemnitees for aggregate Loss which exceeds five hundred
thousand dollars ($500,000).
(ii) The maximum aggregate Loss recoverable by Seller Indemnitees
(considered together as a group) against Purchaser under Section 10.3 and 10.4,
in the aggregate, shall not exceed ten million dollars ($10,000,000).
(c) Time Limits. Notwithstanding anything herein to the contrary, no
claim for indemnification under Sections 10.2 or 10.3 may be brought after the
two year anniversary of the Closing Date.
SECTION 10.7. Exclusive Remedy. From and after the Closing Date, the
foregoing provisions of Article X, 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 and
exclusive remedy of an Indemnified Party for a breach of a representation,
warranty, covenant or agreement of the other party contained in this Agreement
or any Ancillary Agreement.
ARTICLE XI
DISPUTE RESOLUTION
SECTION 11.1. 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 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 such representatives, the dispute shall be submitted to
senior management representatives of Purchaser and Seller. Such senior
management
27
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, 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, 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) 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 11.2. 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 12.1. 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.
SECTION 12.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made by
delivery in person, by courier service, by telecopy (confirmed in writing), or
by registered or certified mail (postage prepaid, return receipt requested), and
shall be deemed to have been duly given or made upon actual delivery, or if
mailed by registered or certified mail, on the third business day following
deposit in the mails, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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(a) if to Seller:
Adaptec, Inc.
691 South Milpitas Blvd.
Milpitas, California 95035
Attention: General Counsel
Telecopy: 408-957-7137
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attention: Dennis R. DeBroeck
Timothy A. Covington
Telecopy: 650-494-1417
(b) if to Purchaser:
STMicroelectronics, Inc.
1310 Electronic Drive
Carollton, Texas 75006
Attention: General Counsel
Telecopy: 972-466-7044
SECTION 12.3. Headings; Disclosure. 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. A disclosure made in any section of
Purchaser's Disclosure Letter or Seller's Disclosure Letter, respectively, with
respect to a representation made in this Agreement may apply to or qualify any
other representation made by such party in this Agreement.
SECTION 12.4. 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 12.5. Survival. The representation and warranties made herein
shall survive until the two year anniversary of the Closing Date.
SECTION 12.6. Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement and any other written agreement
between Seller and Purchaser entered into contemporaneously with this 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.
29
SECTION 12.7. Assignment. This Agreement shall not be assigned by
Purchaser or Seller without the prior written consent of the non-assigning
party; provided, however, that, subject to the parties' obligations under
Section 7.1, either party may assign all or a portion of its rights and
obligations hereunder to one or more wholly-owned subsidiaries or affiliates of
such party. Any purported assignment not permitted by this Section shall be
void.
SECTION 12.8. 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, including but not limited to any Employee or Hired Employee, any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement. No statement, reference or disclosure set forth in
this Agreement, the Ancillary Agreements or the exhibits or schedules thereto
constitutes an admission (express or implied) of any liability or obligation of
the parties hereto to any third party, nor an admission (express or implied)
against any such party's interests.
SECTION 12.9. Amendment; Waiver. This Agreement may not be amended or
modified except by an instrument in writing signed by Seller and Purchaser.
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. Each party irrevocably consents to
submit to the exclusive jurisdiction of any federal or state court located in
the State of California for any lawsuits, actions or proceedings with respect to
this Agreement or the transactions contemplated hereby. Each party irrevocably
agrees to waive any objection to the laying of venue in the federal or state
courts located in Santa Clara County, California, and further agrees not to
plead in any such court that any such lawsuit, action or proceeding has been
brought in an inconvenient forum. The provisions of this Section shall survive
termination of this Agreement.
SECTION 12.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 12.12. No Joint Venture. Nothing contained in this Agreement
will be deemed or construed as creating a joint venture or partnership between
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other, and the
parties' status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
SECTION 12.13. Bulk Sales. Purchaser waives compliance by Seller with
any applicable bulk sales or bulk transfer laws of any applicable jurisdiction.
30
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
ADAPTEC, INC.
ADAPTEC MFG. (S) PTE. LTD.
STMICROELECTRONICS, INC.
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EXHIBITS AND SCHEDULES
EXHIBITS
- --------
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Bill of Sale
Exhibit C Form of Facilities Agreement
Exhibit D Form of License Agreement
Exhibit E Form of Manufacturing Agreement
Exhibit F Opinion of Purchaser's Counsel
Exhibit G Opinion of Seller's Counsel
Exhibit H Form of Patent Assignment
Exhibit I Form of Mask Work Assignment
SCHEDULES
- ---------
Schedule 1 Assumed Liabilities
Schedule 2 Intangible Assets
Schedule 3 Inventory
Schedule 4 Products
Schedule 5 Product Designs
Schedule 6 Seller Contracts
Schedule 7 Tangible Assets
Schedule 8 Purchased Technology Deliverables
Schedule 9 Required Consents
Schedule 10 Licenses
Schedule 11 Employees
Schedule 12 Customers
Schedule 13 Certain Excluded Assets