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EXHIBIT 2
AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
By and Among
QUANTUM CORPORATION,
INSULA CORPORATION,
HAWAII ACQUISITION CORPORATION
and
MAXTOR CORPORATION
Dated as of October 3, 2000
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TABLE OF CONTENTS
(continued)
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ARTICLE I DEFINITIONS....................................................................................................... 3
1.1 Certain Defined Terms..................................................................................... 3
ARTICLE II SEPARATION, REDEMPTION AND MERGER................................................................................ 13
2.1 The Separation and Redemption............................................................................. 13
2.2 The Merger................................................................................................ 13
2.3 Effective Time; Closing................................................................................... 14
2.4 Effect of the Merger...................................................................................... 14
2.5 Certificate of Incorporation and Bylaws of Surviving Corporation.......................................... 14
2.6 Management of the Surviving Corporation................................................................... 14
2.7 Effect on Capital Stock................................................................................... 15
2.8 Surrender of Certificates................................................................................. 16
2.9 No Further Ownership Rights in HDD Common Stock or Spinco Common Stock.................................... 18
2.10 Lost, Stolen or Destroyed Certificates.................................................................... 18
2.11 Tax and Accounting Consequences........................................................................... 19
2.12 Taking of Necessary Action; Further Action................................................................ 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUB........................................................ 19
3.1 Organization and Good Standing............................................................................ 19
3.2 Charter Documents......................................................................................... 19
3.3 Capital Structure......................................................................................... 20
3.4 Subsidiaries.............................................................................................. 21
3.5 Authority................................................................................................. 21
3.6 Conflicts................................................................................................. 21
3.7 Consents.................................................................................................. 22
3.8 SEC Filings; Financial Statements; Undisclosed Liabilities................................................ 22
3.9 Absence of Certain Changes or Events...................................................................... 23
3.10 Taxes..................................................................................................... 23
3.11 Intellectual Property..................................................................................... 24
3.12 Compliance; Permits; Restrictions......................................................................... 27
3.13 Litigation................................................................................................ 27
3.14 Brokers' and Finders' Fees................................................................................ 27
3.15 Employee Benefit Plans.................................................................................... 28
3.16 Absence of Liens.......................................................................................... 30
3.17 Environmental Matters..................................................................................... 30
3.18 Labor Matters............................................................................................. 31
3.19 Agreements, Contracts and Commitments..................................................................... 31
3.20 Registration Statement; Proxy Statement; Other Filings.................................................... 32
3.21 Board Approval............................................................................................ 33
3.22 State Takeover Statutes................................................................................... 33
3.23 Fairness Opinion.......................................................................................... 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND
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TABLE OF CONTENTS
(continued)
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SPINCO.............................................................................................................. 33
4.1 Organization and Good Standing............................................................................. 33
4.2 Charter Documents.......................................................................................... 34
4.3 Capital Structure.......................................................................................... 34
4.4 Subsidiaries............................................................................................... 35
4.5 Authority.................................................................................................. 35
4.6 Conflicts.................................................................................................. 36
4.7 Consents................................................................................................... 36
4.8 SEC Filings; Financial Statements; Undisclosed Liabilities................................................. 37
4.9 Absence of Certain Changes or Events....................................................................... 38
4.10 Taxes...................................................................................................... 38
4.11 Intellectual Property...................................................................................... 39
4.12 Compliance; Permits; Restrictions.......................................................................... 41
4.13 Litigation................................................................................................. 42
4.14 Brokers' and Finders' Fees................................................................................. 42
4.15 Employee Benefit Plans..................................................................................... 42
4.16 Absence of Liens........................................................................................... 45
4.17 Facilities................................................................................................. 45
4.18 Sufficiency of HDD Assets and Parent Intellectual Property................................................. 45
4.19 Environmental Matters...................................................................................... 46
4.20 Labor Matters.............................................................................................. 46
4.21 Agreements, Contracts and Commitments...................................................................... 47
4.22 Registration Statement; Proxy Statement; Other Filings..................................................... 48
4.23 Board Approval............................................................................................. 48
4.24 State Takeover Statutes.................................................................................... 48
4.25 Fairness Opinion........................................................................................... 48
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME................................................................................ 49
5.1 Conduct of Business........................................................................................ 49
5.2 Restricted Conduct......................................................................................... 49
ARTICLE VI ADDITIONAL AGREEMENTS............................................................................................. 51
6.1 Proxy Statement/Prospectus; Registration Statement......................................................... 51
6.2 Meetings of Stockholders................................................................................... 52
6.3 Access to Information; Confidentiality..................................................................... 55
6.4 No Solicitation............................................................................................ 55
6.5 Public Disclosure.......................................................................................... 59
6.6 Requirements of Law........................................................................................ 59
6.7 Third Party Consents....................................................................................... 60
6.8 Notification of Certain Matters............................................................................ 60
6.9 Further Assurances......................................................................................... 60
6.10 Stock Options and Restricted Stock......................................................................... 60
6.11 Form S-8................................................................................................... 62
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TABLE OF CONTENTS
(continued)
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6.12 Insurance Policy........................................................................................... 63
6.13 D&O Insurance.............................................................................................. 63
6.14 Tax-Free Reorganization/Insurance Opinion.................................................................. 63
6.15 Nasdaq Listing............................................................................................. 63
6.16 Regulatory Filings; Commercially Reasonable Efforts........................................................ 63
6.17 Separation Agreements...................................................................................... 64
6.18 Employee Matters........................................................................................... 64
6.19 Affiliate Agreements....................................................................................... 66
ARTICLE VII CONDITIONS TO THE MERGER......................................................................................... 66
7.1 Conditions to Obligations of Each Party to Effect the Merger............................................... 66
7.2 Additional Conditions to Obligations of Company and Merger Sub............................................. 67
7.3 Additional Conditions to the Obligations of Parent and Spinco.............................................. 68
ARTICLE VIII I TERMINATION, AMENDMENT AND WAIVER............................................................................ 69
8.1 Termination................................................................................................ 69
8.2 Notice of Termination; Effect of Termination............................................................... 71
8.3 Fees and Expenses.......................................................................................... 71
8.4 Amendment.................................................................................................. 74
8.5 Extension; Waiver.......................................................................................... 74
ARTICLE IX GENERAL PROVISIONS................................................................................................ 74
9.1 Non-Survival of Representations and Warranties............................................................. 74
9.2 Notices.................................................................................................... 74
9.3 Interpretation............................................................................................. 75
9.4 Counterparts............................................................................................... 76
9.5 Entire Agreement........................................................................................... 76
9.6 No Third Party Beneficiaries............................................................................... 76
9.7 Severability............................................................................................... 76
9.8 Other Remedies; Specific Performance....................................................................... 76
9.9 Governing Law.............................................................................................. 77
9.10 Assignment................................................................................................. 77
9.11 WAIVER OF JURY TRIAL....................................................................................... 77
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INDEX OF EXHIBITS
Exhibit A Form of Parent Voting Agreement
Exhibit B Form of Company Voting Agreement
INDEX OF SCHEDULES
Schedule 1 Form of General Assignment and Assumption Agreement
Schedule 2 Form of Master Separation and Redemption Agreement
Schedule 3 Form of Tax Sharing Agreement
Schedule 4 Form of Transitional Services Agreement
Schedule 5 Form of Intellectual Property Agreement
Schedule 6 Form of Indemnification Agreement
Schedule 7 Commitment to Issue Insurance Policies
Schedule 8 Form of Amended and Restated Certificate of Incorporation of the
Surviving Corporation
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AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this "Agreement") is
made and entered into as of October 3, 2000, by and among Quantum Corporation, a
Delaware corporation ("Parent"), Insula Corporation, a Delaware corporation and
a wholly owned subsidiary of Parent ("Spinco"), Hawaii Acquisition Corporation,
a Delaware corporation and a wholly owned subsidiary of Company ("Merger Sub"),
and Maxtor Corporation, a Delaware corporation ("Company").
RECITALS
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement and in accordance with Delaware Law (as defined below), Parent and
Company are entering into a business combination transaction pursuant to which
Merger Sub will merge with and into Spinco (the "Merger"), with Spinco
continuing after the Merger as the surviving corporation and a wholly owned
subsidiary of Company.
WHEREAS, the Board of Directors of Parent has determined that, if the
Merger receives all required approvals, Parent shall contribute and transfer to
Spinco (the "Separation") and Spinco shall receive and assume, directly or
indirectly, substantially all of the assets and liabilities associated with the
HDD Business (as defined below) including stock, investments or similar
interests currently held by Parent in subsidiaries and other entities that
conduct such business.
WHEREAS, Parent currently contemplates that, following the transfer and
assumption of such assets and liabilities to Spinco and immediately prior to and
in connection with the Merger, Parent shall redeem all of the outstanding shares
of HDD Common Stock (as defined below) pursuant to Section 2.4(d) of Parent's
Restated Certificate of Incorporation in exchange for all of the outstanding
shares of Spinco (the "Redemption").
WHEREAS, the Board of Directors of Parent (i) has determined that the
Merger and the Redemption are consistent with and in furtherance of the long-
term business strategy of Parent and fair to, advisable and in the best
interests of, Parent and its stockholders; (ii) has approved this Agreement, the
Redemption, the Separation, the Merger and the other transactions contemplated
by this Agreement to be consummated by it; and (iii) has determined to recommend
that the stockholders of Parent vote to approve the Parent Stockholder Proposal
(as defined below).
WHEREAS, the Board of Directors of Company (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Company and fair to, advisable and in the best interests of, Company and its
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stockholders; (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement to be consummated by it; and (iii)
has determined to recommend the approval of the Company Stockholder Proposal (as
defined below).
WHEREAS, the Board of Directors of Spinco (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Spinco and fair to, advisable and in the best interests of, Spinco and
Parent; (ii) has approved this Agreement, the Merger and the other transactions
contemplated by this Agreement to be consummated by it; and (iii) has determined
to recommend that Parent, as its sole stockholder, vote to adopt and approve the
Agreement and the Merger.
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the willingness of Parent, Spinco, Company
and Merger Sub to enter into this Agreement, certain affiliates of Parent are
entering into Voting Agreements, each in substantially the form attached hereto
as Exhibit A (collectively, the "Parent Voting Agreements"), and certain
affiliates of Company are entering into Voting Agreements, each in substantially
the form attached hereto as Exhibit B (collectively, the "Company Voting
Agreements" and, together with the Parent Voting Agreements, the "Voting
Agreements").
WHEREAS, the parties hereto intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Code.
WHEREAS, Parent and Spinco intend the Redemption to qualify as a tax-free
transaction under Section 355(a) of the Code.
WHEREAS, the parties hereto intend to account for the Merger as a purchase
for financial reporting purposes.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. For all purposes of and under this Agreement,
the following terms shall have the following respective meanings:
"Action" or "Actions" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Authority or any arbitrator or arbitration panel.
"Actual Severance" has the meaning set forth in Section 6.18(b) hereof.
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"Affiliate" or "Affiliates" means, with respect to any person, an affiliate
of such person within the meaning of Rule 145 promulgated under the Securities
Act.
"Agreement" has the meaning set forth in the introductory paragraph hereto.
"Approved Severance Costs" has the meaning set forth in Section 6.18(b)
hereof.
"Certificate" means a certificate representing shares of HDD Common Stock
outstanding immediately prior to the Redemption.
"Certificate of Merger" has the meaning set forth in Section 2.3 hereto.
"Closing" has the meaning set forth in Section 2.3 hereto.
"Closing Date" has the meaning set forth in Section 2.3 hereto.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, or any successor statute thereto.
"Code" means the United States Internal Revenue Code of 1986, as amended,
or any successor statute thereto.
"Code Affiliate" or "Code Affiliates" means, with respect to any person, or
any trade or business (whether or not incorporated) which is a member of a
controlled group or which is under common control with such person within the
meaning of Section 414 of the Code.
"Company" has the meaning set forth in the introductory paragraph hereto.
"Company Acquisition" has the meaning set forth in Section 8.3(b)(iv)
hereto.
"Company Acquisition Proposal" has the meaning set forth in Section
6.4(a)(ii) hereto.
"Company Acquisition Transaction" has the meaning set forth in Section
6.4(a)(ii) hereto.
"Company Balance Sheet" has the meaning set forth in Section 3.8(b) hereto.
"Company Common Stock" means the Common Stock, par value $0.01 per share,
of Company.
"Company Contract" has the meaning set forth in Section 3.19(b) hereto.
"Company Employee" has the meaning set forth in Section 3.15(a) hereto.
"Company ESPP" has the meaning set forth in Section 5.2(f) hereto.
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"Company Financial Statements" has the meaning set forth in Section 3.8(b)
hereto.
"Company Intellectual Property" has the meaning set forth in Section
3.11(a)(i) hereto.
"Company International Employee Plan" has the meaning set forth in Section
3.15(g) hereto.
"Company Permits" has the meaning set forth in Section 3.12(b) hereto.
"Company Plans" has the meaning set forth in Section 3.15(a) hereto.
"Company Related Agreements" has the meaning set forth in Section 3.5
hereto.
"Company Registered Intellectual Property" has the meaning set forth in
Section 3.11(a)(ii) hereto.
"Company Requisite Vote" means a majority of the shares of Company Common
Stock entitled to vote at the Company Stockholders' Meeting with respect to the
Company Stockholder Proposal.
"Company Schedules" has the meaning set forth in Article 3 hereto.
"Company SEC Reports" has the meaning set forth in Section 3.8(a) hereto.
"Company Stock Option Plans" means the Company's Amended and Restated 1996
Stock Option Plan and 1998 Stock Purchase Plan.
"Company Stockholder Proposal" means a single proposal, to be submitted to
Company's stockholders at the Company Stockholders' Meeting, that provides for
approval of (i) the issuance of shares of Company Common Stock in the Merger;
(ii) an amendment to paragraph A of Article Six of the Company's Amended and
Restated Certificate of Incorporation to eliminate the requirement that the
number of directors in each of the three classes into which the Company's Board
of Directors is divided must be as nearly equal as reasonably possible; and
(iii) if and to the extent necessary to (1) effect the Merger; (2) provide for
the reservation of shares of Company Common Stock in connection therewith; and
(3) leave the Company with a number of authorized but unissued shares of Company
Common Stock that bears approximately the same percentage to the total number of
shares of Company Common Stock outstanding and reserved for issuance immediately
after the Effective Time as the number of authorized but unissued shares of
Company Common Stock immediately before the Effective Time bears to the total
number of shares of Company Common Stock outstanding and reserved for issuance
immediately before the Effective Time, an amendment to the number of shares of
Company Common Stock authorized to be issued thereunder.
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"Company Stockholders' Meeting" has the meaning set forth in Section 6.1(a)
hereto.
"Company Superior Offer" has the meaning set forth in Section 6.2(c)
hereto.
"Company Termination Fee" has the meaning set forth in Section 8.3(b)(i)
hereto.
"Company Triggering Event" has the meaning set forth in Section 8.1(h)
hereto.
"Company Voting Agreements" has the meaning set forth in the seventh
recital hereto.
"Confidentiality Agreement" has the meaning set forth in Section 6.3(b)
hereto.
"Corporate HDD Employees" has the meaning set forth in Section 6.18(a)
hereof.
"Converted DSS Restricted Stock" has the meaning set forth in Section
6.10(d) hereto.
"Delaware Law" means the Delaware General Corporation Law as in effect from
time to time (including interpretations thereof by the Delaware Court of
Chancery and the Delaware Supreme Court).
"Discharge Period" has the meaning as set forth in Section 6.18(b) hereto.
"DOJ" means the United States Department of Justice, or any successor
department thereto.
"DOL" means the United States Department of Labor, or any successor
department thereto.
"DSS Common Stock" means the DLT and Storage Systems Group Common Stock,
par value $0.01 per share, of Parent.
"DSS Restricted Stock" has the meaning set forth in Section 6.10(a) hereto.
"Effective Time" has the meaning set forth in Section 2.3 hereto.
"Environmental Claim" means any claim made by any Governmental Authority
based on, or arising from, an alleged violation of an Environmental Law.
"Environmental Laws" are all applicable laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any Governmental Authority which
prohibit, regulate or control any Hazardous Material or any Hazardous Material
Activity, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Resource Recovery and
Conservation Act
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of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the
Hazardous Materials Transportation Act, the Clean Water Act, comparable laws,
rules, regulations, ordinances, orders, treaties, statutes, and codes of other
Governmental Authorities, the regulations promulgated pursuant to any of the
foregoing, and all amendments and modifications of any of the foregoing, all as
amended to date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute thereto.
"Exchange Agent" has the meaning set forth in Section 2.8(a) hereto.
"Exchange Ratio" has the meaning set forth in Section 2.7(a)(i) hereof.
"Former Parent Service Provider" means an employee or consultant of the
Parent whose employment or consulting relationship with the Parent terminates
prior to the Redemption Date.
"FTC" means the United States Federal Trade Commission, or any successor
agency thereto.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any local, state, provincial, federal, or
international court or governmental authority, department, commission, board,
service, agency, political subdivision or other instrumentality.
"Hazardous Material" means any material or substance that is prohibited or
regulated by any Environmental Law or that has been designated by any
Governmental Authority to be radioactive, toxic, hazardous or otherwise a danger
to health, reproduction or the environment.
"HDD Assets" has the meaning set forth in the Form of General Assignment
and Assumption Agreement attached hereto as Schedule 1.
"HDD Balance Sheet" has the meaning set forth in Section 4.8(b) hereto.
"HDD Business" has the meaning set forth in the Form of General Assignment
and Assumption Agreement attached hereto as Schedule 1.
"HDD Common Stock" means the Hard Disk Drive Group Common stock, par value
$0.01 per share, of Parent.
"HDD Liabilities" has the meaning set forth in the Form of General
Assignment and Assumption Agreement attached hereto as Schedule 1.
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"HDD Products" means the products currently manufactured, marketed and sold
by the HDD Business.
"HDD Restricted Stock" has the meaning set forth in Section 6.10(a) hereto.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, or any successor statute thereto.
"Identified Corporate HDD Employees" has the meaning set forth in Section
6.18(a) hereof.
"Identified Senior Management" has the meaning set forth in Section 6.18(b)
hereof.
"Insurance Commitment" means the insurance commitments collectively set
forth as Schedule 7 hereto.
"Insurance Opinion" means the tax opinion of Ernst & Young LLP dated
October 3, 2000, referred to in the Insurance Commitments.
"Insurance Policy" means one or more insurance policies issued or to be
issued pursuant to the Insurance Commitments.
"Intellectual Property" means any or all of the following and all rights
in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and continuations-
in-part thereof; (ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation relating to
any of the foregoing; (iii) all copyrights, copyrights registrations and
applications therefor, and all other rights corresponding thereto throughout the
world; (iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, logos, common law trademarks
and service marks, trademark and service xxxx registrations and applications
therefor throughout the world; (vi) all databases and data collections and all
rights therein throughout the world; (vii) all moral and economic rights of
authors and inventors, however denominated, throughout the world, and (viii) any
similar or equivalent rights to any of the foregoing anywhere in the world.
"IRS" means the United States Internal Revenue Service, or any successor
agency thereto.
"Law" or "Laws" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, judgment, decree or other requirement
of law.
"Liability" or "Liabilities" means any and all debts, liabilities and
obligations of any type or nature whatsoever, whether accrued or fixed, absolute
or contingent, matured or unmatured, determined or determinable, including,
without limitation, those arising under any Law, Action or governmental order
and those arising
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under any contract, agreement, arrangement, commitment or undertaking.
"Lien" or "Liens" means any lien, security interest, adverse claim, charge,
mortgage or other encumbrance.
"Material Adverse Effect" when used with reference to an entity or business
means any change, event, violation, inaccuracy, circumstance or effect that is
or would reasonably be expected to be materially adverse to the business, assets
(including intangible assets), capitalization, financial condition or results of
operations of such entity or business and its Subsidiaries taken as a whole or
materially adverse to the ability of such entity or business to consummate or
perform, in a timely manner, the transactions contemplated by this Agreement to
be consummated by such party; provided, however, that in no event shall (i) a
decrease in such entity or business's stock price by itself constitute a
Material Adverse Effect; or (ii) any change, event, violation, inaccuracy,
circumstance or effect that results from (A) the public announcement or pendency
of the Merger, the Separation and Redemption and the other transactions
contemplated hereby; (B) changes generally affecting the industry in which such
entity or business currently operates or conducts business and not
disproportionately adversely affecting such entity or business; (C) changes
generally affecting the United States economy and not disproportionately
adversely affecting such entity or business or (D) stockholders' class action
litigation arising from allegations of a breach of fiduciary duty relating to
this Agreement and the transactions contemplated hereby, constitute a Material
Adverse Effect.
"Merger" has the meaning set forth in the first recital hereto.
"Merger Sub" has the meaning set forth in the introductory paragraph
hereto.
"Merger Sub Common Stock" has the meaning set forth in Section 2.7(d)
hereto.
"Nasdaq" means The Nasdaq Stock Market, Inc.
"Nasdaq National Market" means the Nasdaq National Market System operated
by Nasdaq.
"Non-Corporate HDD Employees" has the meaning set forth in Section 6.18(a)
hereof.
"Non-Transferred Employee" had the meaning set forth in Section 6.18(a)
hereof.
"Order" means any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent), issued by any court or tribunal, and any
statute, rule, regulation or executive order issued by any Governmental
Authority, which has the effect of prohibiting, preventing or restricting
consummation of the Separation, the Redemption, the Merger or any other
transaction contemplated by this Agreement.
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"Other HDD Restricted Stockholders" has the meaning set forth in Section
6.10(b) hereto.
"Outstanding DSS Options" has the meaning set forth in Section 6.10(a)
hereto.
"Outstanding HDD Options" has the meaning set forth in Section 6.10(a)
hereto.
"Parent" has the meaning set forth in the introductory paragraph hereto.
"Parent Acquisition" has the meaning set forth in Section 8.3(c)(iv)
hereto.
"Parent Acquisition Proposal" has the meaning set forth in Section
6.4(b)(ii) hereto.
"Parent Acquisition Transaction" has the meaning set forth in Section
6.4(b)(ii) hereto.
"Parent Balance Sheet" has the meaning set forth in Section 4.8(b) hereto.
"Parent Common Stock" has the meaning set forth in Section 4.3(a) hereto.
"Parent Contracts" has the meaning set forth in Section 4.21(b) hereto.
"Parent Employee" has the meaning set forth in Section 4.15(a) hereto.
"Parent ESPP" has the meaning set forth in Section 5.2(f) hereto.
"Parent Facilities" has the meaning set forth in Section 4.17 hereto.
"Parent Financial Statements" has the meaning set forth in Section 4.8(b)
hereto.
"Parent Intellectual Property" has the meaning set forth in Section
4.11(a)(i) hereto.
"Parent International Employee Plan" has the meaning set forth in Section
4.15(g) hereto.
"Parent Leases" has the meaning set forth in Section 4.17 hereto.
"Parent Permits" has the meaning set forth in Section 4.12(b) hereto.
"Parent Plans" has the meaning set forth in Section 4.15(a) hereto.
"Parent Registered Intellectual Property" has the meaning set forth in
Section 4.11(a)(ii) hereto.
"Parent Related Agreements" has the meaning set forth in Section 4.5
hereto.
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"Parent Requisite Vote" means (a) a majority of the shares of Parent Common
Stock entitled to vote at the Parent Stockholders' Meeting with respect to the
Parent Stockholder Proposal; (b) a majority of the shares of HDD Common Stock
(voting as a separate class) entitled to vote at the Parent Stockholders'
Meeting with respect to the Parent Stockholder Proposal; and (c) a majority of
the shares of DSS Common Stock (voting as a separate class) entitled to vote at
the Parent Stockholders' Meeting with respect to the Parent Stockholder
Proposal.
"Parent Schedules" has the meaning set forth in Article 4 hereto.
"Parent SEC Reports" has the meaning set forth in Section 4.8(a) hereto.
"Parent Stockholder Proposal" means the proposal, to be submitted at the
Parent Stockholders' Meeting, that provides for the adoption of the Merger
Agreement and the approval of the Merger.
"Parent Stock Options" means outstanding stock options under the Parent
Stock Option Plans.
"Parent Stock Option Plans" means Parent's 1986 Stock Option Plan, 1996
Board of Directors Stock Option Plan, 1999 Employee Stock Purchase Plan, 1993
Long-Term Incentive Plan, 1999 Supplemental Stock Option Plan and plans assumed
in connection with the acquisition of Meridian Data, Inc. and ATL Products, Inc.
"Parent Stockholders' Meeting" has the meaning set forth in Section 6.1(a)
hereto.
"Parent Superior Offer" has the meaning set forth in Section 6.2(d) hereto.
"Parent Termination Fee" has the meaning set forth in Section 8.3(c)(i)
hereto.
"Parent Triggering Event" has the meaning set forth in Section 8.1(g)
hereto.
"Parent Voting Agreements" has the meaning set forth in the seventh recital
hereto.
"Programs" has the meaning set forth in Section 3.11(a)(iii) hereto.
"Proxy Statement" has the meaning set forth in Section 6.1(a) hereto.
"Redemption" has the meaning set forth in the third recital hereto.
"Redemption Date" shall mean the date of the effectiveness of the
Redemption.
"Registered Intellectual Property" means all United States, international
and foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations or applications related to
trademarks; (iii) registered copyrights and
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applications for copyright registration; and (iv) any other Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
Governmental Authority.
"Registration Statement" has the meaning set forth in Section 6.1(a)
hereto.
"Restated Certificate of Incorporation" means Parent's Restated Certificate
of Incorporation filed with the State of Delaware in August of 1999.
"Restricted Stock" has the meaning set forth in Section 4.3(a) hereto.
"Returns" has the meaning set forth in Section 3.10(a) hereto.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute thereto.
"Securities and Exchange Commission" means the United States Securities and
Exchange Commission, or any successor agency thereto.
"Separation" has the meaning set forth in the second recital hereto.
"Separation Documents" means the documents substantially in the form
attached hereto as Schedules 1 through 7.
"Severance Reserve" has the meaning set forth in Section 6.18(b).
"Significant Subsidiary" means a Subsidiary which is a "Significant
Subsidiary" as defined in Regulation S-X promulgated under the Exchange Act and,
in the case of Parent, any Subsidiary which has generated more than 10% of the
gross revenues of the HDD Business in any of the fiscal quarters since Parent
separated its Common Stock into HDD Common Stock and DSS Common Stock.
"Spinco" has the meaning set forth in the introductory paragraph hereto.
"Spinco Common Stock" has the meaning set forth in Section 4.3(b) hereto.
"Spinco Offerees" shall have the meaning set forth in Section 6.18(a)
hereof.
"Spinco Options" has the meaning set forth in Section 6.10(b) hereto.
"Spinco Restricted Stock" has the meaning set forth in Section 6.10(b)
hereto.
"Subsidiary" or "Subsidiaries" means any corporation, limited liability
company, general or limited partnership, joint venture, business trust,
unincorporated association or other business enterprise or entity controlled by
a person, directly or indirectly through one or more intermediaries.
"Surviving Corporation" has the meaning set forth in Section 2.2 hereto.
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"Tax" or "Taxes" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
"Transferred Employees" has the meaning set forth in Section 6.18(a)
hereof.
"Voting Agreements" has the meaning set forth in the seventh recital
hereto.
ARTICLE II
SEPARATION, REDEMPTION AND MERGER
2.1 The Separation and Redemption
(a) Immediately prior to the Effective Time, and conditioned on the
reasonable determination by Parent that all of the conditions in Article VII
hereof to the obligation of Parent and Spinco to effect the Merger have been, or
will immediately thereafter be, satisfied, Parent shall transfer the HDD
Business to Spinco and thereafter redeem the HDD Common Stock in exchange for
Spinco Common Stock by means of the Separation and the Redemption in a tax-free
transaction. The Separation and the Redemption shall be effected in accordance
with Section 2.4 of the Restated Certificate of Incorporation and the Separation
Documents and on such other terms (including, without limitation, any amendments
to the charter documents of Spinco) as are reasonably satisfactory, in form and
substance, to Parent and Company, as well as in compliance with all applicable
Laws.
(b) No certificates representing shares of Spinco Common Stock shall be
issued to former holders of record of shares of HDD Common Stock in connection
with the Redemption. Instead, an entry shall be made in the books and records of
Parent (or the transfer agent for HDD Common Stock) to reflect the entitlement
of each such former holder of record of shares of HDD Common Stock to an equal
number of shares of Spinco Common Stock, in exchange and replacement for such
shares of HDD Common Stock, as a result of the Redemption. Without the need for
any action by Parent, Spinco or former holders of Certificates, upon the
Redemption all Certificates shall, for all purposes (including the provisions of
Section 2.8 hereof), be deemed to represent a number of shares of Spinco Common
Stock equal to the number of shares of HDD Common Stock represented thereby
immediately prior to the Redemption.
2.2 The Merger. At the Effective Time and upon the terms and subject to
the conditions set forth in this Agreement and the applicable provisions of
Delaware Law, Merger Sub shall be merged with and into Spinco, the separate
corporate existence of Merger Sub shall cease and Spinco shall continue as the
surviving corporation of
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the Merger and a wholly owned subsidiary of Company. As the surviving
corporation after the Merger, Spinco is hereinafter sometimes referred to as the
"Surviving Corporation."
2.3 Effective Time; Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the parties hereto shall cause the Merger to be
consummated by filing a Certificate of Merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware in accordance with the relevant
provisions of Delaware Law (the time of such filing (or such later time as may
be agreed upon in writing by the parties hereto and specified in the Certificate
of Merger) being referred to herein as the "Effective Time") as soon as
practicable on or after the Closing Date (as defined below). The closing of the
Merger (the "Closing") shall take place at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Palo Alto, California, at a time and date to be specified by
the parties hereto, which time and date shall be no later than the 5th business
day after the satisfaction or waiver of the conditions set forth in Article VII
hereof, or at such other location, time and date as the parties hereto shall
mutually agree in writing (the date upon which the Closing actually occurs being
referred to herein as the "Closing Date").
2.4 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all of the property, rights, privileges, powers and
franchises of Spinco and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of Spinco and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
2.5 Certificate of Incorporation and Bylaws of Surviving Corporation.
(a) Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Spinco shall be amended and restated to read in
its entirety as set forth in Schedule 8 hereto and as so amended and restated
shall be the Certificate of Incorporation of the Surviving Corporation.
(b) Bylaws. The Bylaws of Merger Sub as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter amended in accordance with Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
2.6 Management of the Surviving Corporation.
(a) Board of Directors. The Board of Directors of Company effective
as of, and immediately following, the Effective Time shall consist of seven
members, six of whom (including the Chairman of the Board) shall be designated
by Company and one of whom shall be designated by Parent. As of the date of this
Agreement, Parent has designated Xxxxxxx Xxxxx as its director. If Xx. Xxxxx is
unable to serve in this position, Parent shall designate another member of the
Board of Directors of Parent, who is mutually acceptable to Parent and Company,
to the Board of Directors of Company.
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Such designees shall be designated in writing by the parties prior to the
mailing of the Proxy Statement.
(b) Officers. From and after the Effective Time, and until his
successor is duly elected or appointed and qualified in accordance with Delaware
Law, the current Chief Executive Officer of the Company shall hold the title of
Chief Executive Officer.
2.7 Effect on Capital Stock. On the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Company, Spinco, Merger Sub, or the
holders of any of the following securities, the following shall occur:
(a) Spinco Common Stock.
(i) Each share of Spinco Common Stock to which a pre-Redemption
holder of record of shares of HDD Common Stock became entitled in the Redemption
(other than any shares of Spinco Common Stock to be canceled pursuant to Section
2.7(a)(ii) hereof) shall be canceled and extinguished and automatically
converted (subject to Sections 2.7(a)(iii) and Section 2.7(a)(iv) hereof) into
the right to receive 1.52 (the "Exchange Ratio") shares of Company Common Stock,
upon the surrender of the applicable Certificate in the manner provided in
Section 2.8 hereof (or, in the case of a lost, stolen or destroyed Certificate,
upon delivery of an affidavit (and bond, if required) in the manner provided in
Section 2.10 hereof); provided, however, that the Company, may, by written
notice given to Parent at any time prior to the Effective Time, increase the
Exchange Ratio to the extent that it determines such increase to be necessary or
advisable in order to have reasonable assurance that the shares of Company
Common Stock to be issued in the Merger will, in the aggregate, represent at
least 50.1%, and in the Board's sole discretion up to not more than 51%, of the
combined voting power of all shares of Company Common Stock that will be
outstanding immediately after the Effective Time.
(ii) Each share of Spinco Common Stock held in the treasury of
Parent, or owned by Parent or any direct or indirect Subsidiary of Parent
immediately prior to the Effective Time, shall be canceled and extinguished
without any conversion thereof or any consideration therefor.
(iii) The Exchange Ratio shall be adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Company
Common Stock or Spinco Common Stock), extraordinary cash dividends,
reorganization, recapitalization, reclassification, combination, exchange of
shares or other like change with respect to Spinco Common Stock or Company
Common Stock occurring on or after the date hereof and prior to the Effective
Time.
(iv) No fraction of a share of Company Common Stock shall be
issued by virtue of the Merger, but in lieu thereof each pre-Redemption holder
of record
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of shares of HDD Common Stock who would otherwise be entitled to a
fraction of a share of Company Common Stock as a result of the Merger (after
aggregating all fractional shares of Company Common Stock to be received by such
holder) shall receive from Company an amount of cash (rounded down to the
nearest whole cent), without interest, equal to the product obtained by
multiplying (x) such fraction, by (y) the average closing price of one (1) share
of Company Common Stock for the five (5) consecutive trading days ending on the
trading day immediately prior to the Effective Time, as reported on the Nasdaq
National Market.
(v) Each of the Exchange Agent (as defined in Section 2.8(a)
hereof) and Company shall be entitled to deduct and withhold from the
consideration otherwise deliverable in connection with the Merger to any holder
or former holder of shares of Spinco Common Stock such amounts as may be
required to be deducted and withheld therefrom under the Code or any other
applicable provision of Law. To the extent that such amounts are so deducted and
withheld, such amounts shall be treated for all purposes under this Agreement as
having been delivered or otherwise paid to the person to whom such amounts would
otherwise have been delivered or paid in connection with the Merger pursuant to
this Agreement.
(b) Parent Stock Option Plans and Stock Options. Each option to
purchase HDD Common Stock held by a Transferred Employee under the Parent Stock
Option Plans outstanding as of the Effective Time shall be assumed by Company in
accordance with Section 6.10 hereof.
(c) Parent Convertible Notes. Pursuant to a supplemental indenture
reasonably satisfactory, in form and substance, to Parent and Company and
executed at the Closing, Company shall become obligated, upon conversion of any
of Parent's 7% convertible notes after the Effective Time, to issue to the
holder thereof a number of shares of Company Common Stock calculated (in
accordance with the Exchange Ratio) to reflect the number of shares of HDD
Common Stock that would have been issued to such holder if such holder had
converted such note immediately before the Effective Time.
(d) Capital Stock of Merger Sub. Each share of Common Stock, par
value $0.01 per share, of Merger Sub ("Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one (1) duly authorized and validly issued, fully paid and
nonassessable share of Common Stock, par value $0.01 per share, of the Surviving
Corporation. Each stock certificate of Merger Sub evidencing ownership of any
such shares shall thereafter evidence ownership of one (1) share of Common Stock
of the Surviving Corporation.
(e) To the extent relevant, "Spinco Common Stock" as referred to in
this Section 2.7 shall include all former shares of HDD Common Stock which were
exchanged for Spinco Common Stock in the Redemption.
2.8 Surrender of Certificates.
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(a) Exchange Agent. Prior to the Effective Time, Company shall select
and appoint an institution reasonably satisfactory to Parent to act as the
exchange agent (the "Exchange Agent") for the Redemption and the Merger.
(i) Stock and Cash to be Provided by Company. Promptly following
the Effective Time, Company shall make available to the Exchange Agent for
purposes of exchange (i) the certificates representing the shares of Company
Common Stock into which shares of Spinco Common Stock have been converted in the
Merger; (ii) cash in an amount sufficient to make all cash payments required to
be made pursuant to Section 2.7(a)(iv) hereof in lieu of issuing fractional
shares of Company Common Stock in the Merger; and (iii) any dividends or other
distributions to which pre-Redemption holders of record of shares of HDD Common
Stock may be entitled pursuant to Section 2.8(c) hereof.
(b) Exchange Procedures. Promptly following the Effective Time,
Company shall cause the Exchange Agent to mail to each holder of record (as of
the Redemption) of shares of HDD Common Stock whose shares were exchanged for an
equal number of shares of Spinco Common Stock in the Redemption, and which
shares of Spinco Common Stock were thereafter converted into the right to
receive shares of Company Common Stock pursuant to Section 2.7(a) hereof, cash
in lieu of any fractional shares pursuant to Section 2.7(a)(iv) hereof and any
dividends or other distributions pursuant to Section 2.8(c) hereof, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent and Company may reasonably specify); and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Company Common Stock pursuant to Section
2.7(a) hereof, cash in lieu of any fractional shares pursuant to Section
2.7(a)(iv) and any dividends or other distributions pursuant to Section 2.8(c)
hereof. Upon the surrender of Certificates for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Company, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such Certificates shall
be entitled to receive in exchange therefor certificates representing the number
of whole shares of Company Common Stock and cash in lieu of fractional shares
which such holders have the right to receive pursuant to Section 2.7(a)(iv)
hereof, and any dividends or other distributions payable pursuant to Section
2.8(c) hereof, and the Certificates so surrendered shall forthwith be canceled.
Until so surrendered, outstanding Certificates shall be deemed from and after
the Effective Time, for all corporate purposes, subject to the terms of Section
2.8(c) hereof as to the payment of dividends, to evidence the ownership of the
number of full shares of Company Common Stock into which such shares of HDD
Common Stock shall have been so converted pursuant to Section 2.7(a) hereof, and
the right to receive an amount in cash in lieu of the issuance of any fractional
shares pursuant to Section 2.7(a)(iv) hereof, and any dividends or distributions
payable pursuant to Section 2.8(c) hereof.
(c) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date hereof with respect to
Company
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Common Stock with a record date after the Effective Time shall be paid to any
holder of any unsurrendered Certificates with respect to the shares of Company
Common Stock that such holder has the right to receive in the Merger until such
holder shall surrender such Certificates in accordance with Section 2.8(b)
hereof. Subject to applicable law, following the surrender of any such
Certificates, the Exchange Agent shall deliver to the record holders thereof,
without interest, certificates representing whole shares of Company Common Stock
issued in exchange therefor pursuant to Section 2.7(a) hereof, along with
payment in lieu of fractional shares pursuant to Section 2.7(a)(iv) hereof and
the amount of any such dividends or other distributions with a record date after
the Effective Time payable with respect to such whole shares of Company Common
Stock.
(d) Transfers of Ownership. If certificates for shares of Company
Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it shall be a
condition to the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Company or any agent designated by
Company any transfer or other taxes required by reason of the issuance of
Certificates for shares of Company Common Stock in any name other than that of
the registered holders of the Certificates surrendered, or established to the
satisfaction of Company or any agent designated by it that such tax has been
paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary set forth
in this Section 2.8, none of the Exchange Agent, Parent, Spinco, the Surviving
Corporation nor any other party hereto shall be liable to a holder of shares of
HDD Common Stock or Company Common Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
2.9 No Further Ownership Rights in HDD Common Stock or Spinco Common
Stock. All shares of Company Common Stock issued in accordance with the terms
hereof (including any cash paid in respect thereof pursuant to Section
2.7(a)(iv) and Section 2.8(c) hereof) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of HDD Common Stock
(exchanged for an equal number of shares of Spinco Common Stock in the
Redemption) surrendered therefor, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of HDD Common
Stock which were outstanding immediately prior to the Redemption of shares of
Spinco Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II.
2.10 Lost, Stolen or Destroyed Certificates. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Company Common
Stock, cash for fractional shares, if any, as may be required pursuant to
Section 2.7(a)(iv) hereof and any dividends or distributions payable pursuant to
Section 2.8(c) hereof; provided, however, that Company
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may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Company or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
2.11 Tax and Accounting Consequences.
(a) Tax Treatment. It is intended by the parties hereto that the
Merger constitute a "reorganization" within the meaning of Section 368 of the
Code. In accordance therewith, the parties hereto hereby adopt this Agreement as
a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-
3(a) of the United States Income Tax Regulations.
(b) Accounting Treatment. It is intended by the parties hereto that
the Merger be accounted for as a purchase by Company of Spinco.
2.12 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable in order to
carry out the purposes and intent of this Agreement, to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Spinco and Merger Sub, the officers
and directors of the Surviving Corporation and the Company shall be fully
authorized to take all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUB
Company and Merger Sub hereby represent and warrant to Parent and Spinco,
subject to (i) the documents, agreements and transactions contemplated by this
Agreement; (ii) the exceptions disclosed in writing in the disclosure letter,
dated as of the date hereof, delivered by Company and Merger Sub to Parent and
Spinco concurrently with the execution and delivery hereof and accepted by
Parent (the "Company Schedules"); and (iii) the information set forth in any
Company SEC Reports (as defined in Section 3.8(a) hereof) filed by Company with
the SEC prior to the date hereof, as follows:
3.1 Organization and Good Standing. Company and each of its Significant
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with the
corporate power and authority to own, lease and operate its assets and property
and to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to conduct business and in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
and in good standing would reasonably be expected to have a Material Adverse
Effect on Company.
3.2 Charter Documents. Company has delivered or made available to Parent
a true and complete copy of the Certificate of Incorporation and Bylaws of
Company and
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similar governing charter instruments of each of its Significant Subsidiaries,
each as amended to date, and each such instrument is in full force and effect.
Neither Company nor any of its Subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or Bylaws or equivalent governing
charter instruments.
3.3 Capital Structure.
(a) The authorized capital stock of Company consists of 250,000,000
shares of Common Stock, par value $0.01 per share, of which there were
116,125,550 shares issued and outstanding as of September 29, 2000, and
95,000,000 shares of Preferred Stock, par value $0.01 per share, of which no
shares are issued or outstanding. All outstanding shares of Company Common
Stock are duly authorized and validly issued, fully paid and nonassessable, and
are not subject to any preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of Company or any agreement or other instrument to which
Company is a party or by which Company or its properties or assets are bound.
As of September 29, 2000, (i) Company had reserved an aggregate of 21,328,990
shares of Company Common Stock, net of exercises, for issuance to employees,
consultants and non-employee directors pursuant to Company's Amended and
Restated 1996 Stock Option Plan, of which 14,672,301 shares were subject to
outstanding options, 1,690,000 shares were issued as restricted stock grants and
4,966,689 shares were available for future grant, (ii) Company had reserved an
aggregate of 390,000 shares of Company Common Stock for issuance under Company's
1998 Restricted Stock Plan, of which 345,000 shares were issued and 45,000
shares remained available for future issuances, (iii) Company had reserved an
aggregate of 154,153 shares of Company Common Stock for issuance upon exercise
of outstanding assumed options granted under the Creative Design Solutions, Inc.
Incentive Stock Option Plan, and (iv) Company had reserved an aggregate of
4,500,000 shares for issuance under Company's 1998 Employee Stock Purchase Plan.
All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions set forth in the instruments pursuant to
which they are issuable, would be duly authorized and validly issued, fully paid
and nonassessable. Section 3.3(a) of the Company Schedules contains a complete
and accurate list of each outstanding option to acquire shares of Company Common
Stock as of September 29, 2000, the name of the holder of each such option, the
number of shares subject to each such option, the exercise price of each such
option, the number of shares as to which each such option was vested as of such
date, and whether the exercisability of each such option will be accelerated in
any way as a result of the Merger or any other transactions contemplated by this
Agreement or for any other reason, and indicates the extent of acceleration, if
any.
(b) There are no equity securities, partnership interests or other
similar ownership interests of any class or series of capital stock of Company,
or any securities convertible into or exercisable or exchangeable for such
equity securities, partnership interests or other similar ownership interests
issued, reserved for issuance or outstanding. Except for securities Company
owns, directly or indirectly through one or more Subsidiaries, there are no
equity securities, partnership interests or other similar ownership interests of
any class or series of capital stock of any Subsidiary of Company, or any
securities convertible into or exercisable or exchangeable for such equity
securities, partnership interests or other similar ownership interests issued,
reserved for issuance or outstanding. There are no options, warrants, equity
securities, partnership interests or other similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any kind or
character to which Company or any of its Subsidiaries is a party or by which
Company or any of its Subsidiaries is bound obligating Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the
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repurchase, redemption or acquisition, of any shares of capital stock of Company
or any of its Subsidiaries or obligating Company or any of its Subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, partnership interest or other similar ownership interest, call,
right, commitment or agreement. There are no registration rights and, to the
knowledge of Company, there are no voting trusts, proxies or other agreements or
understandings with respect to any class or series of capital stock of Company
or with respect to any equity security, partnership interest or other similar
ownership interest of any class or series of capital stock of any of its
Subsidiaries.
3.4 Subsidiaries. Section 3.4 of the Company Schedules contains a
complete and accurate list of each Subsidiary of Company, indicating the
jurisdiction of incorporation of each such Subsidiary and Company's percentage
equity interest therein.
3.5 Authority. Company has all requisite corporate power and authority to
enter into this Agreement, the Company Affiliate Agreements, the Company Voting
Agreements and the Separation Documents to be entered into or executed by
Company (collectively, the "Company Related Agreements"), to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Company of this
Agreement and the Company Related Agreements, the performance by Company of its
obligations hereunder and thereunder, and the consummation by Company of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of Company, subject only to the Company
Requisite Vote. This Agreement and the Company Related Agreements have been (or,
in the case of those Company Related Agreements that are not being executed and
delivered by the Company concurrently with the execution and delivery of this
Agreement, will, when they are executed and delivery by the Company, have been)
duly executed and delivered by Company and, assuming the due authorization,
execution and delivery thereof by the other parties thereto, constitute (or, in
the case of those Company Related Agreements that are not being executed and
delivered by the Company concurrently with the execution and delivery of this
Agreement, will, when they are executed and delivered by the Company,
constitute) the valid and binding obligations of Company, enforceable in
accordance with their respective terms, subject to (i) the effect of any
applicable Laws of general application relating to bankruptcy, reorganization,
insolvency, moratorium or other similar Laws affecting creditors' rights and the
relief of debtors generally; and (ii) the effect of rules of law and general
principles of equity, including, without limitation, rules of law and general
principal of equity governing specific performance, injunctive relief and other
equitable remedies (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.6 Conflicts. The execution and delivery of this Agreement and the
Company Related Agreements by Company do not, and the performance by Company of
its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of Company or the equivalent
organizational documents of any of its Subsidiaries; (ii) subject to obtaining
the Requisite Company Vote and the consents,
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approvals, orders and authorizations, and making the registrations, declarations
and filings, described in Section 3.7 hereof, conflict with or violate any Law,
rule, regulation, order, judgment or decree applicable to Company or any of its
Subsidiaries or by which any of their respective properties and assets are bound
or affected; or (iii) result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair rights of Company or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the properties or assets of Company or any of its Subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Company or any of
its Subsidiaries is a party or by which Company or any of its Subsidiaries or
any of their respective properties and assets are bound or affected, except to
the extent such conflict, violation, breach, default, impairment or other effect
would not, in the case of clauses (ii) or (iii) above, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
3.7 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to Company in connection with the execution and delivery by
Company of this Agreement and the Company Related Agreements, the performance by
Company of its obligations hereunder and thereunder, or the consummation by
Company of the transactions contemplated hereby or thereby, except for (i) the
filing of the Registration Statement (as defined in Section 6.1 hereof) with the
SEC in accordance with the Securities Act; (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; (iii) the filing of
the Proxy Statement (as defined in Section 6.1 hereof) with the SEC in
accordance with the Exchange Act; (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws; (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the HSR Act and the comparable Laws of any foreign countries; and (vi) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings which, if not obtained or made, would not reasonably be expected to
have a Material Adverse Effect on Company.
3.8 SEC Filings; Financial Statements; Undisclosed Liabilities.
(a) Company has filed all forms, reports and documents required to
be filed by it with the SEC since December 31, 1998. All such required forms,
reports and documents, and all exhibits and schedules thereto and documents
incorporated by reference therein, (including those filed by Company after the
date hereof) are referred to herein as the "Company SEC Reports." As of their
respective dates, the Company SEC Reports (i) complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act, as
the case may be, and the applicable rules and regulations of the SEC promulgated
thereunder; and (ii) did not at the time each such Company SEC Report was filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
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order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of the Subsidiaries of Company is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports
(including any Company SEC Reports filed by Company after the date hereof until
the Closing) (collectively, the "Company Financial Statements"), (i) complied as
to form in all material respects with the published rules and regulations of the
SEC in effect, at the time of filing, with respect thereto; (ii) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act); and (iii) fairly presented the consolidated
financial position of Company and its consolidated Subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows of Company and its consolidated Subsidiaries for the periods indicated
therein, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not, or are not
expected to be, material in amount. The balance sheet of Company contained in
the Company SEC Reports as of July 1, 2000, is hereinafter referred to as the
"Company Balance Sheet."
(c) Neither Company nor any of its Subsidiaries has any
Liabilities of a nature required to be disclosed on a balance sheet or in the
related notes to consolidated financial statements prepared in accordance with
GAAP which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Company and its Subsidiaries
taken as a whole, except Liabilities (i) reflected in the Company Balance Sheet;
or (ii) incurred since the date of the Company Balance Sheet in the ordinary
course of business consistent with past practices.
(d) Company has heretofore furnished to Parent a true and complete
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed following the date hereof, to forms,
reports and documents which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
3.9 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet: (a) there has not been, occurred or arisen: (i) any Material
Adverse Effect on Company; (ii) any material change by Company in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP; or (iii) any revaluation by Company of any of its assets, including,
without limitation, writing down of the value of capitalized inventory or
writing off notes or accounts receivable other than in the ordinary course of
business; and (b) Company has not taken any action, or failed to take any
action, the taking or failure to take which action would, if it had occurred
after the execution and delivery of this Agreement, have constituted a breach by
Company of Sections 5.1 or 5.2 hereof.
3.10 Taxes.
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(a) Company and each of its Subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information statements and
reports ("Returns") relating to Taxes required to be filed by Company and each
of its Subsidiaries with any Tax authority, except such Returns which are not
material to Company. Company and each of its Subsidiaries have paid all Taxes
shown to be due on such Returns.
(b) Neither Company nor any of its Subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Company or any of its
Subsidiaries, nor has Company or any of its Subsidiaries executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(c) No audit or other examination of any Return of Company or any
of its Subsidiaries by any Tax authority is presently in progress, nor has
Company or any of its Subsidiaries been notified of any request for such an
audit or other examination.
(d) Neither Company nor any of its Subsidiaries has any Liability
for any material unpaid Taxes which has not been accrued for or reserved on
Company Balance Sheet in accordance with GAAP, which is material to Company,
other than any Liability for unpaid Taxes that may have accrued since December
31, 1999, in connection with the operation of the business of Company and its
Subsidiaries in the ordinary course.
(e) There is no contract, agreement, plan or arrangement to which
Company or any of its Subsidiaries is a party as of the date of this Agreement
(including, without limitation, this Agreement), covering any employee or former
employee of Company or any of its Subsidiaries that, individually or
collectively, would reasonably be expected to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which Company
or any of its Subsidiaries is a party or by which Company or any of its
Subsidiaries is bound to compensate any individual for excise taxes paid
pursuant to Section 4999 of the Code.
(f) Neither Company nor any of its Subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Company or any of its
Subsidiaries.
(g) Other than as set forth in the Separation Documents, neither
Company nor any of its Subsidiaries is party to or has any obligation under any
Tax-sharing, Tax indemnity or Tax allocation agreement or arrangement.
(h) None of the assets of Company or any of its Subsidiaries are
tax exempt use property within the meaning of Section 168(h) of the Code.
3.11 Intellectual Property.
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(a) For all purposes of and under this Agreement, the following terms
shall have the following respective meanings:
(i) "Company Intellectual Property" means any Intellectual
Property that is owned by, or exclusively licensed to, Company or any of its
Subsidiaries.
(ii) "Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name of, Company or
any of its Subsidiaries.
(iii) "Programs" means that a portion of a party's Intellectual
Property having a plurality of instructions capable of being executed by a
machine, whether or not such instructions are in a machine-readable form.
(b) No Company Intellectual Property or product or service of
Company or any of its Subsidiaries is subject to any proceeding or outstanding
decree, order, judgment, contract, license, agreement, or stipulation
restricting in any manner the use, transfer, or licensing thereof by Company or
any of its Subsidiaries, or which may affect the validity, use or enforceability
of such Company Intellectual Property.
(c) Either Company or one of its Subsidiaries owns and has good and
exclusive title to, or has a valid license to (sufficient for the conduct of its
business as currently conducted and as currently proposed to be conducted), each
material item of Company Intellectual Property or other Intellectual Property
used by the Company or the applicable Subsidiary free and clear of any Lien
(excluding licenses and related restrictions), and either Company or one of its
Subsidiaries is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Company or the
applicable Subsidiary, including the sale of any products or the provision of
any services by Company or such Subsidiary.
(d) Either Company or one of its Subsidiaries owns exclusively, and
has good title to, all copyrighted works that are products of Company of the
applicable Subsidiary or which Company or the applicable Subsidiary otherwise
expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Company or any of its Subsidiaries,
Company or such Subsidiary has a written agreement with such third party with
respect thereto and Company or such Subsidiary thereby either (i) has obtained
ownership of, and is the exclusive owner of; or (ii) has obtained a license
(sufficient for the conduct of its business as currently conducted and as
currently proposed to be conducted) to all such third party's Intellectual
Property in such work, material or invention by operation of law or by valid
assignment, to the fullest extent it is legally possible to do so.
(f) Neither Company nor any of its Subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Company Intellectual Property, to any third
party.
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(g) To the knowledge of Company, the operation of the business of
Company and its Subsidiaries as such business is currently conducted and
currently proposed to be conducted, including Company's and its Subsidiaries'
design, development, manufacture, marketing and sale of the products or services
of Company and its Subsidiaries (including products currently under development)
has not, does not and will not infringe or misappropriate the Intellectual
Property of any third party or, to the knowledge of Company, constitute unfair
competition or trade practices under the laws of any jurisdiction.
(h) Neither Company nor any of its Subsidiaries has received notice
from any third party that the operation of the business of Company or any of its
Subsidiaries or any act, product or service of Company or any of its
Subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(i) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
(j) All Company Registered Intellectual Property included in the
Company Intellectual Property is valid and subsisting. All maintenance and
annuity fees have been fully paid and all fees paid during prosecution and after
issuance of any Company Registered Intellectual Property have been paid in the
correct entity status amounts.
(k) There are no royalties, fees or other payments payable by Company
or any of its Subsidiaries to any third party by reason of the ownership, use,
sale or disposition of Company Intellectual Property.
(l) Neither Company nor any of its Subsidiaries is in breach of any
license, sublicense or other agreement relating to material Company Intellectual
Property. Neither the execution of this Agreement or any ancillary agreement
contemplated hereby nor the consummation of the Merger will contravene, conflict
with or result in an impairment of Company's right to own or use any of the
material Company Intellectual Property or any intellectual property of any third
party.
(m) To the knowledge of Company, it has at all times been Company's
practice and procedure to require all employees of Company and its Subsidiaries
to execute an agreement (containing no exceptions or exclusions from the scope
of its coverage) regarding the protection of proprietary information and the
assignment to Company of any Intellectual Property arising from services
performed for Company by such employees, the current form of which has been
provided to Parent.
(n) The Programs do not contain any open source code or any materials
subject to the GNU Public License (GPL), GNU Lesser Public License (GLPL) or any
similar license, and the Programs are not subject to any open source license
restrictions, including without limit the GPL or GLPL.
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(o) To the knowledge of Company, the Programs will be free of any and
all viruses, Trojan horses, trap doors, passwords, keys, protection codes or any
other devices or mechanisms which are intended to cause it to perform any
material functions other than those specified or intended or which are intended
to halt, disrupt, limit access or grant improper access to or sabotage the
operation of the Programs or any other process or device.
3.12 Compliance; Permits; Restrictions.
(a) Neither Company nor any of its Subsidiaries is in conflict with,
or in default or violation of (i) any Law, rule, regulation, order, judgment or
decree applicable to Company or any of its Subsidiaries or by which any of their
respective properties and assets are bound or affected; or (ii) any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company or any of its
Subsidiaries is a party or by which Company or any of its Subsidiaries or any of
their respective properties and assets are bound or affected, except for
conflicts, defaults or violations which, neither individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
Company. To the knowledge of Company, no investigation or review by any
Governmental Authority is pending or threatened against Company or its
Subsidiaries, nor has any Governmental Authority indicated an intention to
conduct the same, except for investigations which, neither individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
Company. There is no material agreement, judgment, injunction, order or decree
binding upon Company or any of its Subsidiaries which would reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Company or any of its Subsidiaries, any acquisition of material
property by Company or any of its Subsidiaries or the conduct of business by
Company and any of its Subsidiaries as currently conducted or currently proposed
to be conducted.
(b) Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from Governmental Authorities for
the operation of its respective business of Company, failure to hold which
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company (collectively, the "Company Permits").
Company and its Subsidiaries are in compliance in all material respects with the
terms of the Company Permits.
3.13 Litigation. There are no Actions pending, or as to which Company or
any of its Subsidiaries has received any notice of assertion nor, to the
knowledge of Company, is there a threatened Action against Company or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect on Company, or which in any manner challenges or seeks to prevent,
enjoin, alter or delay the Merger or any of the other transactions contemplated
by this Agreement.
3.14 Brokers' and Finders' Fees. Except for fees payable to Xxxxxxx Xxxxx
Xxxxxx pursuant to an engagement letter, dated September 26, 2000, a copy of
which has been provided to Parent, Company has not incurred, nor will it incur,
directly or
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indirectly, any Liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement, the Merger or any
other transactions contemplated by this Agreement.
3.15 Employee Benefit Plans.
(a) Section 3.15(a) of the Company Schedules contains a complete
and accurate list of all employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments, agreements or other arrangements
(whether or not set forth in a written document and including, without
limitation, all "employee benefit plans" within the meaning of Section 3(3) of
ERISA) covering any active or former employee, director or consultant of Company
("Company Employee" which shall for this purpose mean an employee of Company or
a Code Affiliate of Company), any Subsidiary of Company, or with respect to
which Company has or, to its knowledge, may in the future have Liability
(collectively, the "Company Plans"). Company has provided or will make available
to Parent prior to the Closing: (i) true and complete copies of all documents
embodying each Company Plan including, without limitation, all amendments
thereto, all trust documents related thereto, and all material written
agreements and contracts relating to each such Company Plan; (ii) the most
recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Company Plan; (iii) the most recent summary plan
description together with the summary(ies) of material modifications thereto, if
any, required under ERISA with respect to each Company Plan; (iv) all IRS
determination, opinion, notification and advisory letters relating to each
Company Plan; (v) all material correspondence to or from any Governmental
Authority relating to each Company Plan; (vi) all forms and related notices
required under the COBRA; (vii) the most recent discrimination tests for each
Company Plan; (viii) the most recent actuarial valuations, if any, prepared for
each Company Plan; (ix) if the Company Plan is funded, the most recent annual
and periodic accounting of the Company Plan assets; and (x) all material
communication to Company Employees relating to any Company Plan and any proposed
Company Plan, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules, or other events which would result in any material liability
to Company or any Code Affiliate.
(b) Each Company Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all Laws, including, without limitation, ERISA and the
Code, which are applicable to such Company Plans. No Action (excluding claims
for benefits incurred in the ordinary course of Company Plan activities) has
been brought, or to the knowledge of Company, is threatened, against or with
respect to any Company Plan. There are no audits, inquiries or proceedings
pending or, to the knowledge of Company, threatened by the IRS or the DOL with
respect to any Company Plans. All contributions, reserves or premium payments
required to be made or accrued as of the date hereof to the Company Plans have
been timely made or accrued. Any Company Plan intended to be qualified under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code (i) has either obtained a favorable determination,
notification, advisory and/or opinion letter, as applicable, as to its qualified
status from the IRS or still has a
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remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination; and (ii) incorporates or has been
amended to incorporate all provisions required to comply with the Tax Reform Act
of 1986, as amended. To the knowledge of Company, no condition or circumstance
exists giving rise to a material likelihood that any such Company Plan would not
be treated as qualified by the IRS. Company does not have any plan or commitment
to establish any new Company Plan, to modify any Company Plan (except to the
extent required by applicable Law or the applicable Company Plan or to conform
any such Company Plan to the requirements of any applicable Law, in each case as
previously disclosed to Parent in writing, or as required by the terms of this
Agreement), or to enter into any new Company Plan. Each Company Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Company or any of its
Code Affiliates (other than ordinary administration expenses).
(c) Neither Company, any of its Subsidiaries, nor any of their
Code Affiliates has at any time ever maintained, established, sponsored,
participated in, or contributed to any plan subject to Title IV of ERISA or
Section 412 of the Code and at no time has Company contributed to or been
requested to contribute to any "multiemployer plan," as such term is defined
under ERISA. Neither Company, any of its Subsidiaries, nor any officer or
director of Company or any of its Subsidiaries is subject to any material
Liability or penalty under Section 4975 through 4980B of the Code or Title I of
ERISA. No "prohibited transaction," within the meaning of Section 4975 of the
Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
4975 of the Code and Section 408 of ERISA, has occurred with respect to any
Company Plan which could subject Company or its Affiliates to material
Liability.
(d) None of the Company Plans promises or provides retiree medical
or other retiree welfare benefits to any person except as required by applicable
Law, and neither Company nor any of its Subsidiaries has represented, promised
or contracted (whether in oral or written form) to provide such retiree benefits
to any Company Employee, former employee, director, consultant or other person,
except to the extent required by applicable Law.
(e) Neither Company nor any of its Subsidiaries is bound by or
subject to (and none of its respective properties or assets is bound by or
subject to) any arrangement with any labor union. No employee of Company or any
of its Subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Company, no campaign to
establish such representation is in progress. There is no pending or, to the
knowledge of Company, threatened labor dispute involving Company or any of its
Subsidiaries and any group of its employees nor has Company or any of its
Subsidiaries experienced any labor interruptions over the past three (3) years,
and Company and its subsidiaries consider their relationships with their
employees to be good. Company is in compliance in all material respects with all
applicable material Laws respecting employment, employment practices, terms and
conditions of employment and wages and hours.
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(f) Neither the execution and delivery by Company of this
Agreement or the Separation Documents, nor the performance by Company of its
obligations hereunder and thereunder, nor the consummation by Company of the
transactions contemplated hereby or thereby will (i) result in any payment
(including severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any stockholder, director or Company Employee or any
of its Subsidiaries under any Company Plan or otherwise; (ii) materially
increase any benefits otherwise payable under any Company Plan; or (iii) result
in the acceleration of the time of payment or vesting of any such benefits.
(g) Each Company International Employee Plan (as defined below)
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
Laws that are applicable to such Company International Employee Plan.
Furthermore, no Company International Employee Plan has unfunded Liabilities
that, as of the Effective Time, will not be offset by insurance or fully
accrued. Except as required by applicable Law, no condition exists that would
prevent Company or Parent from terminating or amending any Company International
Employee Plan at any time for any reason. For all purposes of and under this
Agreement, "Company International Employee Plan" means each Company Plan that
has been adopted or maintained by Company or any of its Subsidiaries, whether
informally or formally, for the benefit of current or former employees of
Company or any of its Subsidiaries outside the United States.
3.16 Absence of Liens. Company and each of its Subsidiaries has
good and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its material tangible properties and assets
(real, personal and mixed) used in its business, free and clear of any Liens,
except (i) Liens reflected in the Company Financial Statements; (ii) Liens for
Taxes not yet due and payable; and (iii) Liens which are not material to Company
and its Subsidiaries taken as a whole.
3.17 Environmental Matters.
(a) (i) To the knowledge of Company, Company and its
Subsidiaries are in compliance with and have been in compliance with all
applicable Environmental Laws (which compliance includes, but is not limited to,
the possession by Company and its Subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), except where failures to be
in compliance would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company. Since December 31, 1997, neither Company nor
any of its Subsidiaries has received any communication (written or oral),
whether from a Governmental Authority, citizens' group, employee or otherwise,
alleging that Company or any of its Subsidiaries is not in such compliance,
except where failures to be in compliance would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company.
(ii) There is no Environmental Claim pending or, to the knowledge of Company,
threatened against Company or any of its Subsidiaries or, to the
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knowledge of the Company, against any entity or business whose liability for
any Environmental Claim Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law that would
reasonably be expected to have a Material Adverse Effect on Company.
(iii) There are no present or, to the knowledge of
Company, past actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release or presence of any
Hazardous Material that could form the basis of any Environmental Claim against
Company or any of its Subsidiaries or, to the knowledge of Company, against any
entity or business whose liability for any Environmental Claim Company or any of
its Subsidiaries has or may have retained or assumed either contractually or by
operation of law that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company.
(b) Neither the Company nor any of its Subsidiaries is subject to
any indemnity or other agreement relating to liability under any Environmental
Laws or relating to Hazardous Materials, except for indemnity or similar
provisions contained in Company contracts entered into in the ordinary course of
business of the Company or any of its Subsidiaries.
3.18 Labor Matters. There are no material controversies pending or, to
the knowledge of Company, threatened, between Company or any of its Subsidiaries
and any of their respective employees. As of the date of this Agreement, neither
Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by
Company or its Subsidiaries nor does Company know of any activities or
proceedings of any labor union to organize any such employees. As of the date of
this Agreement, Company has no knowledge of any strikes, slowdowns, work
stoppages or lockouts, or threats thereof, by or with respect to any employees
of Company or any of its Subsidiaries.
3.19 Agreements, Contracts and Commitments.
(a) Neither Company nor any of its Subsidiaries is a party to or
is bound by:
(i) any employment or consulting agreement, contract or
commitment with any executive officer or member of the Board of Directors of
Company, other than those that are terminable by Company or any of its
Subsidiaries on no more than thirty (30) days' notice without Liability or
financial obligation to Company;
(ii) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
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(iii) any agreement of indemnification or any guaranty other
than any agreement of indemnification entered into in connection with the sale
or license of products or services in the ordinary course of business;
(iv) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its Subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(v) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its Subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than its Subsidiaries; or
(vi) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit.
(b) Neither Company nor any of its Subsidiaries, nor to the
knowledge of Company any other party to a Company Contract (as defined below),
is in breach, violation or default under, and neither Company nor any of its
Subsidiaries has received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company or any of its Subsidiaries
is a party or by which Company or any of its Subsidiaries is bound that are
required to be disclosed in the Company Schedules pursuant to this Agreement
(any such agreement, contract or commitment, a "Company Contract") in such a
manner as would permit any other party to cancel or terminate any such Company
Contract, or would permit any other party to seek material damages or other
material remedies (for any or all of such breaches, violations or defaults, or
all of them in the aggregate).
3.20 Registration Statement; Proxy Statement; Other Filings. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in (i) the Registration Statement (as defined in Section 6.1
hereof) will at the time it is declared or ordered effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they were made,
not misleading; and (ii) the Proxy Statement (as defined in Section 6.1 hereof)
shall not, on the date the Proxy Statement is first mailed to the stockholders
of Company and the stockholders of Parent, at the time of the Company
Stockholders' Meeting (as defined in Section 6.1 hereof) or the Parent
Stockholders' Meeting (as defined in Section 6.1 hereof) and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
false or misleading, or omit to state any material fact necessary
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to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders' Meeting or the Parent
Stockholders' Meeting which has become false or misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder that are
applicable by reason of the Proxy Statement constituting a proxy statement of
Company. Notwithstanding the foregoing, Company makes no representation or
warranty with respect to any information supplied by Parent or Merger Sub which
is contained in any of the foregoing documents.
3.21 Board Approval. The Board of Directors of Company has, as of the
date of this Agreement, made the determinations set forth in the fifth recital
to this Agreement.
3.22 State Takeover Statutes. The Board of Directors of Company has
approved the Merger, this Agreement, the Company Related Agreements and the
transactions contemplated hereby and thereby, and such approval is sufficient to
render inapplicable to the Merger, this Agreement, the Company Related
Agreements and the transactions contemplated hereby and thereby the provisions
of Section 203 of Delaware Law to the extent, if any, such section is applicable
to the Merger, this Agreement, the Company Related Agreements and the
transactions contemplated hereby and thereby. No other state takeover statute or
similar statute or regulation applies to or purports to apply to the Merger,
this Agreement, the Company Related Agreements or the transactions contemplated
hereby and thereby.
3.23 Fairness Opinion. Company has received a written opinion from
Xxxxxxx Xxxxx Xxxxxx, dated as of the date hereof, to the effect that as of the
date hereof, the Exchange Ratio is fair to the Company from a financial point of
view and has delivered to Parent a copy of such opinion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SPINCO
Parent and Spinco hereby represent and warrant to Company and Merger Sub,
subject to (i) the documents, agreements and transactions contemplated by this
Agreement; (ii) the exceptions disclosed in writing in the disclosure letter,
dated as of the date hereof, delivered by Parent and Spinco to Company and
Merger Sub concurrently with the execution and delivery hereof and accepted by
Company (the "Parent Schedules"); and (iii) the information set forth in any
Parent SEC Reports (as defined in Section 4.8(a) hereof) filed by Parent with
the SEC prior to the date hereof, as follows:
4.1 Organization and Good Standing. Parent, Spinco and each of their
respective Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, with the corporate power and authority to own, lease and operate
its assets and property and to carry on its business as now being conducted and
as currently proposed to be conducted, and is duly qualified to conduct business
and in good standing as a foreign corporation in each jurisdiction in which the
failure to be so qualified and in good standing would reasonably be expected to
have a Material Adverse Effect on Spinco or the HDD Business.
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4.2 Charter Documents. Parent and Spinco have delivered or made
available to Company a true and complete copy of the Restated Certificate of
Incorporation and Bylaws of Parent and the Certificate of Incorporation and
Bylaws of Spinco and similar governing charter instruments of each of its
Significant Subsidiaries, each as amended to date, and each such instrument is
in full force and effect. None of Parent or Spinco, nor any of their respective
Subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent governing charter instruments.
4.3 Capital Structure.
(a) The authorized capital stock of Parent consists of
600,000,000 shares of HDD Common Stock, par value $0.01 per share, of which
there were 76,968,118 shares issued and outstanding as of September 30, 2000,
1,000,000,000 shares of DSS Common Stock, par value $0.01 per share, of which
there were 148,823,768 shares issued and outstanding as of September 30, 2000
(together the "Parent Common Stock"), and 20,000,000 shares of Preferred Stock,
par value $0.01 per share, of which no shares are issued or outstanding. All
outstanding shares of Parent Common Stock are duly authorized and validly
issued, fully paid and nonassessable, and are not subject to any preemptive
rights created by statute, the Restated Certificate of Incorporation or Bylaws
of Parent or any agreement or other instrument to which Parent is a party or by
which Parent or its properties or assets are bound. Of the shares of HDD Common
Stock outstanding as of September 30, 2000, 1,494,409 were issued as shares of
restricted stock and were subject to repurchase upon the termination of
employment of the holder ("Restricted Stock") and of the shares of DSS Common
Stock outstanding as of such date, 2,988,809 were shares of Restricted Stock. As
of September 30, 2000, Parent had reserved an aggregate of 59,884,263 shares of
Parent Common Stock, net of exercises, for issuance to employees, consultants
and non-employee directors pursuant to the Parent Stock Option Plans, under
which (i) options were outstanding to purchase an aggregate of 54,630,672
shares; and (ii) 5,253,591 shares were available for future grant. All shares of
Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms
and conditions set forth in the instruments pursuant to which they are issuable,
would be duly authorized and validly issued, fully paid and nonassessable.
Section 4.3(a) of the Parent Schedules contains a complete and accurate list of
each outstanding option to acquire shares of Parent Common Stock as of September
30, 2000, the name of the holder of each such option, the number of shares
subject to each such option, the exercise price of each such option, the number
of shares as to which each such option was vested as of such date, the vesting
schedule for each such option and whether the exercisability of each such option
will be accelerated in any way as a result of the Merger or any other
transactions contemplated by this Agreement or for any other reason, and
indicates the extent of acceleration, if any.
(b) At the Effective Time, the authorized capital stock of Spinco will
consist of 100,000,000 shares of Common Stock, par value $0.01 per share. At the
Effective Time, the number of shares of Spinco Common Stock which are issued and
outstanding shall be equal to the number of shares of HDD Common Stock issued
and outstanding immediately prior to the Redemption (the "Spinco Common Stock")
and no shares of Preferred Stock will be issued and outstanding. All outstanding
shares of
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Spinco Common Stock will be duly authorized and validly issued, fully paid and
nonassessable, and will not be subject to any preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of Spinco or any agreement
or other instrument to which Spinco is a party or by which Spinco or its
properties or assets are bound. All shares of Spinco Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions set forth in
the instruments pursuant to which they are issuable, will be duly authorized and
validly issued, fully paid and nonassessable.
(c) There are no equity securities, partnership interests or other
similar ownership interests of any class or series of capital stock of Parent,
or any securities convertible into or exercisable or exchangeable for such
equity securities, partnership interests or other similar ownership interests
issued, reserved for issuance or outstanding. Except for securities Parent owns,
directly or indirectly through one or more Subsidiaries, there are no equity
securities, partnership interests or other similar ownership interests of any
class or series of capital stock of any Subsidiary of Parent, or any securities
convertible into or exercisable or exchangeable for such equity securities,
partnership interests or other similar ownership interests issued, reserved for
issuance or outstanding. There are no options, warrants, equity securities,
partnership interests or other similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any kind or
character to which Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries is bound obligating Parent or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition, of any shares of capital stock of Parent or any of
its Subsidiaries or obligating Parent or any of its Subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant, equity
security, partnership interest or other similar ownership interest, call, right,
commitment or agreement. There are no registration rights and, to the knowledge
of Parent, there are no voting trusts, proxies or other agreements or
understandings with respect to any class or series of capital stock of Parent or
with respect to any equity security, partnership interest or other similar
ownership interest of any class or series of capital stock of any of its
Subsidiaries.
4.4 Subsidiaries. Section 4.4 of the Parent Schedules contains a complete
and accurate list of each Subsidiary of Parent and Spinco, indicating the
jurisdiction of incorporation of each such Subsidiary and Parent's and Spinco's
percentage equity interest therein.
4.5 Authority. Parent and Spinco have all requisite corporate power and
authority to enter into this Agreement, the Parent Voting Agreements, the Parent
Affiliate Agreements and the Separation Documents to be entered into or executed
by Parent or Spinco (collectively, the "Parent Related Agreements"), to perform
their respective obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Parent and Spinco of this Agreement and the Parent Related Agreements, the
performance by Parent and Spinco of their respective obligations hereunder and
thereunder, and the consummation by Parent and Spinco of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action on the part of Parent or Spinco, as applicable (including,
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without limitation, the adoption of this Agreement and the approval of the
Merger by Parent as the sole stockholder of Spinco), subject only to the Parent
Requisite Vote. This Agreement and the Parent Related Agreements have been (or,
in the case of those Parent Related Agreements that are not being executed and
delivered by Parent or Spinco concurrently with the execution and delivery of
this Agreement, will, when they are executed and delivered by Parent or Spinco,
have been) duly executed and delivered by Parent and Spinco, and, assuming the
due authorization, execution and delivery thereof by the other parties thereto,
constitute (or, in the case of those Parent Related Agreements that are not
being executed and delivered by Parent or Spinco concurrently with the execution
and delivery of this Agreement, will, when they are executed and delivered by
Parent or Spinco, constitute) valid and binding obligations of Parent and
Spinco, enforceable in accordance with their respective terms, subject to (i)
the effect of any applicable Laws of general application relating to bankruptcy,
reorganization, insolvency, moratorium or other similar Laws affecting
creditors' rights and the relief of debtors generally; and (ii) the effect of
rules of law and general principles of equity, including, without limitation,
rules of law and general principal of equity governing specific performance,
injunctive relief and other equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.6 Conflicts. The execution and delivery of this Agreement and the
Parent Related Agreements by Parent and Spinco do not, and the performance by
Parent and Spinco of their obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby will not, (i)
conflict with or violate the Restated Certificate of Incorporation or Bylaws of
Parent or the Certificate of Incorporation or Bylaws of Spinco or the equivalent
organizational documents of any of their Subsidiaries; (ii) subject to obtaining
the Parent Requisite Vote and the consents, approvals, orders and
authorizations, and making the registrations, declarations and filings,
described in Section 4.7 hereof, conflict with or violate any Law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
Subsidiaries or by which any of their respective properties and assets are bound
or affected; or (iii) result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair rights of Parent or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of Parent or Spinco or any of their respective Subsidiaries pursuant to,
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
Spinco or any of their respective Subsidiaries is a party or by which Parent or
Spinco or any of their respective Subsidiaries or any of their respective
properties and assets are bound or affected, except to the extent such conflict,
violation, breach, default, impairment or other effect would not, in the case of
clauses (ii) or (iii) above, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco or the HDD Business.
4.7 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to Parent or Spinco in connection with the execution and
delivery by Parent or Spinco of
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this Agreement, the Separation Documents and the Parent Related Agreements, the
performance by Parent or Spinco of their respective obligations hereunder and
thereunder, or the consummation by Parent or Spinco of the transactions
contemplated hereby or thereby, except for (i) the filing of a Registration
Statement (as defined in Section 6.1 hereof) with the SEC in accordance with the
Securities Act; (ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware; (iii) the filing of the Proxy Statement (as
defined in Section 6.1 hereof) with the SEC in accordance with the Exchange Act;
(iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws; (v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the HSR Act and the comparable
Laws of any foreign countries; and (vi) such other consents, approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not reasonably be expected to have a Material Adverse Effect on
Spinco or the HDD Business.
4.8 SEC Filings; Financial Statements; Undisclosed Liabilities
(a) Parent has filed all forms, reports and documents relating to the
HDD Business required to be filed with the SEC since December 31, 1998. All such
required forms, reports and documents, and all exhibits and schedules thereto
and documents incorporated by reference therein (including those filed by Parent
relating to the HDD Business after the date hereof) are referred to herein as
the "Parent SEC Reports." As of their respective dates, the Parent SEC Reports
(i) complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations of the SEC promulgated thereunder; and (ii) did not at the time
each such Parent SEC Report was filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of the Subsidiaries of Parent or Spinco is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements of Parent and the
combined financial statements of Parent's Hard Disk Drive Group (including, in
each case, any related notes thereto) contained in the Parent SEC Reports
(including any Parent SEC Reports filed by Parent after the date hereof until
the Closing) (collectively, the "Parent Financial Statements"), (i) complied as
to form in all material respects with the published rules and regulations of the
SEC in effect, at the time of filing, with respect thereto; (ii) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act); and (iii) fairly presented the consolidated
financial position of Parent and its consolidated Subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows of Parent and its consolidated Subsidiaries for the periods indicated
therein, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were
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not, or are not expected to be, material in amount. The consolidated balance
sheet of Parent contained in the Parent SEC Reports as of June 30, 2000, is
hereinafter referred to as the "Parent Balance Sheet" and the separate combined
balance sheet of Parent's Hard Disk Drive Group contained in the Parent SEC
Reports as of June 30, 2000, is hereafter referred to as the "HDD Balance
Sheet."
(c) Neither Parent nor any of its Subsidiaries has any Liabilities of
a nature required to be disclosed on a balance sheet or in the related notes to
consolidated financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its Subsidiaries taken as a
whole, except Liabilities (i) reflected in the Parent Balance Sheet; or (ii)
incurred since the date of the Parent Balance Sheet in the ordinary course of
business consistent with past practices. Spinco does not have any Liabilities as
of the date of this Agreement, and, as of the Effective Time, will have no
Liabilities other than the HDD Liabilities.
(d) Neither Parent nor any of its Subsidiaries has any Liabilities of
a nature relating to the HDD Business and included as HDD Liabilities that are
required to be disclosed on a balance sheet or in the related notes to
consolidated or combined financial statements prepared in accordance with GAAP
which are, individually or in the aggregate, material to the business, results
of operations or financial condition of Parent and its Subsidiaries taken as a
whole, except Liabilities (i) reflected in the HDD Balance Sheet; or (ii)
incurred since the date of the HDD Balance Sheet in the ordinary course,
consistent with past practices, of the HDD Business.
(e) Parent has heretofore furnished to Company a true and complete
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed following the date hereof, to forms,
reports and documents which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act relating to the HDD Business.
4.9 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet: (a) there has not been, occurred or arisen: (i) any Material
Adverse Effect on the HDD Business; (ii) any material change by Parent in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP; or (iii) any revaluation by Parent of any of its assets,
including, without limitation, writing down of the value of capitalized
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; and (b) Parent has not taken any action, or failed to take
any action, the taking or failure to take which action would, if it had occurred
after the execution and delivery of this Agreement, have constituted a breach by
Parent of Section 5.1 or Section 5.2 hereof.
4.10 Taxes.
(a) Parent and each of its Subsidiaries have timely filed all Returns
relating to Taxes required to be filed by Parent and each of its Subsidiaries
with any Tax
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authority. Parent and each of its Subsidiaries have paid all Taxes shown to be
due on such Returns.
(b) Neither Parent nor any of its Subsidiaries has been delinquent in
the payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Parent or any of its Subsidiaries, nor
has Parent or any of its Subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(c) No audit or other examination of any Return of Parent or any of
its Subsidiaries by any Tax authority is presently in progress, nor has Parent
or any of its Subsidiaries been notified of any request for such an audit or
other examination.
(d) Neither Parent nor any of its Subsidiaries has any Liability for
any material unpaid Taxes which has not been accrued for or reserved on Parent
Balance Sheet in accordance with GAAP, other than any Liability for unpaid Taxes
that may have accrued since June 30, 2000.
(e) There is no contract, agreement, plan or arrangement to which
Parent or any of its Subsidiaries is a party as of the date of this Agreement
(including, without limitation, this Agreement), covering any employee or former
employee of Parent or any of its Subsidiaries that, individually or
collectively, would reasonably be expected to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which Parent
or any of its Subsidiaries is a party or by which Parent or any of its
Subsidiaries is bound to compensate any individual for excise taxes paid
pursuant to Section 4999 of the Code.
(f) Neither Parent nor any of its Subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Parent or any of its Subsidiaries.
(g) Other than the Separation Documents contemplated hereby, neither
Parent nor any of its Subsidiaries is party to or has any obligation under any
Tax-sharing, Tax indemnity or Tax allocation agreement or arrangement.
(h) None of the assets of Parent or any of its Subsidiaries are tax
exempt use property within the meaning of Section 168(h) of the Code.
4.11 Intellectual Property.
(a) For all purposes of and under this Agreement, the following terms
shall have the following respective meanings:
(i) "Parent Intellectual Property" means all Intellectual
Property that is owned by, or exclusively licensed to, Parent or any of its
Subsidiaries and used in the HDD Business.
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(ii) "Parent Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name of, Parent or
any of its Subsidiaries and used in the HDD Business.
(b) No Parent Intellectual Property or product or service of Parent
or any of its Subsidiaries is subject to any proceeding or outstanding decree,
order, judgment, contract, license, agreement, or stipulation restricting in any
manner the use, transfer, or licensing thereof by Parent or any of its
Subsidiaries, or which may affect the validity, use or enforceability of such
Parent Intellectual Property.
(c) Either Parent or one of its Subsidiaries owns and has good and
exclusive title to, or has a valid license to (sufficient for the conduct of its
business as currently conducted and as currently proposed to be conducted), each
material item of Parent Intellectual Property or other Intellectual Property
used by Parent or the applicable Subsidiary free and clear of any Lien
(excluding licenses and related restrictions), and either Parent or one of its
Subsidiaries is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Parent or the
applicable Subsidiary, including the sale of any products or the provision of
any services by Parent or such Subsidiary.
(d) Either Parent or one of its Subsidiaries owns exclusively, and
has good title to, all copyrighted works that are products of Parent or the
applicable Subsidiary or which Parent or the applicable Subsidiary otherwise
expressly purports to own that are used in the HDD Business.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Parent or any of its Subsidiaries that
is used in the HDD Business, Parent or such Subsidiary has a written agreement
with such third party with respect thereto and Parent or such Subsidiary thereby
either (i) has obtained ownership of, and is the exclusive owner of; or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(f) Neither Parent nor any of its Subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Parent Intellectual Property, to any third
party.
(g) To the knowledge of Parent, the operation of the HDD Business of
Parent and its Subsidiaries as such business is currently conducted and
currently proposed to be conducted, including Parent's and its Subsidiaries'
design, development, manufacture, marketing and sale of the products or services
of Parent and its Subsidiaries (including products currently under development)
has not, does not and will not infringe or misappropriate the Intellectual
Property of any third party or, to the knowledge of Parent, constitute unfair
competition or trade practices under the laws of any jurisdiction.
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(h) Neither Parent nor any of its Subsidiaries has received
notice from any third party that the operation of the HDD Business of Parent or
any of its Subsidiaries or any act, product or service of Parent or any of its
Subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(i) To the knowledge of Parent, no person has or is infringing
or misappropriating any Parent Intellectual Property.
(j) All Parent Registered Intellectual Property included in the
Parent Intellectual Property is valid and subsisting. All maintenance and
annuity fees have been fully paid and all fees paid during prosecution and after
issuance of any Parent Registered Intellectual Property have been paid in the
correct entity status amounts.
(k) There are no royalties, fees or other payments payable by
Parent or any of its Subsidiaries to any third party by reason of the ownership,
use, sale or disposition of Parent Intellectual Property.
(l) Neither Parent nor any of its Subsidiaries is in breach of
any license, sublicense or other agreement relating to material Parent
Intellectual Property. Neither the execution of this Agreement or any ancillary
agreement contemplated hereby nor the consummation of the Merger will
contravene, conflict with or result in an impairment of Parent's right to own or
use any of the material Parent Intellectual Property or any intellectual
property of any third party.
(m) To the knowledge of Parent, it has at all times been
Parent's practice and procedure to require all employees of Parent and its
Subsidiaries to execute an agreement (containing no exceptions or exclusions
from the scope of its coverage) regarding the protection of proprietary
information and the assignment to Parent of any Intellectual Property arising
from services performed for Parent by such employees, the current form of which
has been provided to Company.
(n) The Programs do not contain any open source code or any
materials subject to the GNU Public License (GPL), GNU Lesser Public License
(GLPL) or any similar license, and the Programs are not subject to any open
source license restrictions; including without limit the GPL or GLPL.
(o) To the knowledge of Parent, the Programs will be free of any
and all viruses, Trojan horses, trap doors, passwords, keys, protection codes or
any other devices or mechanisms which are intended to cause it to perform any
material functions other than those specified or intended or which are intended
to halt, disrupt, limit access or grant improper access to or sabotage the
operation of the Programs or any other process or device.
4.12 Compliance; Permits; Restrictions
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(a) Neither Parent nor any of its Subsidiaries is in conflict
with, or in default or violation of (i) any Law, rule, regulation, order,
judgment or decree applicable to Parent or any of its Subsidiaries or by which
any of their respective properties and assets are bound or affected; or (ii) any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its Subsidiaries is a party or by which Parent or any of its Subsidiaries or any
of their respective properties and assets are bound or affected, except for
conflicts, defaults or violations which, neither individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
HDD Business. To the knowledge of Parent, no investigation or review by any
Governmental Authority is pending or threatened against Parent or its
Subsidiaries, nor has any Governmental Authority indicated an intention to
conduct the same, except for investigations which, neither individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
the HDD Business or Spinco. There is no material agreement, judgment,
injunction, order or decree binding upon Parent or any of its Subsidiaries which
would reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Parent or any of its Subsidiaries, any
acquisition of material property by Parent or any of its Subsidiaries or the
conduct of business by Parent and any of its Subsidiaries as currently
conducted.
(b) Parent and its Subsidiaries hold (or, in the case of Spinco,
will hold upon the consummation of the Separation) all permits, licenses,
variances, exemptions, orders and approvals from Governmental Authorities for
the operation of the HDD Business, failure to hold which would, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the HDD Business or Spinco (collectively, the "Parent Permits"). Parent and its
Subsidiaries are in compliance in all material respects with the terms of the
Parent Permits.
4.13 Litigation. There are no Actions pending, or as to which Parent
or any of its Subsidiaries has received any notice of assertion nor, to the
knowledge of Parent, is there a threatened Action against Parent or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect on Spinco, or which in any manner challenges or seeks to prevent, enjoin,
alter or delay the Merger or any of the other transactions contemplated by this
Agreement, except as is not material to Spinco.
4.14 Brokers' and Finders' Fees. Except for fees payable to Xxxxxx
Brothers pursuant to an engagement letter, dated August 17, 2000, a copy of
which has been provided to Company, neither Parent nor Spinco has incurred, nor
will either incur, directly or indirectly, any Liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement, the Merger or any other transactions contemplated by this
Agreement.
4.15 Employee Benefit Plans.
(a) Section 4.15(a) of the Parent Schedules contains a complete
and accurate list of all employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments, agreements or other arrangements
(whether or not set forth in a
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written document and including, without limitation, all "employee benefit plans"
within the meaning of Section 3(3) of ERISA) covering any active or former
employee, director or consultant of Parent to be transferred in the Separation
to Spinco ("Parent Employee" which shall for this purpose mean an employee of
Parent or a Code Affiliate of Parent to be transferred in the Separation to
Spinco), any Subsidiary of Parent, or with respect to which Parent has or, to
its knowledge, may in the future have Liability, (collectively, the "Parent
Plans"). Parent has provided or will make available to Company prior to the
Closing: (i) true and complete copies of all documents embodying each Parent
Plan including, without limitation, all amendments thereto, all trust documents
related thereto; and all material written agreements and contracts relating to
each such Parent Plan; (ii) the most recent annual reports (Form Series 5500 and
all schedules and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Parent Plan; (iii) the most recent
summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Parent
Plan; (iv) all IRS determination, opinion, notification and advisory letters
relating to each Parent Plan; (v) all material correspondence to or from any
Governmental Authority relating to each Parent Plan; (vi) all forms and related
notices required under the COBRA; (vii) the most recent discrimination tests for
each Parent Plan; (viii) the most recent actuarial valuations, if any, prepared
for each Parent Plan; (ix) if the Parent Plan is funded, the most recent annual
and periodic accounting of the Parent Plan assets; and (x) all material
communication to Parent Employees relating to any Parent Plan and any proposed
Parent Plan, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules, or other events which would result in any material liability
to Parent or any Code Affiliate.
(b) Each Parent Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all Laws, including, without limitation, ERISA and the
Code, which are applicable to such Parent Plans. No Action (excluding claims for
benefits incurred in the ordinary course of Parent Plan activities) has been
brought, or to the knowledge of Parent, is threatened, against or with respect
to any Parent Plan. There are no audits, inquiries or proceedings pending or, to
the knowledge of Parent, threatened by the IRS or the DOL with respect to any
Parent Plans. All contributions, reserves or premium payments required to be
made or accrued as of the date hereof to the Parent Plans have been timely made
or accrued. Any Parent Plan intended to be qualified under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code (i) has
either obtained a favorable determination, notification, advisory and/or opinion
letter, as applicable, as to its qualified status from the IRS or still has a
remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination; and (ii) incorporates or has been
amended to incorporate all provisions required to comply with the Tax Reform Act
of 1986 and subsequent legislation. To the knowledge of Parent, no condition or
circumstance exists giving rise to a material likelihood that any such Parent
Plan would not be treated as qualified by the IRS. Parent does not have any plan
or commitment to establish any new Parent Plan, to modify any
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Parent Plan (except to the extent required by applicable Law or the applicable
Parent Plan or to conform any such Parent Plan to the requirements of any
applicable Law, in each case as previously disclosed to Company in writing, or
as required by the terms of any Parent Plan or this Agreement), or to enter into
any new Parent Plan. Each Parent Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Company, Parent or any of its Code Affiliates (other than ordinary
administration expenses).
(c) Neither Parent, any of its Subsidiaries, nor any of their
Code Affiliates has at any time ever maintained, established, sponsored,
participated in, or contributed to any plan subject to Title IV of ERISA or
Section 412 of the Code and at no time has Parent contributed to or been
requested to contribute to any "multiemployer plan," as such term is defined
under ERISA. Neither Parent, any of its Subsidiaries, nor any officer or
director of Parent or any of its Subsidiaries is subject to any material
Liability or penalty under Section 4975 through 4980B of the Code or Title I of
ERISA. No "prohibited transaction," within the meaning of Section 4975 of the
Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
4975 of the Code and Section 408 of ERISA, has occurred with respect to any
Parent Plan which could subject Parent or its Affiliates to material Liability.
(d) None of the Parent Plans promises or provides retiree
medical or other retiree welfare benefits to any person except as required by
applicable Law, and neither Parent nor any of its Subsidiaries has represented,
promised or contracted (whether in oral or written form) to provide such retiree
benefits to any Parent Employee, former employee, director, consultant or other
person, except to the extent required by applicable Law.
(e) Neither Parent nor any of its Subsidiaries is bound by or
subject to (and none of its respective properties or assets is bound by or
subject to) any arrangement with any labor union. No employee of Parent or any
of its Subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Parent, no campaign to
establish such representation is in progress. There is no pending or, to the
knowledge of Parent, threatened labor dispute involving Parent or any of its
Subsidiaries and any group of its employees nor has Parent or any of its
Subsidiaries experienced any labor interruptions over the past three (3) years,
and Parent and its subsidiaries consider their relationships with their
employees to be good. Parent is in compliance in all material respects with all
applicable material Laws respecting employment, employment practices, terms and
conditions of employment and wages and hours.
(f) Neither the execution and delivery by Parent of this
Agreement or the Separation Documents, nor the performance by Parent of its
obligations hereunder or thereunder, or the consummation by Parent of the
transactions contemplated hereby or thereby will (i) result in any payment
(including severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any stockholder, director or Parent Employee or any
of its Subsidiaries under any Parent Plan or otherwise,
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(ii) materially increase any benefits otherwise payable under any Parent Plan,
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits.
(g) Each Parent International Employee Plan (as defined below)
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
Laws that are applicable to such Parent International Employee Plan.
Furthermore, no Parent International Employee Plan has unfunded Liabilities
that, as of the Effective Time, will not be offset by insurance or fully
accrued. Except as required by applicable Law, no condition exists that would
prevent Parent or Company from terminating or amending any Parent International
Employee Plan at any time for any reason. For all purposes of and under this
Agreement, "Parent International Employee Plan" means each Parent Plan covering
employees to be transferred in the Separation to Spinco that has been adopted or
maintained by Parent or any of its Subsidiaries, whether informally or formally,
for the benefit of current or former employees of Parent or any of its
Subsidiaries outside the United States.
4.16 Absence of Liens. Parent and each of its Subsidiaries has good
and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its material tangible properties and assets
(real, personal and mixed) used in the HDD Business, free and clear of any
Liens, except (i) Liens reflected in the Parent Financial Statements; (ii) Liens
for Taxes not yet due and payable; and (iii) such Liens as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect
on the HDD Business.
4.17 Facilities. Section 4.19 of the Parent Schedules provides an
accurate and complete list of any facility or real property, including without
limitation, any improvement, equipment, structure, building or fixture that is
currently owned, used, occupied, controlled or rented in connection with the HDD
Business (collectively, the "Parent Facilities"), and Parent has provided
Company true and complete copies of all leases, licenses or other agreements
relating to Parent's use or occupancy of the Parent Facilities (collectively,
the "Parent Leases"). Neither Parent nor any of its Subsidiaries, nor to the
knowledge of Parent any other party to a Parent Lease, is in material breach,
violation or default under, and neither Parent nor any of its Subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the terms or conditions of any Parent Lease.
4.18 Sufficiency of HDD Assets and Parent Intellectual Property. The
Parent Intellectual Property constitutes and includes all of the Intellectual
Property used in the HDD Business, or necessary for the conduct of the HDD
Business, as the HDD Business is currently conducted. The HDD Assets, together
with the Parent Intellectual Property and the rights conferred under the
contracts assigned to (or the economic benefits of which are conferred on)
Spinco in the Separation pursuant to the Separation Documents, constitutes and
includes all of the property and assets, tangible and intangible, and all
agreements and rights, used in the HDD Business, or necessary for the conduct of
the HDD Business, as the HDD Business is currently conducted.
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4.19 Environmental Matters.
(a) (i) To the knowledge of Parent, the HDD Business is in
compliance and has been in compliance with all applicable Environmental Laws
(which compliance includes, but is not limited to, the possession by the HDD
Business and its Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except where failures to be in compliance
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Spinco or the HDD Business. Since December 31, 1997, neither Parent,
Spinco nor any of their respective Subsidiaries has received any communication
(written or oral), whether from a Governmental Authority, citizens' group,
employee or otherwise, indicating that the HDD Business is not in such
compliance, except where failures to be in compliance would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect on Spinco or
the HDD Business.
(ii) There is no Environmental Claim pending or, to the
knowledge of Parent, threatened against the HDD Business or, to the knowledge of
Parent, against any entity or business whose liability for any Environmental
Claim Spinco or any of its Subsidiaries has or may have retained, assumed or
been allocated, or that Spinco or any of its Subsidiaries may or will assume, be
allocated or otherwise acquire, that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Spinco or the HDD
Business.
(iii) There are no present or, to the knowledge of Parent,
past actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release or presence of any Hazardous Material
that could form the basis of any Environmental Claim against Parent (in
connection with the HDD Business), Spinco or any of its Subsidiaries or the
Surviving Corporation or, to the knowledge of Parent, against any entity or
business whose liability for any Environmental Claim Spinco or any of its
Subsidiaries has or may have retained, assumed or been allocated, or that Spinco
or any of its Subsidiaries may or will assume, be allocated or otherwise
acquire, that would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Spinco.
(b) Neither Spinco nor any of its Subsidiaries is subject to any
indemnity or other agreement, or will after the Separation be subject to any
indemnity or other agreement, relating to liability under any Environmental Laws
or relating to Hazardous Materials, except for indemnity or similar provisions
contained in Parent Contracts that were entered into in the ordinary course of
Parent's business.
4.20 Labor Matters. Except as would not be material to the HDD
Business, there are no controversies pending or, to the knowledge of Parent,
threatened, between Parent or any of its Subsidiaries and any of their
respective employees. As of the date of this Agreement, neither Parent nor any
of its Subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by Parent or its
Subsidiaries nor does Parent know of any activities or proceedings of any
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labor union to organize any such employees. As of the date of this Agreement,
Parent has no knowledge of any strikes, slowdowns, work stoppages or lockouts,
or threats thereof, by or with respect to any employees of Parent or any of its
Subsidiaries.
4.21 Agreements, Contracts and Commitments.
(a) Except as would not be material to the HDD Business, neither
Parent nor any of its Subsidiaries is a party to or is bound by:
(i) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
the Board of Directors of Parent, other than those that are terminable by Parent
or any of its Subsidiaries on no more than thirty (30) days' notice without
Liability or financial obligation to Parent;
(ii) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(iii) any agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in connection with the
sale or license of products or services in the ordinary course of business;
(iv) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Parent or any of its Subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(v) any agreement, contract or commitment currently in
force relating to the disposition or acquisition by Parent or any of its
Subsidiaries after the date of this Agreement of a material amount of assets not
in the ordinary course of business or pursuant to which Parent has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than its Subsidiaries; or
(vi) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit.
(b) Neither Parent nor any of its Subsidiaries, nor to the
knowledge of Parent any other party to a Parent Contract (as defined below), is
in breach, violation or default under, and neither Parent nor any of its
Subsidiaries has received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Parent or any of its Subsidiaries
is a party or by which Parent or any of its Subsidiaries is bound that are
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required to be disclosed in the Parent Schedules pursuant to this Agreement (any
such agreements, contracts or commitments are "Parent Contracts") in such a
manner as would permit any other party to cancel or terminate any such Parent
Contract, or would permit any other party to seek material damages or other
material remedies (for any of such breaches, violations or defaults, or all of
them in the aggregate).
4.22 Registration Statement; Proxy Statement; Other Filings. None of
the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in (i) the Registration Statement (as defined in
Section 6.1 hereof) will at the time it is declared or ordered effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading; and (ii) the Proxy Statement (as defined in Section 6.1
hereof) shall not, on the date the Proxy Statement is first mailed to the
stockholders of Parent and the stockholders of Company, at the time of the
Parent Stockholders' Meeting (as defined in Section 6.1 of this Agreement) or
the Company Stockholders' Meeting (as defined in Section 6.1 of this Agreement)
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Parent Stockholders' Meeting or the Company
Stockholders' Meeting which has become false or misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder that are
applicable by reason of the Proxy Statement constituting a proxy statement of
Parent. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by Company or Merger Sub which
is contained in any of the foregoing documents.
4.23 Board Approval. The Board of Directors of Parent has, as of the
date of this Agreement, made the determinations set forth in the fourth recital
to this Agreement.
4.24 State Takeover Statutes. The Board of Directors of Parent has
approved the Merger, this Agreement, the Parent Related Agreements and the
transactions contemplated hereby and thereby, and such approval is sufficient to
render inapplicable to the Merger, the Redemption, this Agreement, the Parent
Related Agreements and the transactions contemplated hereby and thereby the
provisions of Section 203 of Delaware Law to the extent, if any, such section is
applicable to the Merger, the Redemption, this Agreement, the Parent Related
Agreements and the transactions contemplated hereby and thereby. No other state
takeover statute or similar statute or regulation applies to or purports to
apply to the Merger, the Redemption, this Agreement, the Parent Related
Agreements or the transactions contemplated hereby and thereby.
4.25 Fairness Opinion. Parent has received a written opinion from
Xxxxxx Brothers, dated as of the date hereof, to the effect that as of the date
hereof, the Exchange
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Ratio is fair to the holders of HDD Common Stock from a financial point of view
and has delivered to Company a copy of such opinion.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business. During the period commencing with the execution
and delivery of this Agreement and continuing until the earlier to occur of the
termination of this Agreement pursuant to its terms or the Effective Time,
except (i) in the case of Company as provided in Article V of the Company
Schedules and in the case of Parent as provided in Article V of the Parent
Schedules; or (ii) to the extent that the other party shall otherwise consent in
writing, Company (which for the purposes of this Article V shall include Company
and each of its Subsidiaries) and Parent (which for the purposes of this Article
V shall include Parent and each of its Subsidiaries) shall (a) carry on its -
business diligently and in accordance with good commercial practices and in the
ordinary course, in substantially the same manner as heretofore conducted and in
compliance with all applicable Laws, (b) pay its debts and Taxes when due
(unless being contested or disputed in good faith), (c) pay or perform other
material obligations when due, (d) keep in force all insurance policies relating
to the HDD Business and (e) use its commercially reasonable efforts consistent
with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers, distributors,
licensors, licensees, landlords, creditors, employees and others with which it
has business dealings. In furtherance of the foregoing and subject to applicable
Law, Company and Parent shall confer, as promptly as practicable, prior to
taking any material actions or making any material management decisions with
respect to the conduct of the HDD Business during the foregoing period.
5.2 Restricted Conduct. Except (i) in the case of Company, as provided in
Article V of the Company Schedules; and (ii) in the case of Parent or Spinco, as
provided in Article V of the Parent Schedules, or as provided in this Agreement,
none of Company, Parent or Spinco shall do any of the following, and none of
Company, Parent or Spinco shall permit its Subsidiaries to do any of the
following, without the prior written consent of the other party hereto
(provided, however, that subparagraphs (a), (b), (d), (e), (f), (g), (h), (i)
and (j) shall only apply to the HDD Business and its employees and Spinco):
(a) except as required by applicable Law or pursuant to the terms of
a Company Plan or a Parent Plan, as the case may be, in effect as of the date
hereof, waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options,
granted under any employee, consultant or director stock plans or authorize cash
payments in exchange for any options granted under any of such plans;
(b) grant any severance or termination pay to any director, officer
or employee, except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing to the other
party hereto, or adopt any
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new severance plan or amend or modify or alter in any manner any severance plan,
agreement or arrangement existing on the date hereof;
(c) transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company Intellectual
Property or the Parent Intellectual Property, as the case may be, or enter into
grants to transfer or license to any person future patent rights, other than in
the ordinary course of business or amend or modify or alter in any manner any
severance plan, agreement or arrangement existing on the date hereof;
(d) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock, or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Company or its Subsidiaries, or Parent or its
Subsidiaries, as the case may be, except repurchases of unvested shares at cost
in connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the date
hereof;
(f) issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any kind or character obligating it to issue any such shares or
convertible securities, other than (i) the issuance, delivery and/or sale of
shares of Company Common Stock or Parent Common Stock, as the case may be,
pursuant to the exercise of stock options therefor outstanding on the date
hereof; (ii) the granting of options to purchase shares of Company Common Stock
or Parent Common Stock, as the case may be, to be granted at fair market value
in the ordinary course of business, consistent with past practice (as to
recipients, amounts and vesting); (iii) shares of Company Common Stock or Parent
Common Stock, as the case may be, issuable upon the exercise of the options
referred to in clause (ii); and (iv) shares of Company Common Stock or Parent
Common Stock, as the case may be, issuable to participants in Parent's 1999
Employee Stock Purchase Plan (the "Parent ESPP") or the Company 1998 Employee
Stock Purchase Plan (the "Company ESPP") consistent with the terms thereof;
(g) acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of Company or Parent, as the case may be, or enter
into any joint ventures, strategic partnerships or alliances, other than in the
ordinary course of business consistent with past practice;
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(h) adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring, recapitalization or other reorganization;
(i) incur any indebtedness or guarantee any such indebtedness of
another person, issue or sell any debt securities or options, warrants, calls or
other rights to acquire any debt securities of Company or Parent, as the case
may be, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing, other than (i) in connection with the financing of
ordinary course trade payables consistent with past practice; or (ii) pursuant
to existing credit facilities in the ordinary course of business;
(j) adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan other than routine amendments in the
ordinary course and consistent with past practices, or enter into any employment
contract or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with past
practice with employees who are terminable "at will"), pay any special bonus or
special remuneration to any director or employee other than in the ordinary
course of business consistent with past practices, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants;
(k) revalue any of its assets or, except as required by GAAP, make
any change in accounting methods, principles or practices;
(l) engage in any action that could reasonably be expected to cause
the Merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code, whether or not otherwise permitted by the terms of this Article V;
(m) sell, dispose of or license any of the HDD Assets to any person,
except Inventory in the ordinary course of business, or mortgage, pledge,
subject to a Lien, grant a security interest in or otherwise encumber any of the
HDD Assets;
(n) change accounting methods or practices relating to or affecting
the HDD Assets, the HDD Liabilities or the HDD Business (including, without
limitation, methods and practices relating to the internal allocation of assets
and liabilities as between the HDD Business and Parent's DLT & Storage Systems
Group);
(o) amend, terminate or waive any rights under any contract of Parent
relating to the HDD Business, except in the ordinary course of the HDD Business
consistent with past practices; or
(p) agree in writing or otherwise to take any of the actions
described in Section 5.1 through Section 5.2(p), inclusive.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Proxy Statement/Prospectus; Registration Statement.
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(a) As promptly as practicable after the execution of this Agreement,
(i) Company and Parent shall prepare and file with the SEC a joint proxy
statement (the "Proxy Statement") to be sent to the stockholders of Company and
the stockholders of Parent in connection with the meeting of the stockholders of
Company to consider the approval of the Company Stockholder Proposal (the
"Company Stockholders' Meeting") and in connection with the meeting of the
stockholders of Parent to consider the approval of the Parent Stockholder
Proposal (the "Parent Stockholders' Meeting"), and (ii) Company shall prepare
and file with the SEC a registration statement on Form S-4 (the "Registration
Statement"), in which the Proxy Statement will be included as a prospectus, to
register under the Securities Act the issuance of shares of Company Common Stock
in connection with the Merger. Each of Company and Parent shall respond to any
comments of the SEC, use its respective commercially reasonable efforts to have
the Registration Statement declared or ordered effective under the Securities
Act as promptly as practicable after such filing, and cause the Proxy Statement
to be mailed to its respective stockholders at the earliest practicable time. As
promptly as practicable after the date hereof, Company and Parent shall prepare
and file any other filings required under the Exchange Act or the Securities
Act. Each party hereto shall notify the other promptly upon the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or the Registration
Statement or for additional information, and shall supply the other party or
parties hereto with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Registration Statement. Each
party hereto shall comply in all material respects with all requirements of Law
applicable to such party in connection with the Proxy Statement and the
Registration Statement. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement or the Registration
Statement, Company or Parent, as the case may be, shall promptly inform the
other party hereto of such occurrence and cooperate in filing with the SEC or
its staff, and/or mailing to stockholders of Company or stockholders of Parent,
such amendment or supplement. As promptly as practicable after the Registration
Statement shall have become effective, each of Parent and Company shall mail the
Proxy Statement to their respective stockholders.
(b) Subject to Section 6.2(c) and Section 6.2(d) hereof, the Proxy
Statement shall also include the recommendations of (i) the Board of Directors
of Company in favor of approval of the Company Stockholder Proposal, and (ii)
the Board of Directors of Parent in favor of approval of the Parent Stockholder
Proposal.
6.2 Meetings of Stockholders.
(a) Company shall take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and Bylaws to convene the
Company Stockholders' Meeting, to be held as promptly as practicable after the
Registration Statement is declared effected under the Securities Act, for the
purpose of voting upon the approval of the Company Stockholder Proposal and
shall use its commercially reasonable efforts to convene and hold the Company
Stockholders' Meeting on the same day and at the same time as the Parent
Stockholders' Meeting. Parent shall take all action
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necessary in accordance with Delaware Law, the Restated Certificate of
Incorporation and its Bylaws to convene the Parent Stockholders' Meeting, to be
held as promptly as practicable after the Registration Statement is declared
effected under the Securities Act, for the purpose of voting upon the approval
of the Parent Stockholder Proposal and shall use its commercially reasonable
efforts to hold the Parent Stockholders' Meeting on the same day and at the same
time as the Company Stockholders' Meeting. Subject to Section 6.2(c) and Section
6.2(d) hereof, Parent and Company shall each use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the approval of the
Company Stockholder Proposal, in the case of Company, and in favor of the
approval of the Parent Stockholder Proposal, in the case of Parent, and shall
take all other action necessary or advisable to secure the Company Requisite
Vote, in the case of Company's stockholders, and the Parent Requisite Vote, in
the case of Parent's stockholders, in each case as required by Delaware Law and
all other applicable legal requirements (including, without limitation, the
rules of Nasdaq, in the case of Company, and the rules of the New York Stock
Exchange, in the case of Parent).
(b) Subject to Section 6.2(c) and Section 6.2(d) hereof: (i) the
Board of Directors of Company shall recommend that the stockholders of Company
vote in favor of approval of the Company Stockholder Proposal at the Company
Stockholders' Meeting, and the Board of Directors of Parent shall recommend that
the stockholders of Parent vote in favor of the approval of the Parent
Stockholder Proposal at the Parent Stockholders' Meeting; (ii) the Proxy
Statement shall include a statement to the effect that the Board of Directors of
Company has recommended that the stockholders of Company vote in favor of
approval of the Company Stockholder Proposal at the Company Stockholders'
Meeting, and a statement to the effect that the Board of Directors of Parent has
recommended that the stockholders of Parent vote in favor of the approval of the
Parent Stockholder Proposal at the Parent Stockholders' Meeting; and (iii)
neither Board of Directors, nor any committee thereof, shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify, in a manner adverse
to the other party hereto, its respective recommendation.
(c) Notwithstanding anything in this Agreement to the contrary,
nothing in this Agreement shall prevent the Board of Directors of Company from
withholding, withdrawing, amending or modifying its recommendation in favor of
approval of the Company Stockholder Proposal by the stockholders of Company if
(i) a Company Superior Offer (as defined below) is made to Company and is not
withdrawn; (ii) neither Company nor any of its representatives shall have
violated any of the restrictions set forth in Section 6.4(a) hereof; and (iii)
the Board of Directors of Company concludes in good faith, after consultation
with its legal counsel, that, in light of such Company Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation is
necessary in order for the Board of Directors of Company to comply with its
fiduciary obligations to the stockholders of Company under applicable Law.
Nothing contained in this Section 6.2(c) shall limit Company's obligation to
convene and hold the Company Stockholders' Meeting (regardless of whether the
recommendation of the Board of Directors of Company shall have been withdrawn,
amended or modified). For purposes of this Agreement, "Company Superior Offer"
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shall mean an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Company, pursuant to which the stockholders of Company
immediately preceding such transaction hold less than fifty percent (50%) of the
equity interest in the surviving or resulting entity of such transaction; (ii) a
sale or other disposition by Company of assets (excluding inventory and used
equipment sold in the ordinary course of business) representing in excess of
fifty percent (50%) of the fair market value of Company's assets immediately
prior to such sale, or (iii) the acquisition by any person or group (including
by way of a tender offer or an exchange offer or issuance by Company), directly
or indirectly, of beneficial ownership or a right to acquire beneficial
ownership of shares representing in excess of fifty percent (50%) of the voting
power of the then outstanding shares of capital stock of Company, in each case
on terms that the Board of Directors of Company determines, in its reasonable
judgment (after consultation with its financial advisor) to be more favorable to
the Company stockholders from a financial point of view than the terms of the
Merger; provided, however, that no such offer shall be deemed to be a Company
Superior Offer if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the good faith
judgment of the Board of Directors of Company to be obtained by such third party
on a timely basis.
(d) Notwithstanding anything in this Agreement to the contrary,
nothing in this Agreement shall prevent the Board of Directors of Parent from
withholding, withdrawing, amending or modifying its recommendation in favor of
the adoption and approval of this Agreement and the approval of the Merger by
the stockholders of Parent if (i) a Parent Superior Offer (as defined below) is
made to Parent and is not withdrawn; (ii) neither Parent nor any of its
representatives shall have violated any of the restrictions set forth in Section
6.4(b) hereof; and (iii) the Board of Directors of Parent concludes in good
faith, after consultation with its legal counsel, that, in light of such Parent
Superior Offer, the withholding, withdrawal, amendment or modification of such
recommendation is necessary in order for the Board of Directors of Parent to
comply with its fiduciary obligations to the stockholders of Parent under
applicable Law. Nothing contained in this Section 6.2(d) shall limit Parent's
obligation to convene and hold the Parent Stockholders' Meeting (regardless of
whether the recommendation of the Board of Directors of Parent shall have been
withdrawn, amended or modified). For purposes of this Agreement, "Parent
Superior Offer" shall mean an unsolicited, bona fide written offer made by a
third party to consummate any of the following transactions: (i) a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Parent, pursuant to which the holders of HDD
Common Stock immediately preceding such transaction hold less than fifty percent
(50%) of the equity interest in the surviving or resulting entity of such
transaction; (ii) a sale or other disposition by Parent of assets (excluding
inventory and used equipment sold in the ordinary course of business)
representing in excess of fifty percent (50%) of the fair market value of assets
that would have been part of the HDD Business and transferred to Spinco if the
Separation had taken place; or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by
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Parent), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of fifty percent (50%) of
the voting power of the then outstanding HDD Common Stock, in each case on terms
that the Board of Directors of Parent determines, in its reasonable judgment
(after consultation with its financial advisor) to be more favorable to the
Parent stockholders than the terms of the Merger; provided, however, that no
such offer shall be deemed to be a Parent Superior Offer if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely, in the good faith judgment of the Board of
Directors of Parent, to be obtained by such third party on a timely basis.
(e) Nothing in this Agreement shall prohibit the Company, Parent or
their respective Boards of Directors from complying with Rule 14-2 and Rule 14d-
9 promulgated under the Securities Exchange Act with respect to a tender or
exchange offer made by a third party for any or their respective securities.
6.3 Access to Information; Confidentiality.
(a) Each party hereto shall afford the other party hereto and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of the other
party hereto during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of such party, as the
other party hereto may reasonably request. No information or knowledge obtained
in any investigation pursuant to this Section 6.3 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties hereto to consummate the Merger or the other
transactions contemplated hereby.
(b) The parties acknowledge that Company and Parent have previously
executed a Confidentiality Agreement, dated August 14, 2000 (the
"Confidentiality Agreement"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms.
6.4 No Solicitation.
(a) Restrictions on Company.
(i) During the period commencing with the execution and delivery
of this Agreement and continuing until the earlier to occur of the termination
of this Agreement pursuant to its terms or the Effective Time, Company and its
Subsidiaries shall not, nor shall they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly (A) solicit, initiate, encourage or induce the making,
submission or announcement of any Company Acquisition Proposal (as defined in
Section 6.4(a)(ii) hereof); (B) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the
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making of any proposal that constitutes or may reasonably be expected to lead
to, any Company Acquisition Proposal or relating to any Company Acquisition
Transaction; (C) engage in discussions with any person with respect to any
Company Acquisition Proposal; (D) subject to Section 6.2(c) hereof, approve,
endorse or recommend any Company Acquisition Proposal; or (E) enter into any
letter of intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Company Acquisition Transaction (as
defined in Section 6.4(a)(ii) hereof); provided, however, that until the date on
which this Agreement is approved and adopted by the Company Requisite Vote, this
Section 6.4(a) shall not prohibit Company from furnishing nonpublic information
regarding Company and its Subsidiaries to, entering into a confidentiality
agreement or discussions or negotiations with, any person or group in response
to a Company Superior Offer submitted by such person or group (and not
withdrawn) if (w) neither Company nor any representative of Company and its
Subsidiaries shall have violated any of the restrictions set forth in this
Section 6.4(a); (x) the Board of Directors of Company concludes in good faith,
after consultation with its legal counsel, that such action is necessary in
order for the Board of Directors of Company to comply with its fiduciary
obligations to the stockholders of Company under applicable Law; (y) (1) at
least forty-eight (48) hours prior to furnishing any such nonpublic information
to, or entering into discussions or negotiations with, such person or group,
Company gives Parent written notice of the identity of such person or group and
of Company's intention to furnish nonpublic information to, or enter into
discussions or negotiations with, such person or group, and (2) Company receives
from such person or group an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and
oral information furnished to such person or group by or on behalf of Company
and containing terms no less favorable to the disclosing party than the terms of
the Confidentiality Agreement; and (z) contemporaneously with furnishing any
such nonpublic information to such person or group, Company furnishes such
nonpublic information to Parent (to the extent such nonpublic information has
not been previously furnished by Company to Parent). Company and its
Subsidiaries shall immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Company Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in this Section
6.4(a), any officer or director of Company or any of its Subsidiaries or any
investment banker, attorney or other advisor or representative of Company or any
of its Subsidiaries shall be deemed to be a breach of this Section 6.4(a) by
Company. In addition to the foregoing, Company shall (i) provide Parent with at
least forty-eight (48) hours' prior notice (or such lesser prior notice as
provided to the members of the Board of Directors of Company but in no event
less than eight (8) hours) of any meeting of the Board of Directors of Company
at which the Board of Directors of Company is reasonably expected to consider a
Company Superior Offer, and (ii) provide Parent with at least forty-eight (48)
hours' prior written notice of a meeting of the Board of Directors of Company at
which the Board of Directors of Company is reasonably expected to recommend a
Company Superior Offer to its stockholders and together with such notice a copy
of the definitive documentation relating to such Company Superior Offer.
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(ii) For all purposes of and under this Agreement, "Company
Acquisition Proposal" means any offer or proposal (other than an offer or
proposal by Parent) relating to any Company Acquisition Transaction. For all the
purposes of and under this Agreement, "Company Acquisition Transaction" means
any transaction or series of related transactions (other than the transactions
contemplated by this Agreement) involving: (A) any acquisition or purchase from
Company by any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of fifteen percent
(15%) or more in interest of the total outstanding voting securities of Company
or any of its Subsidiaries, or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
beneficially owning fifteen percent (15%) or more in interest of the total
outstanding voting securities of Company or any of its Subsidiaries, or any
merger, consolidation, business combination or similar transaction involving
Company pursuant to which the stockholders of Company immediately preceding such
transaction hold less than fifteen percent (15%) of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition or disposition of fifteen
percent (15%) or more of the assets of Company; or (C) any liquidation or
dissolution of Company.
(iii) In addition to the obligations of Company set forth in
Section 6.4(a)(i) hereof, as promptly as practicable, and in any event within
twenty-four (24) hours, Company shall advise Parent orally and in writing of any
request received by Company for non-public information which Company reasonably
believes could lead to a Company Acquisition Proposal or of any Company
Acquisition Proposal, the material terms and conditions of such request or
Company Acquisition Proposal, and the identity of the person or group making any
such request or Company Acquisition Proposal. Company shall keep Parent informed
in all material respects of the status and details (including material
amendments or proposed amendments) of any such request or Company Acquisition
Proposal.
(b) Restrictions on Parent.
(i) During the period commencing with the execution and delivery
of this Agreement and continuing until the earlier to occur of the termination
of this Agreement pursuant to its terms or the Effective Time, Parent and its
Subsidiaries shall not, nor shall they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly (A) solicit, initiate, encourage or induce the making,
submission or announcement of any Parent Acquisition Proposal (as defined in
Section 6.4(b)(ii) hereof); (B) participate in any discussions
or negotiations regarding, or furnish to any person any non-public information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to lead
to, any Parent Acquisition Proposal or relating to any Parent Acquisition
Transaction; (C) engage in discussions with any person with respect to any
Parent Acquisition Proposal; (D) subject to Section 6.2(d) hereof,
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approve, endorse or recommend any Parent Acquisition Proposal; or (E) enter into
any letter of intent or similar document or any contract, agreement or
commitment contemplating or otherwise relating to any Parent Acquisition
Transaction (as defined in Section 6.4(b)(ii) hereof); provided, however, until
the date on which this Agreement is approved and adopted by the Parent Requisite
Vote, this Section 6.4(b) shall not prohibit Parent from furnishing nonpublic
information regarding Parent and its Subsidiaries to, entering into a
confidentiality agreement or into discussions or negotiations with, any person
or group in response to a Parent Superior Offer submitted by such person or
group (and not withdrawn) if (w) neither Parent nor any representative of Parent
and its Subsidiaries shall have violated any of the restrictions set forth in
this Section 6.4(b); (x) the Board of Directors of Parent concludes in good
faith, after consultation with its legal counsel, that such action is advisable
in order for the Board of Directors of Parent to comply with its fiduciary
obligations to the stockholders of Parent under applicable Law; (y) (1) at least
forty-eight (48) hours prior to furnishing any such nonpublic information to, or
entering into discussions or negotiations with, such person or group, Parent
gives Company written notice of the identity of such person or group and of
Parent's intention to furnish nonpublic information to, or enter into
discussions or negotiations with, such person or group, and (2) Parent receives
from such person or group an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and
oral information furnished to such person or group by or on behalf of Parent and
containing terms no less favorable to the disclosing party than the terms of the
Confidentiality Agreement; and (z) contemporaneously with furnishing any such
nonpublic information to such person or group, Parent furnishes such nonpublic
information to Company (to the extent such nonpublic information has not been
previously furnished by Parent to Company). Parent and its Subsidiaries shall
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Parent Acquisition
Proposal. Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in this Section 6.4(b) by any officer or director of
Parent or any of its Subsidiaries or any investment banker, attorney or other
advisor or representative of Parent or any of its Subsidiaries shall be deemed
to be a breach of this Section 6.4(b) by Parent. In addition to the foregoing,
Parent shall (i) provide Company with at least forty eight (48) hours' prior
notice (or such lesser prior notice as provided to the members of the Board of
Directors of Parent but in no event less than eight (8) hours) of any meeting of
the Board of Directors of Parent at which the Board of Directors of Parent is
reasonably expected to consider a Parent Superior Offer; and (ii) provide
Company with at least forty-eight (48) hours' prior written notice of a meeting
of the Board of Directors of Parent at which the Board of Directors of Parent is
reasonably expected to recommend a Parent Superior Offer to its stockholders and
together with such notice a copy of the definitive documentation relating to
such Parent Superior Offer.
(ii) For all purposes of and under this Agreement, "Parent
Acquisition Proposal" means any offer or proposal (other than an offer or
proposal by Company) relating to any Parent Acquisition Transaction. For all the
purposes of and under this Agreement, "Parent Acquisition Transaction" means any
transaction or series of related transactions (other than the transactions
contemplated by this
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Agreement) involving: (A) any acquisition or purchase from Parent by any person
or "group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) of fifteen percent (15%) or more in interest
of the total outstanding HDD Common Stock of Parent or any of its Subsidiaries,
or any tender offer or exchange offer that if consummated would result in any
person or "group" (as defined under Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) beneficially owning fifteen
percent (15%) or more in interest of the total outstanding HDD Common Stock of
Parent or any of its Subsidiaries, or any merger, consolidation, business
combination or similar transaction involving Parent pursuant to which the
aggregate percentage equity interest in the surviving or resulting entity of
such transaction held by the former holders of HDD Common Stock represents 50%
or less of the aggregate equity interest in Parent represented by their shares
of HDD Common Stock immediately before the transaction; or (B) any sale, lease
(other than in the ordinary course of business), exchange, transfer, license
(other than in the ordinary course of business), acquisition or disposition of
fifteen percent (15%) or more of the HDD Business assets.
(iii) In addition to the obligations of Parent set forth in
Section 6.4(b)(i), as promptly as practicable, and in any event within twenty-
four (24) hours, Parent shall advise Company orally and in writing of any
request received by Parent for non-public information which Parent reasonably
believes could lead to a Parent Acquisition Proposal or of any Parent
Acquisition Proposal, the material terms and conditions of such request or
Parent Acquisition Proposal and the identity of the person or group making any
such request or Parent Acquisition Proposal.
6.5 Public Disclosure. Parent and Company shall consult with each other
and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement, a Company Acquisition
Proposal or a Parent Acquisition Proposal and shall not issue any such press
release or make any such public statement prior to such agreement, except as may
be required by applicable Law or any listing agreement with a national
securities exchange or Nasdaq in which case reasonable efforts to consult with
the other party hereto shall be made prior to such release or public statement;
provided, however, that no such consultation or agreement shall be required if,
prior to the date of such release or public statement, either party hereto shall
have withheld, withdrawn, amended or modified its recommendation in favor of the
transactions contemplated hereby.
6.6 Requirements of Law. Each of Parent, Spinco, Merger Sub and Company
shall take all commercially reasonable actions necessary or desirable to comply
promptly with all requirements of Law which may be imposed on them with respect
to the consummation of the Merger or any other transactions contemplated by this
Agreement (including furnishing all information required in connection with
approvals of or filings with any Governmental Authority, and prompt resolution
of any litigation prompted hereby) and will promptly cooperate with and furnish
information to each other and any third party necessary in connection with any
such requirements imposed upon any of them or their respective Subsidiaries in
connection with the consummation of the Merger or any other transactions
contemplated by this Agreement. Company shall use its
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commercially reasonable efforts to take such steps as may be necessary to comply
with the securities and blue sky laws of all jurisdictions which are applicable
to the issuance of Company Common Stock in connection with the Merger. Parent
shall use its commercially reasonable efforts to assist Company as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Company Common Stock in
connection with the Merger.
6.7 Third Party Consents. As soon as practicable following the date
hereof, Parent, Spinco and Company shall each use its commercially reasonable
efforts to obtain all material consents, waivers and approvals under any of its
or its Subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the Merger, the Separation, the
Redemption and other transactions contemplated by this Agreement and to permit
the Surviving Corporation to operate the HDD Business under the ownership of
Company following the Effective Time.
6.8 Notification of Certain Matters. Parent, Spinco and Merger Sub shall
give prompt notice to Company, and Company shall give prompt notice to Parent,
of the occurrence, or failure to occur, of any event, which occurrence or
failure to occur would be reasonably likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate at any time from
the date of this Agreement to the Effective Time, such that the conditions set
forth in Section 7.2(a) or Section 7.3(a) hereof, as the case may be, would not
be satisfied as a result thereof; or (ii) any material failure of Parent and
Spinco or Company and Merger Sub, as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to
this Section 6.8 shall not limit or otherwise affect the remedies available
hereunder to the party hereto receiving such notice.
6.9 Further Assurances. Subject to the respective rights and obligations
of Parent, Spinco, Merger Sub and Company under this Agreement, each of the
parties hereto shall use its commercially reasonable efforts to effectuate the
Merger, the Separation, the Redemption and the other transactions contemplated
hereby, and to fulfill and cause to be fulfilled the conditions to the other
parties' obligations to proceed with the closing under this Agreement. Each
party hereto agrees to cooperate fully with the other party and to execute such
further instruments, documents and agreements, to supplement the respective
forms of each of the Separation Documents and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intent and purposes of this Agreement.
6.10 Stock Options and Restricted Stock; Parent ESPP.
(a) Outstanding HDD & DSS Options and Restricted Stock. The Parent
Stock Options covering shares of HDD Common Stock that are outstanding as of the
Redemption Date shall be referred to herein as "Outstanding HDD Options." The
Parent Stock Options covering shares of DSS Common Stock that are outstanding as
of
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the Redemption Date shall be referred to herein as "Outstanding DSS Options."
Restricted Stock covering shares of HDD Common Stock as of the Redemption Date
shall be referred to herein as "HDD Restricted Stock." Restricted Stock covering
shares of DSS Common Stock as of the Redemption Date shall be referred to herein
as "DSS Restricted Stock."
(b) Spinco Assumption of Outstanding HDD Options and Restricted Stock
Held by Transferred Employees, Former Parent Service Providers and Other
Individuals Holding Vested HDD Restricted Stock. In the Redemption, (i) all
Outstanding HDD Options and HDD Restricted Stock held by Transferred Employees,
whether or not vested; (ii) all vested Outstanding HDD Options and HDD
Restricted Stock held by Former Parent Service Providers; and (iii) all vested
HDD Restricted Stock held by other individuals shall be assumed by Spinco
("Other HDD Restricted Stockholders"). Each Outstanding HDD Option and share of
HDD Restricted Stock so assumed by Spinco under this Agreement shall continue to
have, and be subject to, the same terms and conditions of such options and
restricted stock agreements immediately prior to the Redemption Date (including,
without limitation, any repurchase rights or post-termination exercise
provisions), and shall cover the same number of shares of Spinco Common Stock,
at the same per share exercise price, as the number of shares of HDD Common
Stock covered by the option or subject to the HDD Restricted Stock award prior
to the assumption. Such assumed options shall be referred to herein as "Spinco
Options." Such assumed HDD Restricted Stock shall be referred to herein as
"Spinco Restricted Stock."
(c) Company Assumption of Spinco Options and Spinco Restricted Stock
Held by Transferred Employees, Former Parent Service Providers and Other HDD
Restricted Stockholders. At the Effective Time, (i) all Spinco Options and
Spinco Restricted Stock held by Transferred Employees, whether or not vested;
(ii) all vested Spinco Options and vested Spinco Restricted Stock held by Former
Parent Service Providers; and (iii) all vested Spinco Restricted Stock held by
Other HDD Restricted Stockholders shall be assumed by Company. Each Spinco
Option and share of Spinco Restricted Stock so assumed by Company under this
Agreement shall continue to have, and be subject to, the same terms and
conditions of such options and restricted stock agreements immediately prior to
the Effective Time (including, without limitation, any repurchase rights, or
post-termination exercise provisions), except that (i) for purposes of
determining vesting, continuous service shall include service for Parent
immediately prior to the Effective Time and service with Company from and after
the Effective Time; (ii) each Spinco Option shall be exercisable (or shall
become exercisable in accordance with its terms) for that number of whole shares
of Company Common Stock equal to the product obtained by multiplying (x) the
number of shares of Spinco Common Stock that were issuable upon exercise of such
Spinco Option immediately prior to the Effective Time; by (y) the Exchange
Ratio, rounded down to the nearest whole number of shares of Company Common
Stock, (iii) the per share exercise price for the shares of Spinco Common Stock
issuable upon exercise of such assumed Spinco Option shall be equal to the
quotient determined by dividing (x) the exercise price per share of Spinco
Common Stock at which such Spinco Option was exercisable immediately prior to
the Effective
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Time, by (y) the Exchange Ratio, rounded up to the nearest whole cent; and (iv)
each share of Spinco Restricted Stock shall be converted into that number of
whole shares of Company Common Stock equal to the product obtained by
multiplying (x) the number of shares of Spinco Common Stock subject to the
Spinco Restricted Stock, by (y) the Exchange Ratio, rounded down to the nearest
whole number of shares of Company Common Stock.
(d) Treatment of Outstanding DSS Options Held by Transferred
Employees. At the Effective Time (i) Transferred Employees holding Outstanding
DSS Options vested as of such date shall have the post-termination exercise
period as set forth in relevant provisions of the applicable stock option
agreement to exercise such vested Outstanding DSS Options after which such
vested Outstanding DSS Options shall terminate and be without further force and
effect; and (ii) Outstanding DSS Options that are unvested as of such date shall
be converted into shares of DSS restricted stock with a per share purchase price
equal to par value (the "Converted DSS Restricted Stock"). The conversion
formula for the Converted DSS Restricted Stock shall be determined by Parent,
but shall confer an economic value at least equal to the option spread at the
time of conversion. The Converted DSS Restricted Stock shall vest as to fifty
percent (50%) of the shares upon the earlier of (i) three (3) months following
the Effective Time, subject to the optionee's continued employment or consulting
relationship with the Company or its affiliates through such vesting date; or
(ii) upon the optionee's involuntary termination other than for Cause, death or
Disability or upon his or her voluntary termination for Good Reason, as such
terms are defined in the applicable restricted stock agreement. The remaining
fifty percent (50%) of the Converted DSS Restricted Stock shall vest ratably
each month over the succeeding nine (9) month period, subject to the optionee's
continued employment or consulting relationship with the Company or its
affiliates through such monthly vesting dates, so as to be 100% vested one (1)
year following the Effective Time.
(e) Outstanding HDD Options and Unvested HDD Restricted Stock Held by
Individuals Other than Transferred Employees and Former Parent Service
Providers. Outstanding HDD Options (both vested and unvested) and HDD Restricted
Stock held by individuals other than Transferred Employees and Former Parent
Service Providers shall be converted into DSS Options and DSS Restricted Stock
as determined by Parent (and consistent with the terms of the Insurance Opinion
and the statement of facts provided therein).
(f) Parent ESPP. As of the Redemption Date, Transferred Employees
will cease to participate in the Parent ESPP. In accordance with the terms of
the Parent ESPP, any monies set aside under such Plan that were not previously
used to purchase ESPP shares shall promptly be returned to the Transferred
Employees.
6.11 Form S-8. Company agrees to file a registration statement on Form S-8
for the shares of Company Common Stock issuable with respect to assumed Parent
Stock Options as soon as is reasonably practicable following the Effective Time,
but in no event later than ten (10) business days following the Effective Time.
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6.12 Insurance Policy. Company and Parent shall cooperate in obtaining the
Insurance Policy. Unless Parent otherwise consents in writing, the Insurance
Policy shall be issued in the name of Parent, as insured, and shall include
Company as a "loss payee" as its interests may appear. Company shall pay all
premiums due and owing to obtain and maintain the Insurance Policy in effect.
6.13 D&O Insurance.
(a) For a period of six (6) years after the Effective Time, Company
shall maintain in effect directors' and officers' liability insurance for any
claims in connection with this Agreement and the transactions contemplated
hereby (and only such claims) covering those persons who are currently covered
by Parent's directors' and officers' liability insurance policy on terms
comparable to those applicable to the then current directors and officers of
Company; provided, however, that Company shall not be obligated to spend
annually more than 150% of the annual premium most recently charged to Parent
for such insurance and, if such insurance is not readily available on
commercially reasonable terms within such limit, Company shall be required to
obtain only such insurance as is readily available on reasonable terms within
such limit; and provided, further, that Company may elect to satisfy its
obligation under this Section 6.13(a) by purchasing one or more "tail" or "run-
off" policies providing the required coverage for such six-year period.
(b) The terms and provisions of this Section 6.13 are (i) intended to
be for the benefit of, and shall be enforceable by, each of the persons referred
to in Section 6.13(a) hereof, Parties; and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
of such persons may have by contract or otherwise.
(c) This Section 6.13 shall survive any termination of this Agreement
and the consummation of the Merger at the Effective Time, and shall be binding
on all successors and assigns of Company and the Surviving Corporation.
6.14 Tax-Free Reorganization/Insurance Opinion. Neither Parent nor Company
shall, nor shall either permit any of its respective Subsidiaries to, take or
cause to be taken any action that would reasonably be expected to disqualify the
Merger as a "reorganization" within the meaning of Section 368(a) of the Code or
would make any certification or representation or warranty given by either party
to the issuer of the Insurance Opinion and referenced in the Insurance Opinion
untrue or incorrect in any material respect.
6.15 Nasdaq Listing. Company shall authorize for listing on Nasdaq
National Market the shares of Company Common Stock issuable, and those required
to be reserved for issuance, in connection with the Merger, upon official notice
of issuance.
6.16 Regulatory Filings; Commercially Reasonable Efforts.
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(a) As soon as reasonably practicable after the date of this
Agreement, Company and Parent each shall file with the FTC and the Antitrust
Division of the DOJ, Notification and Report Forms relating to the Merger and
any other transactions contemplated by this Agreement as required by the HSR
Act, as well as comparable pre-merger notification forms required by the merger
notification or control Laws of any other applicable jurisdiction, as agreed to
by the parties hereto. Company and Parent each shall promptly (i) supply the
other with any information which may be required in order to effectuate such
filings; and (ii) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate.
Each of Company and Parent shall use all commercially reasonable efforts to
cause the early termination or expiration of the waiting periods applicable to
all such filings as soon as reasonably practicable.
(b) Each of Company and Parent shall use all commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Authority with respect to the transactions contemplated by this
Agreement. In connection therewith, if any Action is instituted (or threatened
to be instituted) challenging any transaction contemplated by this Agreement as
violative of any Law, each of Company and Parent shall cooperate and use all
commercially reasonable efforts vigorously to contest and resist any such
Action.
6.17 Separation Agreements. The parties will use all commercially
reasonable efforts to execute all agreements relating to the Separation in
substantially the forms attached hereto as Schedules 1 through 6.
6.18 Employee Matters.
(a) Transferred Employees. Non-Transferred Employees. Within twenty
(20) days prior to the Company Stockholders' Meeting, Parent shall provide to
Company a list of all corporate employees providing services to the HDD Business
(the "Corporate HDD Employees") and all other employees primarily engaged in the
HDD Business up to a maximum of 2,600 individuals (the "Non-Corporate HDD
Employees"). Commencing not later than thirty (30) days prior to the Redemption
Date, Company shall notify Parent of the names of the Non-Corporate HDD
Employees and Corporate HDD Employees to whom Company (in its sole discretion)
and Spinco shall make written offers of employment (the "Spinco Offerees").
Spinco and the Company agree to hire the Spinco Offerees who accept their offer
of employment in writing. The Company agrees to hire, or be responsible for the
Approved Severance Costs (as provided in Section 6.18(b) below) of the Non-
Corporate HDD Employees and 535 Corporate HDD Employees provided that such
Corporate HDD Employees shall be identified by the Company in its sole
discretion ("Identified Corporate HDD Employees"). Parent agrees to use
commercially reasonable efforts to assist the Company and Spinco with the
delivery of written offers of employment. Spinco Offerees and Identified
Corporate HDD Employees who accept their employment offers in writing and
commence work with Spinco or the Company pursuant to such offers shall be
referred to herein as "Transferred Employees." All other Non-Corporate HDD
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Employees and Identified Corporate HDD Employees shall be referred to herein as
"Non-Transferred Employees."
(b) Certain Terminations of Employment of Non-Transferred Employees. In
the event that any Non-Transferred Employee is terminated by Parent primarily
because of the transaction contemplated by this Agreement within thirty (30)
days prior to the Effective Time but after the signing of this Agreement, or in
the case of any Non-Transferred Employee who is terminated within nine (9)
months after the Effective Time (the "Discharge Period"), then the Company shall
be responsible for severance costs payable pursuant to the severance policy
agreed to by Parent and Company and attached as Schedule 6.18(b) of the Parent
Schedules (the "Approved Severance Costs") for such employee, provided, however,
that the aggregate number of Identified Corporate HDD Employees for whom Company
has responsibility to pay Approved Severance Costs shall not exceed 535 less the
number of Identified Corporate HDD Employees who are Transferred Employees.
Parent shall disclose to the Company the Non-Transferred Employees terminated or
to be terminated within the Discharge Period prior to the Effective Time. Parent
shall withhold an amount equal to the Approved Severance Costs from the monies
otherwise transferable to Spinco pursuant to the transfer of the HDD Business as
specified in Section 2.1 hereof to pay for such Approved Severance Costs (the
"Severance Reserve"). Following the Discharge Period, Parent shall provide the
Company with a final accounting of the Approved Severance Costs associated with
terminations of employment of the Non-Transferred Employees (the "Actual
Severance"). Parent shall issue a check or an invoice to the Company for the
difference (including interest at 6.20%), if any, between the Severance Reserve
and the Actual Severance. Company agrees to pay Parent for fifty percent (50%)
(one hundred percent (100%) for Messrs. Xxxxxx and Xxxxxxxx) of the severance
costs, up to the maximum Company payment reflected on Parent Schedule 6.18(b),
associated with the termination of employment of those members of Parent's
senior management team as agreed to and set forth on Parent Schedule 6.18(b)
("Identified Senior Management") that arise primarily due to the transactions
contemplated by this Agreement and which termination occurs within 9 months
following the Effective Time. Notwithstanding the foregoing, in the event any
member of Identified Senior Management (i) becomes employed by Company within
the Discharge Period, or (ii) rejects a Company employment offer within the
Discharge Period for a position with comparable pay and within forty (40) miles
of such member's current office location, the Company will not be required to
pay Parent for severance costs associated with such person. Except for the
Approved Severance Costs and except as otherwise specified in this Agreement,
the Company is not responsible or liable for any claim for severance benefits or
other cash or equity compensation under any severance plan, program, policy or
arrangement maintained by Parent or agreement covering severance or change of
control benefits between Parent and any individual providing services to Parent.
(c) Liability for Terminated Employees. Parent shall be responsible and
assume all liability for all notices, benefits or payments (other than those
required to be paid by the Company pursuant to Section 6.18(b) above) due to any
Non-Transferred Employees, and all notices, payments, fines or assessments due
to any government
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authority, pursuant to any applicable foreign, federal, state or local law,
common law, statute, rule or regulation with respect to the employment,
discharge or layoff of employees by Parent prior to the Effective Date,
including but not limited to the Worker Adjustment and Retraining Notification
Act and COBRA and any rules or regulations thereunder. Such severance benefits
shall be made consistent with the severance methodology for such individuals
discussed with the Company prior to the signing of this Agreement. The Company
and Spinco shall be responsible and assume all liability for all notices,
benefits or payments due to any Transferred Employees, and all notices,
payments, fines or assessments due to any government authority, pursuant to any
applicable foreign, federal, state or local law, common law, statute, rule or
regulation with respect to the employment, discharge or layoff of employees by
the Company or Spinco after the Effective Time, including but not limited to the
Worker Adjustment and Retraining Notification Act and COBRA and any rules or
regulations thereunder.
(d) 401(k) Plan-to-Plan Transfer. Parent and Company each covenant
and agree, as soon as administratively feasible following the Effective Time, as
follows: (i) to facilitate a plan-to-plan transfer of the account balances of
Transferred Employees in Parent's 401(k) plan; (ii) Parent agrees to provide the
Company with information concerning the Transferred Employees who are
participants in the Parent 401(k) Plan, including such participants' Parent
401(k) Plan account balances, vesting, outstanding loan balances, and any
additional information which may be necessary in order to administer a transfer
of assets; and (iii) Parent and the Company shall make reasonable efforts to
take any and all actions necessary to accomplish the plan-to-plan transfer as
soon as administratively feasible following the Effective Time.
6.19 Affiliate Agreements. Parent will use commercially reasonably efforts
to cause its Affiliates to execute and deliver agreements with the Company in a
form customary for transactions of the nature of the Merger and reasonably
acceptable to both parties prior to the Closing.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or fulfillment, at or prior to the
Effective Time, of the following conditions:
(a) Stockholder Approvals. The Company Stockholder Proposal shall
have been approved at the Company Stockholders' Meeting by the Company Requisite
Vote and the Parent Stockholder Proposal shall have been approved at the Parent
Stockholders' Meeting by the Parent Requisite Vote.
(b) Registration Statement Effective; Proxy Statement. The SEC
shall have declared the Registration Statement effective in accordance with the
provisions of the Securities Act; and no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued by the
SEC and no proceeding for
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that purpose, and no similar proceeding in respect of the Proxy Statement, shall
have been initiated or threatened in writing by the SEC.
(c) HSR Act and Comparable Laws. All waiting periods, if any, under
the HSR Act relating to the transactions contemplated hereby shall have expired
or been terminated and clearance for such transactions shall have been obtained
under the comparable Laws of any foreign countries where consummation of such
transactions prior to such clearance would reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect on Company or Parent.
(d) Insurance Opinion. The Insurance Opinion shall have been re-
issued to Company and Parent and re-dated at and as of the Closing without any
adverse qualifications or modifications.
(e) Tax Opinions. Company and Parent shall each have received
substantially identical written opinions from their counsel, Xxxx Xxxx Xxxx &
Freidenrich LLP and Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
respectively, in form and substance reasonably satisfactory to each, to the
effect that the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and such opinions shall not have been withdrawn;
provided, however, that if the counsel to either Company or Parent does not
render such opinion, this condition shall nonetheless be deemed to be satisfied
with respect to such party if counsel to the other party renders such opinion to
such party. The parties to this Agreement agree to make reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
(f) Nasdaq Listing. The shares of Company Common Stock issuable to
stockholders of Spinco in connection with the Merger and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on the Nasdaq National Market upon official notice
of issuance.
(g) Separation and Redemption. The Separation and the Redemption
shall have been consummated in accordance with the terms and provisions of the
Form of Separation and Redemption Agreement attached hereto as Schedule 2.
(h) Insurance Policy. The Insurance Policy shall have been issued and
be in full force and effect.
(i) No Orders. No Order shall be in effect and no person shall have
initiated any Action seeking an Order.
7.2 Additional Conditions to Obligations of Company and Merger Sub. The
obligation of Company and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction or fulfillment, at or prior to the Effective
Time, of each of the following conditions, any of which may be waived, in
writing, exclusively by Company:
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(a) Representations and Warranties. (i) The representations and
warranties of Parent and Spinco contained in this Agreement (without giving
effect to any qualifiers and exceptions therein relating to materiality or
Material Adverse Effect) shall have been true and correct as of the date of this
Agreement, except where the failure to be so true and correct would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Spinco or the HDD Business; (ii) the representations and
warranties of Parent and Merger Sub contained in this Agreement (without giving
effect to any qualifiers and exceptions therein relating to materiality or
Material Adverse Effect) shall be true and correct on and as of the Effective
Time, except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such particular date), with the
same force and effect as if made on and as of the Effective Time, except in such
cases where the failure to be so true and correct would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Spinco; (iii) the representations, warranties and certifications of Parent
incorporated by reference into the Insurance Opinion shall have been true and
correct as of the date of the Insurance Opinion, and shall be true and correct
on and as of the Effective Time, except in any respect that would not reasonably
be expected to alter any of the conclusions set forth in the Insurance Opinion;
and (iv) Company shall have received a certificate with respect to the foregoing
signed on behalf of Parent and Spinco by their respective Chief Executive
Officers and by the Chief Financial Officers of Parent.
(b) Agreements and Covenants. Parent and Spinco shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them on or prior to the
Effective Time, and Company shall have received a certificate to such effect
signed for on behalf of Parent and Spinco by the Chief Executive Officer and the
Chief Financial Officer of Parent and Spinco, as applicable .
7.3 Additional Conditions to the Obligations of Parent and Spinco.
The obligations of Parent and Spinco to consummate and effect the Merger
shall be subject to the satisfaction or fulfillment, at or prior to the
Effective Time, of each of the following conditions, any of which may be waived,
in writing, exclusively by Parent:
(a) Representations and Warranties. (i) The representations and
warranties of Company contained in this Agreement (without giving effect to any
qualifiers and exceptions therein relating to materiality or Material Adverse
Effect) shall have been true and correct as of the date of this Agreement,
except where the failure to be so true and correct would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company; (ii) the representations and warranties of Company contained in this
Agreement (without giving effect to any qualifiers and exceptions therein
relating to materiality or Material Adverse Effect) shall be true and correct on
and as of the Effective Time, except for changes contemplated by this Agreement
and except for those representations and warranties which address matters only
as of a particular date (which shall remain true and correct as of such
particular date), with the same force and effect as if made on and as of the
Effective Time, except in
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such cases where the failure to be so true and correct would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Company; (iii) the representations, warranties and certifications of Company
incorporated by reference into the Insurance Opinion shall have been true and
correct as of the date of the Insurance Opinion, and shall be true and correct
on and as of the Effective Time, except in any respect that would not reasonably
be expected to alter any of the conclusions set forth in the Insurance Opinion;
and (iv) Parent shall have received a certificate with respect to the foregoing
signed on behalf of Company by its President and its Chief Financial Officer.
(b) Agreements and Covenants. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Parent shall have received a certificate to such effect
signed for and on behalf of Company by the President and the Chief Financial
Officer of Company.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after adoption and approval of
this Agreement and approval of the Merger by the stockholders of Parent or the
approval of the issuance of shares of Company Common Stock in connection with
the Merger by the stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by June 30, 2001; provided, however, that the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a material breach of this Agreement;
(c) by either Company or Parent if a Governmental Authority shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree or ruling is final and nonappealable;
(d) by either Company or Parent if the Company Requisite Vote is not
obtained upon a vote taken on the Company Stockholder Proposal at the Company
Stockholders' Meeting (or at any adjournment or postponement thereof) or the
Parent Requisite Vote is not obtained upon a vote taken on the Parent
Stockholder Proposal at the Parent Stockholders' Meeting (or at any adjournment
or postponement thereof); provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(d) shall not be available to any party
where the failure to obtain stockholder approval
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of such party shall have been caused by the action or failure to act of such
party and such action or failure to act constitutes a material breach of this
Agreement;
(e) by Company, upon a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
any representation or warranty of Parent or Merger Sub shall have become untrue,
in either case such that the conditions set forth in Section 7.2(a) or Section
7.2(b) hereof would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided,
however, that if such inaccuracy in the representations and warranties of Parent
and Merger Sub or breach by Parent or Merger Sub is curable by Parent or Merger
Sub through the exercise of their respective commercially reasonable efforts,
then Company may not terminate this Agreement pursuant to this Section 8.1(e)
for thirty (30) calendar days after delivery of written notice from Company to
Parent and Merger Sub of such breach, provided Parent and Merger Sub continue to
exercise their respective commercially reasonable efforts to cure such breach
(it being understood that Company may not terminate this Agreement pursuant to
this Section 8.1(e) if such breach by Parent, Spinco or Merger Sub is cured
during such thirty (30) calendar day period);
(f) by Parent, upon a breach of any representation, warranty, covenant or
agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in either case
such that the conditions set forth in Section 7.3(a) or Section 7.3(b) hereof
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, however, that if
such inaccuracy in Company's representations and warranties or breach by Company
is curable by Company through the exercise of its commercially reasonable
efforts, then Parent may not terminate this Agreement pursuant to this Section
8.1(f) for thirty (30) days after delivery of written notice from Parent to
Company of such breach, provided Company continues to exercise commercially
reasonable efforts to cure such breach (it being understood that Parent may not
terminate this Agreement pursuant to this Section 8.1(f) if such breach by
Company is cured during such thirty (30) calendar day period);
(g) by Parent if a Parent Triggering Event (as defined below) shall have
occurred. For all purposes of and under this Agreement, a "Parent Triggering
Event" shall be deemed to have occurred if: (i) the Board of Directors of
Company or any committee thereof shall for any reason have withdrawn or shall
have amended or modified in a manner adverse to Parent its recommendation in
favor of the approval of the issuance of shares of Company Common Stock
in connection with the Merger; (ii) Company shall have failed to include in the
Proxy Statement the recommendation of the Board of Directors of Company in favor
of the approval of the issuance of shares of Company Common Stock in connection
with the Merger; (iii) the Board of Directors of Company shall have failed to
reaffirm its recommendation in favor of the approval of the Merger within ten
(10) business days after Parent requests in writing that such recommendation be
reaffirmed at any time following the announcement of a Company Acquisition
Proposal; (iv) the Board of Directors of Company or any committee thereof shall
have approved or recommended any Company Acquisition Proposal; (v) Company
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shall have entered into any letter of intent or similar document or any
agreement, contract or commitment accepting any Company Acquisition Proposal or
relating to any Company Acquisition Transaction; (vi) a tender or exchange offer
relating to securities of Company shall have been commenced by a person
unaffiliated with Parent, and Company shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10)
business days after such tender or exchange offer is first published, sent or
given, a statement that Company recommends rejection of such tender or exchange
offer; or (vii) Company shall have breached the terms of Section 6.4(a) hereof;
or
(h) by Company if a Company Triggering Event (as defined below) shall
have occurred. For all purposes of and under this Agreement, a "Company
Triggering Event" shall be deemed to have occurred if: (i) the Board of
Directors of Parent or any committee thereof shall for any reason have withdrawn
or shall have amended or modified in a manner adverse to Company its
recommendation in favor of the adoption and approval of this Agreement or the
approval of the Merger; (ii) Parent shall have failed to include in the Proxy
Statement the recommendation of the Board of Directors of Parent in favor of the
adoption and approval of this Agreement or the approval of the Merger; (iii) the
Board of Directors of Parent shall have failed to reaffirm its recommendation in
favor of the adoption and approval of this Agreement and the approval of the
Merger within 10 business days after Company requests in writing that such
recommendation be reaffirmed at any time following the announcement of a Parent
Acquisition Proposal; (iv) the Board of Directors of Parent or any committee
thereof shall have approved or recommended any Parent Acquisition Proposal; (v)
Parent shall have entered into any letter of intent or similar document or any
agreement, contract or commitment accepting any Parent Acquisition Proposal or
relating to any Company Acquisition Transaction; (vi) a tender or exchange offer
relating to securities of Parent shall have been commenced by a person
unaffiliated with Company, and Parent shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within 10 business
days after such tender or exchange offer is first published sent or given, a
statement that Parent recommends rejection of such tender or exchange offer; or
(vii) Parent shall have breached the terms of Section 6.4(b) hereof.
8.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement pursuant to Section 8.1 hereof shall be effective immediately upon the
delivery of written notice of the terminating party to the other party hereto.
In the event of the termination of this Agreement pursuant to Section 8.1
hereof, this Agreement shall be of no further force or effect, except (i) as set
forth in this Section 8.2, Section 8.3 and Article IX hereof, each of which
shall survive the termination of this Agreement; and (ii) nothing herein shall
relieve any party hereto from Liability for any intentional breach of this
Agreement.
8.3 Fees and Expenses
(a) General. except as set forth in this section 8.3, all fees and
expenses incurred in connection with this agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is
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consummated; provided, however, that Parent and Company shall share equally all
fees and expenses, other than attorneys' and accountants' fees and expenses,
incurred (i) in connection with the printing and filing of the Proxy Statement
(including any preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements thereto; and (ii) in connection with the filing of the pre-merger
notification and report forms under the HSR act.
(b) Company Payments.
(i) Company shall pay to Parent in immediately available funds,
within one (1) business day after notice of termination is delivered, an amount
equal to $35 million (the "Company Termination Fee") if this Agreement is
terminated by Parent pursuant to Section 8.1(g) hereof.
(ii) Company shall pay Parent in immediately available funds,
within two (2) business days after demand by Parent, an amount equal to the
Company Termination Fee, if this Agreement is terminated by Parent or Company,
as applicable, pursuant to Section 8.1(b) or Section 8.1(d) hereof as a result
of the Company Stockholder Proposal not receiving the Company Requisite Vote
upon the vote being taken thereon at the Company Stockholders' Meeting (or any
adjournment or postponement thereof) and any of the following shall occur:
(1) if following the date hereof and prior to the taking
of such vote, a third party has publicly announced, and not publicly withdrawn,
a Company Acquisition Proposal and within twelve (12) months following the
termination of this Agreement a Company Acquisition (as defined below) is
consummated; or
(2) if following the date hereof and prior to the taking
of such vote, a third party has publicly announced, and not publicly withdrawn,
a Company Acquisition Proposal and within twelve (12) months following the
termination of this Agreement Company enters into an agreement or letter of
intent providing for a Company Acquisition.
(iii) Company acknowledges that the agreements contained in this
Section 8.3(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would have not entered
into this Agreement. Accordingly, if Company fails to pay in a timely manner the
amounts due pursuant to this Section 8.3(b) and, in order to obtain such
payment, Parent makes a claim that results in a judgment against Company for the
amounts set forth in this Section 8.3(b), Company shall pay to Parent its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 8.3(b) at the prime rate of the Chase Manhattan Bank
in effect on the date such payment was required to be made. Payment of the fees
described in this Section 8.3(b) shall not be in lieu of damages incurred in the
event of breach of this Agreement.
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(iv) For the purposes of this Section 8.3, "Company
Acquisition" means any of the following transactions (other than the
transactions contemplated by this Agreement): (A) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Company pursuant to which the stockholders of Company
immediately preceding such transaction hold less than fifty percent (50%)
of the aggregate equity interest in the surviving or resulting entity of
such transaction; (B) a sale or other disposition by Company of assets
representing in excess of fifty percent (50%) of the aggregate fair market
value of Company's assets immediately prior to such sale; or (C) the
acquisition by any person or group (including by way of a tender offer or
an exchange offer or issuance by Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of fifty percent (50%) of the voting power of the
then outstanding shares of capital stock of Company.
(c) Parent Payments.
(i) Parent shall pay to Company in immediately available
funds, within one (1) business day after notice of termination is
delivered, an amount equal to $35 million (the "Parent Termination Fee") if
this Agreement is terminated by Company pursuant to Section 8.1(h) hereof.
(ii) Parent shall pay Company in immediately available
funds, within two (2) business days after demand by Company, an amount
equal to the Parent Termination Fee, if this Agreement is terminated by
Company or Parent, as applicable, pursuant to Section 8.1(b) or Section
8.1(d) hereof as a result of the Parent Stockholder Proposal not receiving
the Parent Requisite Vote upon the vote being taken thereon at the Parent
Stockholders' Meeting (or any adjournment or postponement thereof) and any
of the following shall occur:
(1) if following the date hereof and prior to the
taking of such vote, a third party has publicly announced, and not publicly
withdrawn, a Parent Acquisition Proposal and within twelve (12) months
following the termination of this Agreement a Parent Acquisition (as
defined below) is consummated; or
(2) if following the date hereof and prior to the
taking of such vote, a third party has publicly announced, and not publicly
withdrawn, a Parent Acquisition Proposal and within twelve (12) months
following the termination of this Agreement Parent enters into an agreement
or letter of intent providing for a Parent Acquisition.
(iii) Parent acknowledges that the agreements contained in
this Section 8.3(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Company would not have
entered into this Agreement. Accordingly, if Parent fails to pay in a timely
manner the amounts due pursuant to this Section 8.3(c) and, in order to obtain
such payment, Company makes a claim that results in a judgment against Parent
for the amounts set forth in this Section 8.3(c), Parent shall pay to Company
its reasonable costs and expenses (including
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reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amounts set forth in this Section 8.3(c) at the prime rate
of The Chase Manhattan Bank in effect on the date such payment was required to
be made. Payment of the fees described in this Section 8.3(c) shall not be in
lieu of damages incurred in the event of breach of this Agreement.
(iv) For the purposes of this Section 8.3, "Parent Acquisition"
means any of the following transactions (other than the transactions
contemplated by this Agreement): (A) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving Parent pursuant to which the aggregate percentage equity interest in
the surviving or resulting entity of such transaction held by the former holders
of HDD Common Stock represents 50% or less of the aggregate equity interest in
Parent represented by their shares of HDD Common Stock immediately before the
transaction; (B) a sale or other disposition by Parent of assets representing in
excess of fifty percent (50%) of the aggregate fair market value of assets that
would have been part of the HDD Business and transferred to Spinco if the
Separation had taken place; or (C) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by Parent),
directly or indirectly, of beneficial ownership or a right to acquire beneficial
ownership of shares representing in excess of fifty percent (50%) of the voting
power of the HDD Common Stock then outstanding.
8.4 Amendment. Subject to applicable Law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of the parties hereto.
8.5 Extension; Waiver. At any time prior to the Effective Time, any party
hereto may, to the extent legally permitted, (i) extend the time for the
performance of any of the obligations or other acts of the other party or
parties hereto; (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto; and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. Delay in
exercising any right under this Agreement shall not constitute a waiver of such
right.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations and Warranties. The representations
and warranties of Company, Parent, Spinco and Merger Sub contained in this
Agreement shall terminate at the Effective Time, and only the covenants that by
their terms survive the Effective Time shall survive the Effective Time.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses
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or facsimile numbers (or at such other address or facsimile numbers for a party
as shall be specified by like notice):
(a) if to Parent, Spinco or Merger Sub, to:
Quantum Corporation
000 XxXxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
One Market, Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to Company, to:
Maxtor Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx
Attention: Xxxxx Xxxx Xxxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
9.3 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each
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case to be followed by the words "without limitation." The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. When
reference is made herein to "the business of" an entity, such reference shall be
deemed to include the business of all direct and indirect Subsidiaries of such
entity.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party or parties hereto, it being
understood that all parties hereto need not sign the same counterpart.
9.5 Entire Agreement. This Agreement, the Separation Documents and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Schedules and the
Parent Schedules (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (ii) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth herein.
9.6 No Third Party Beneficiaries. Except as provided in Section 6.12, this
Agreement is not intended to confer upon any person other than the parties to
this Agreement any rights or remedies under this Agreement.
9.7 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions of this Agreement.
If any provision of this Agreement, or the application of that provision to any
person or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted for that provision in order to carry
out, so far as may be valid and enforceable, the intent and purpose of the
invalid or unenforceable provision and (b) the remainder of this Agreement and
the application of the provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of the provision, or the
application of that provision, in any other jurisdiction.
9.8 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party hereto
shall be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by Law or equity upon such party, and the exercise by a party hereto
of any one remedy will not preclude the exercise of any other remedy. The
parties hereto agree that irreparable damage would occur in the event that any
of the terms of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
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provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
9.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the parties hereto. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
9.11 WAIVER OF JURY TRIAL. EACH OF PARENT, SPINCO, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, SPINCO, COMPANY OR MERGER
SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Parent, Spinco, Merger Sub and Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
each as of the date first written above.
QUANTUM CORPORATION
By:___________________________
Name:
Title:
INSULA CORPORATION
By:___________________________
Name:
Title:
HAWAII ACQUISITION CORPORATION
By:___________________________
Name:
Title:
MAXTOR CORPORATION
By:___________________________
Name:
Title:
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