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Exhibit 99.1
ASSET PURCHASE AGREEMENT
dated as of May 25, 2001
by and between
LSI LOGIC CORPORATION
(as Purchaser)
and
AMERICAN MEGATRENDS, INC.
(as Seller)
with respect to the Assets of
Seller's RAID Business
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached but
is inserted for convenience only.
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ARTICLE I DEFINITIONS........................................................................2
Section 1.01 Definitions and Construction.........................................2
ARTICLE II SALE OF ASSETS AND CLOSING.......................................................10
Section 2.01 Purchased and Excluded Assets.......................................10
Section 2.02 Assumed and Retained Liabilities....................................10
Section 2.03 Purchase Price; Allocation..........................................12
Section 2.04 Closing.............................................................12
Section 2.05 Further Assurances; Post-Closing Cooperation........................13
Section 2.06 Third Party Consents................................................15
Section 2.07 Insurance Proceeds..................................................15
Section 2.08 Shared Intellectual Property........................................16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER........................................17
Section 3.01 Organization, Standing and Power....................................17
Section 3.02 Authority...........................................................17
Section 3.03 No Conflicts........................................................18
Section 3.04 No Governmental Consents............................................18
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Section 3.05 Title to Purchased Assets; Absence of Encumbrances..................18
Section 3.06 Financial Statements and Schedules..................................19
Section 3.07 Absence of Certain Changes..........................................20
Section 3.08 Absence of Undisclosed Liabilities..................................21
Section 3.09 Litigation..........................................................21
Section 3.10 Product Liability Claims............................................22
Section 3.11 Restrictions on Business Activities.................................22
Section 3.12 Governmental Authorization..........................................22
Section 3.13 Intellectual Property...............................................22
Section 3.14 Environmental Matters...............................................25
Section 3.15 Taxes...............................................................26
Section 3.16 Employee Benefit Plans..............................................27
Section 3.17 Employee Stock Options..............................................28
Section 3.18 Certain Agreements Affected by the Acquisition......................28
Section 3.19 Employee Matters....................................................28
Section 3.20 Interested Party Transactions.......................................29
Section 3.21 Insurance...........................................................30
Section 3.22 Compliance With Laws................................................30
Section 3.23 Books and Records...................................................30
Section 3.24 Brokers' and Finders' Fees; Third Party Expenses....................30
Section 3.25 Customers and Suppliers.............................................30
Section 3.26 Business Contracts..................................................31
Section 3.27 No Breach of Business Contracts.....................................32
Section 3.28 Third Party Consents................................................32
Section 3.29 Export Control Laws.................................................32
Section 3.30 Product Releases....................................................32
Section 3.31 Solvency............................................................32
Section 3.32 Epidemic Failure....................................................33
Section 3.33 Representations Complete............................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................33
Section 4.01 Organization and Qualification......................................33
Section 4.02 Authority Relative to this Agreement................................34
Section 4.03 No Conflict; Required Filings and Consents..........................34
Section 4.04 Financial Resources.................................................34
Section 4.05 Litigation..........................................................34
Section 4.06 No Further Representations..........................................35
Section 4.07 Financial Incentive Shares..........................................35
ARTICLE V COVENANTS.........................................................................35
Section 5.01 Conduct of Business by Seller Pending the Closing...................35
Section 5.02 Notice of Certain Events............................................37
Section 5.03 Access to Information; Confidentiality..............................37
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Section 5.04 No Solicitation of Transactions.....................................38
Section 5.05 Financial Statements and Reports....................................39
Section 5.06 Delivery of Books and Records; Removal of Property..................39
Section 5.07 Noncompetition......................................................40
Section 5.08 Notice and Cure.....................................................42
Section 5.09 Fulfillment of Conditions...........................................42
Section 5.10 Further Action; Consents; Filings...................................43
Section 5.11 Employment Matters..................................................43
Section 5.12 Financial Incentive Payments........................................44
Section 5.13 Public Announcements................................................44
ARTICLE VI ADDITIONAL AGREEMENTS............................................................44
Section 6.01 Assistance and Cooperation..........................................45
Section 6.02 FIRPTA Certificate..................................................45
Section 6.03 Tax Clearance Certificates..........................................45
Section 6.04 Bulk Sales Act......................................................45
Section 6.05 Special Purpose Subsidiary..........................................45
Section 6.06 Trademark and Website Agreement; Preferred Provider Agreement.......45
ARTICLE VII CONDITIONS TO CLOSING...........................................................46
Section 7.01 Conditions to the Obligations of Each Party to Consummate the
Transaction.......................................................46
Section 7.02 Additional Conditions to the Obligations of Seller..................46
Section 7.03 Additional Conditions to the Obligations of Purchaser...............48
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................................50
Section 8.01 Termination.........................................................50
Section 8.02 Effect of Termination...............................................51
Section 8.03 Expenses and Transfer Taxes.........................................52
ARTICLE IX SURVIVAL, INDEMNIFICATION AND ESCROW.............................................52
Section 9.01 Survival of Representations and Warranties..........................52
Section 9.02 Escrow Fund.........................................................53
Section 9.03 Indemnification.....................................................53
Section 9.04 Limits on Indemnification...........................................54
Section 9.05 Damages Threshold...................................................54
Section 9.06 Escrow Period.......................................................54
Section 9.07 Procedure for Claims Upon Escrow Fund...............................55
Section 9.08 Objections to Claims................................................55
Section 9.09 Resolution of Conflicts; Arbitration................................55
Section 9.10 Third Party Claims..................................................56
ARTICLE X GENERAL PROVISIONS................................................................58
Section 10.01 Notices.............................................................58
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Section 10.02 Amendment...........................................................59
Section 10.03 Waiver, Rights and Remedies Cumulative..............................59
Section 10.04 Severability........................................................59
Section 10.05 Assignment; Binding Effect; No Third Party Beneficiary..............60
Section 10.06 Governing Law.......................................................60
Section 10.07 Waiver of Jury Trial................................................60
Section 10.08 Headings; Interpretation............................................60
Section 10.09 Counterparts........................................................61
Section 10.10 Entire Agreement....................................................61
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EXHIBITS
Exhibit A Form of Seller Warranties
Exhibit B Escrow Agreement
Exhibit C Assignment and Assumption Agreement and ▇▇▇▇ of Sale
Exhibit D Trademark and Web Site Agreement
Exhibit E Opinion of Counsel to Seller
Exhibit F Employment Agreement
Exhibit G General Purchase Agreement
Exhibit H Transition Services Agreement
Exhibit I Stock Issuance Agreement
Exhibit J.1 ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Non-Competition Agreement
Exhibit J.2 ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Non-Competition Agreement
Exhibit J.3 Non-Competition Agreement
Exhibit K Employment Separation and Waiver Agreement
Exhibit L Preferred Provider Agreement
Exhibit M Norcross Sublease
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and entered into as of May
25, 2001 by and between LSI Logic Corporation, a Delaware corporation
("Purchaser"), and American Megatrends, Inc., a Georgia corporation ("Seller").
Capitalized terms not otherwise defined herein have the meanings set forth in
Article I.
RECITALS
Seller is engaged in the worldwide business of designing,
developing, testing, marketing, selling, licensing, distributing, supporting and
maintaining the RAID products set forth on Annex A and the technologies,
hardware, software, firmware and utilities used to achieve the functionality
provided by such RAID products (the "Business"). Seller desires to sell to
Purchaser, and Purchaser desires to purchase and acquire from Seller, all Assets
and Properties of Seller, including the Seller Intellectual Property, which
either are used or held for use by Seller primarily in, or are necessary for,
the conduct of the Business as a going concern, all on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.01 Definitions and Construction
(a) Certain Defined Terms. For purposes of this Agreement, the
following terms shall have the respective meanings set forth below. All other
capitalized terms, when used in this Agreement, shall have the respective
meanings assigned to them where they first appear and are defined in this
Agreement.
"Action or Proceeding" means any action, suit, litigation,
proceeding, mediation, arbitration or Governmental Entity investigation or
audit.
"Affiliate", with respect to any Person, means any other Person
that controls, is controlled by or is under common control with the first
Person.
"Agreement" means this Asset Purchase Agreement.
"Ancillary Agreements" means, collectively, the Assignment and
Assumption Agreement and ▇▇▇▇ of Sale, the Assignment Instruments, the Escrow
Agreement, the General Purchase Agreement, the Transition Services Agreement,
the Employment Agreement, the Stock Issuance Agreement, the Employment
Separation and Waiver Agreement, the Non-Competition Agreements, the Trademark
and Web Site Agreement, the Preferred Provider Agreement, the Norcross Sublease,
and all other support agreements and other agreements to be entered into in
connection with the transactions contemplated by this Agreement.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including cash, cash
equivalents, Investment Assets, accounts and notes receivable, chattel paper,
documents, instruments, licenses, Contracts, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Assignment Instruments" means the Assignment and Assumption
Agreement and ▇▇▇▇ of Sale and the other instruments of assignment referred to
in Section 2.04(c).
"Associate", with respect to any Person, means any corporation or
other business organization of which such Person is an officer or partner or is
the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities entitled to vote in the election of members of
the Board of Directors or similar governing body, any trust or estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as a trustee or in a similar capacity, the spouse of such Person, or any
relative of such Person or spouse, who has the same principal residence as such
Person.
"Assumption Instruments" means the Assignment and Assumption
Agreement and ▇▇▇▇ of Sale and the other instruments of assumption referred to
in Section 2.04(d).
"Benefit Plan" means any written and any material unwritten
bonus, incentive compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, leave of absence, layoff,
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vacation, day care, dependent care, legal services, cafeteria, life, health,
accident, disability, worker's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including any "employee benefit plan" within
the meaning of Section 3(3) of ERISA.
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition (financial or other), results of operations and Assets and Properties
of such Person, including financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, Contracts, Licenses, customer
lists, computer files and programs, retrieval programs, operating data and plans
and environmental studies and plans.
"Business Books and Records" has the meaning ascribed to it in
Schedule 2.01(a).
"Business Contracts" has the meaning ascribed to it in Schedule
2.01(a).
"Business Day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by Law or executive order to close in the State of
California.
"Business Licenses" has the meaning ascribed to it in Schedule
2.01(a).
"Confidential Information" has the meaning ascribed to it in
Section 5.03.
"Confidentiality Agreement" means the Confidentiality Agreement
dated as of October 4, 2000 between Purchaser and Seller.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract or
arrangement (whether written or oral) setting forth a legal obligation or right
of a party thereto with respect to the subject matter thereof (including all
amendments, supplements thereto, restatements thereof and consents, waivers and
notices thereunder which affect the rights and/or obligations of any of the
parties thereto).
"Dell" means Dell Computer Corporation and its direct and
indirect subsidiaries.
"Dell Agreement" means the Letter Agreement dated April 19, 2000
from Dell Products L.P. to Seller evidencing the terms and conditions of their
relationship.
"Designated Shares" means the number of shares of Purchaser
Common Stock issuable pursuant to the Stock Issuance Agreement.
"$" means United States dollars.
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"Encumbrance" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance or
restriction of any kind, or any conditional sale Contract, title retention
Contract or other Contract to give any of the foregoing.
"Environmental Claim" means any written or oral notice, claim,
demand or other communication, alleging or asserting liability for investigatory
costs, cleanup costs, Governmental Entity response costs, damages to natural
resources or other property, personal injuries, fines or penalties arising out
of, based on or resulting from (a) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
the Person against whom such liability is alleged or asserted or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law or any Liability under any Environmental Law. The term
"Environmental Claim" shall include any claim by any Governmental Entity for
enforcement, cleanup, removal, response, remedial or other action or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Material, as in effect as of the date hereof.
"Epidemic Failure" means failure or material malfunction of any
product of the Business covered by Seller's warranties (in terms of complying
with the material performance standards set forth in Seller's product data
sheets and documented customer requirements accepted in writing by an authorized
representative of Seller) during the warranty period applicable to such product
where the number of products returned during any trailing period of twelve (12)
consecutive months for a specific failure/malfunction attributable to the same
cause exceeds two percent (2%) of the total units of such product shipped.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder, as in
effect from time to time.
"Excluded Assets" has the meaning ascribed to it in Section
2.01(b).
"Expenses" means, with respect to any party hereto, all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants) reasonably incurred by or on behalf
of such party in connection with or related to the negotiation, authorization,
preparation, execution and performance of its obligations pursuant to this
Agreement, the Ancillary Agreements and the consummation of the transactions
contemplated hereby, the preparation and filing of any required HSR Act notice
and any response to any request for additional information in connection
therewith, and all other matters
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and proceedings related to this Agreement, the Ancillary Agreements, the
transactions contemplated hereby and thereby and the closing of such
transactions.
"Financial Incentive Share Value" shall mean seven million
dollars ($7,000,000).
"GAAP" means United States generally accepted accounting
principles, consistently applied throughout the specified period and in the
immediately preceding comparable period.
"Governmental Entity" means any arbitrator or mediator or any
United States federal, state or local and any foreign governmental, regulatory
or administrative authority, agency, commission, court, tribunal or arbitral
body.
"Hazardous Material" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HP" means Hewlett-Packard Company and its direct and indirect
subsidiaries .
"HP Agreements" means the Division Purchase Agreement between
Seller and Hewlett-Packard Company dated February 2, 1997.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder, as in effect from time to time.
"Indebtedness" of any Person means all obligations of such Person
(i) for borrowed money, whether or not evidenced by notes, bonds, debentures or
similar instruments, (ii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iii) under capital leases, and (iv) in the nature of guarantees of
the obligations described in clauses (i) through (iii) above of any other
Person.
"Intangible Personal Property" has the meaning ascribed to it in
Schedule 2.01(a).
"Intellectual Property" means any or all of the following and all
rights in, arising out of, or associated with any or all of the following: (i)
all United States, foreign and international patents and patent rights
(including all patents, patent applications, and any and all divisions,
continuations, continuations-in-part, reissues, re-examinations and extensions
thereof, and all invention registrations and invention disclosures); (ii) all
trademarks and trademark rights, service marks and service ▇▇▇▇ rights, trade
names and trade name rights, service names and service name rights (including
all goodwill, common law rights and governmental or other registrations or
applications for registration pertaining thereto), designs, trade dress, brand
names, business and product names, Internet domain names, logos and slogans;
(iii) all copyrights and copyright rights (including all common law rights and
governmental or other registrations or applications for registration pertaining
thereto, and renewal rights therefor); (iv) all sui generis database rights,
ideas, inventions, (whether patentable or not), invention
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disclosures, improvements, technology, know-how, show-how, trade secrets,
formulas, systems, processes, designs, methodologies, industrial models, works
of authorship, databases, content, graphics, technical drawings, statistical
models, algorithms, modules, computer programs, technical documentation,
business methods, work product, intellectual and industrial property licenses,
proprietary information, customer lists, and documentation relating to any of
the foregoing; (v) all mask works, mask work registrations and applications
therefor; (vi) all industrial designs and any registrations and applications
therefor throughout the world; (vii) all computer software including all source
code, object code, firmware, development tools, files, records and data, and all
media on which any of the foregoing is recorded; (viii) all similar,
corresponding or equivalent rights to any of the foregoing; and (ix) all
documentation related to any of the foregoing.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Inventory" has the meaning ascribed to it in Schedule 2.01(b).
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by Seller (other
than trade receivables generated in the ordinary course of business of Seller).
"IRS" means the United States Internal Revenue Service.
"Law" means any U.S. federal, state, or local, and any foreign,
statute, law, ordinance, regulation, rule, code, order, judgment, decree, or
other requirement or rule of law, as in effect from time to time, including the
Foreign Corrupt Practices Act.
"Legal Expenses" of an Indemnified Person means any and all
reasonable out-of-pocket fees, costs and expenses of any kind incurred by such
Indemnified Person and its counsel in investigating, preparing for, defending
against, providing evidence, producing documents or responding to subpoenas in
connection with, or taking other action with respect to any threatened or
asserted claim of a third party or Governmental Entity, including expenses of
investigation, court costs, and fees and reasonable expenses of attorneys,
accountants and experts.
"Liability" and "Liabilities" means any Indebtedness, obligation
or other liability of a Person (whether absolute, accrued, contingent, fixed or
otherwise, matured or unmatured, determined or undetermined, or whether due or
to become due).
"License" means any license, permit, certificate of authority,
authorization, approval, registration, franchise and similar consent granted or
issued by any Governmental Entity.
"Material Adverse Effect" with respect to the specified Person or
to the Business means any change, effect, event, occurrence, state of facts or
development that, individually or in the aggregate with all other such changes,
effects, events, occurrences, states of fact and
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developments, is, or would reasonably be expected to be, materially adverse to
the business, assets, Liabilities, financial condition, operations or results of
operations of the specified Person or, in the case of the Business, materially
adverse to the Business, the Purchased Assets or the Assumed Liabilities, or the
financial condition, operations or results of operations of the Business;
provided, however, that none of the following, alone or in the aggregate, shall
be deemed in themselves to constitute a Material Adverse Effect: changes,
effects, events, occurrences, states of fact or developments (A) occurring as a
result of general economic or financial conditions, (B) which, in the case of
the Business, are not unique to the Business but also affect other Persons who
participate or are engaged in the business of designing, developing, testing,
marketing, selling, licensing, distributing, supporting and maintaining RAID
products and technologies, hardware, software, firmware and utilities used to
achieve RAID functionality, and, in the case of Purchaser, are not unique to
Purchaser but also affect other Persons who participate or are engaged in the
businesses conducted by Purchaser, to the extent, in each case, that such
changes, events, occurrences, states of fact or developments do not have a
disproportionate effect on the Business (in the case of provisions relating to
the Business) or on Purchaser (in the case of provisions relating to Purchaser),
or (C) affecting customers, employees and Business Contracts directly and
primarily resulting from the public announcement of the transactions
contemplated hereby.
"Norcross Lease" means the Lease agreement dated December 3, 1999
between St. ▇▇▇▇ Properties, Inc., and Seller.
"Norcross Sublease" has the meaning ascribed to it in Section
7.02(i).
"Order" means any writ, judgment, decree, stipulation,
determination, injunction or similar order or award of any Governmental Entity
(in each such case whether preliminary or final).
"Other Purchased Assets" has the meaning ascribed to it in
Schedule 2.01(a).
"Permitted Encumbrance" means (i) any Encumbrance for Taxes not
yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP, or (ii) any statutory Encumbrance arising in the ordinary course of
business by operation of Law with respect to a Liability that is not yet due and
payable and does not materially impair the value of the property subject to such
Encumbrance or the use of such property in the conduct of the Business.
"Person" means an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association, entity or Governmental Entity.
"Personal Property Leases" has the meaning ascribed to it in
Schedule 2.01(a).
"Prepaid Rent" has the meaning ascribed to it in Schedule
2.01(a).
"Pricing Period" means the twenty (20) trading days ending two
(2) full trading days immediately prior to (and not including) the Closing Date.
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"Purchased Assets" has the meaning ascribed to it in Section
2.01(a).
"Purchaser Average Stock Price" means the arithmetic average of
the closing price for a share of Purchaser Common Stock as quoted on the New
York Stock Exchange for each trading day during the Pricing Period.
"Purchaser Common Stock" means the common stock, par value $.01
per share, of Purchaser.
"Real Property Leases" has the meaning ascribed to it in Schedule
2.01(a).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder, as in effect
from time to time.
"Seller Intellectual Property" means all the Intellectual
Property that is used or, held for use primarily in, or is necessary for, the
conduct of the Business as a going concern (including Seller's goodwill therein)
as currently conducted or in connection with products of the Business under
design or development as of the date hereof, the Closing Date or any date
between such dates, including the Shared Intellectual Property.
"Shared Intellectual Property" means the WebBIOS, AMI Diag and
ASICs Intellectual Property and rights thereto and interests therein granted to
Purchaser as provided in Section 2.08.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or other legal entity, a majority of the stock or
other equity interests or voting power of which is owned, directly or
indirectly, by such Person (either alone or through or together with any other
subsidiary of such Person).
"Tangible Personal Property" has the meaning ascribed to it in
Schedule 2.01(a).
"Tax" means (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Taxing Authority, including, without limitation, taxes or other
charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value-added or gains taxes, license, registration and documentation
fees, and customs' duties, tariffs and similar charges; (ii) any liability for
the payment of any amounts of the type described in clause (i) as a result of
being a
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member of an affiliated, combined, consolidated or unitary group for any taxable
period; and (iii) any liability for the payment of amounts of the type described
in clause (i) or clause (ii) as a result of being a transferee of, or a
successor in interest to, any Person or as a result of an express or implied
obligation to indemnify any Person.
"Tax Return" means any return, statement, report or form
(including any estimated tax reports and returns, withholding tax reports and
returns and information reports and returns) required to be filed with respect
to any Tax.
"Taxing Authority" means any Governmental Entity or taxing
authority responsible for the assessment, collection or administration of any
Tax.
"Transfer Taxes" means any Tax imposed upon the transfer of any
of the Purchased Assets, including, without limitation, any sales, use,
documentary transfer or value added Tax but not including income Taxes.
"Transferred Employees" has the meaning ascribed to it in Section
5.11.
"Warranty Obligations" has the meaning ascribed to it in Section
2.02(a)(iii).
"Warranty Reserve Amount" means five hundred thousand dollars
($500,000).
Construction. Unless the context of this Agreement otherwise clearly
requires, (i) words of any gender include each other gender and the neuter; (ii)
words using the singular or plural number also include the plural or singular
number, respectively; (iii) the terms "hereof," "herein," "hereby," "hereto" and
derivative or similar words refer to this entire Agreement as a whole and not to
any particular Article, Section or other subdivision; (iv) the terms "Article"
or "Section" or other subdivision refer to the specified Article, Section or
other subdivision of the body of this Agreement; (v) the words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation" except when preceded by a negative predicate; and (vi) when a
reference is made in this Agreement to a schedule or exhibit, such reference
shall be to a schedule or exhibit to this Agreement unless otherwise indicated.
All accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. The term "party" or "parties" (but not the
term "third party") when used herein refer to Purchaser, on the one hand, and
Seller, on the other hand. When used herein, the phrase "to the knowledge of"
any Person, "to the best knowledge of" any Person, "known to" any Person or any
similar phrase, means, in the case of Purchaser, the actual knowledge of the
directors and officers of Purchaser, and, in the case of Seller, the actual
knowledge of the directors, President, Chief Financial Officer, Corporate
Counsel and Chief Technology Officer of Seller, and, in each case, the knowledge
that such Persons would have obtained of the matter represented after reasonable
due and diligent inquiry of those employees of such party whom such officers,
directors, managers and employees reasonably believe would have actual knowledge
of the matters represented. In this Agreement, any reference to a party
conducting its business or other affairs or taking any action in the "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of the specified business as
heretofore conducted to the extent: (a) such action is consistent with such
party's past practices and is taken in the ordinary course of such party's
normal day-to-day operations; and (b) such
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action is not required to be authorized by such party's shareholders, such
party's board of directors or any committee of such party's board of directors
and does not require any other separate or special authorization of any nature
from a third party.
ARTICLE II
SALE OF ASSETS AND CLOSING
Section 2.01 Purchased and Excluded Assets.
(a) Purchased Assets. On the terms and subject to the conditions set
forth in this Agreement, Seller shall sell, transfer, convey, assign and deliver
to Purchaser, free and clear of all Encumbrances, and Purchaser shall purchase
and pay for, at the Closing, all of Seller's right, title and interest in, to
and under all Assets and Properties of Seller used or held for use primarily in,
or necessary for, the conduct of the Business as a going concern, including the
Seller Intellectual Property and the other Assets and Properties listed on
Schedule 2.01(a) but excluding the Excluded Assets (collectively with any
proceeds and awards referred to in Section 2.07, the "Purchased Assets").
(b) Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets and Properties of Seller that are not used or held for use
primarily in the Business, including the Assets and Properties listed on
Schedule 2.01(b) (the "Excluded Assets") shall be excluded from and shall not
constitute Purchased Assets.
Section 2.02 Assumed and Retained Liabilities.
(a) Assumed Liabilities. In connection with the sale, transfer,
conveyance, assignment and delivery of the Purchased Assets pursuant to this
Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall assume and agree to pay, perform and
discharge when due the following obligations of Seller arising in connection
with the operation of the Business, as the same shall exist on the Closing Date,
and no others (the "Assumed Liabilities"):
(i) Real Property Lease Liabilities. All obligations of Seller under the
Real Property Leases arising and to be performed on or after the Closing Date,
except, in each case, to the extent that such obligations (A) would have been
paid, performed or otherwise discharged on or prior to the Closing Date but for
a breach or default by Seller, or (B) arise out of any breach or default by
Seller;
(ii) Personal Property Lease Liabilities. All obligations of Seller
under the Personal Property Leases arising and to be performed on or after the
Closing Date, except, in each case, to the extent such obligations (A) would
have been paid, performed or otherwise discharged on or prior to the Closing
Date but for a breach or default by Seller, or (B) arise out of any breach or
default by Seller;
(iii) Warranty Obligations. All obligations of Seller for repair,
refurbishment or replacement of, or refund for, damaged, defective or returned
products of the Business within the categories set forth on Annex A pursuant to
the standard commercial written warranties heretofore made by
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Seller to initial-purchaser customers of Seller in the ordinary course of
business with respect to products of the Business, forms of which are attached
as Exhibit A hereto (the "Warranty Obligations"). In no event shall the Warranty
Obligations include any obligations with respect to any of the matters set forth
in Schedule 2.02(b);
(iv) Liabilities under Contracts and Licenses. All obligations of Seller
(other than (x) any obligations with respect to any of the matters set forth in
Schedule 2.02(b) and (y) warranty obligations not assumed by Purchaser pursuant
to Section 2.02(a)(iii)) under the Business Contracts and Business Licenses
arising and to be performed on or after the Closing Date, except, in each case,
to the extent such obligations (A) would have been paid, performed or otherwise
discharged on or prior to the Closing Date but for a breach or default by
Seller, or (B) arise out of any breach or default by Seller; and
(v) Accrued Vacation. All obligations of Seller with respect to accrued
and unpaid vacation of the Transferred Employees (the "Accrued Vacation") as set
forth on Section 2.02(a)(v) of the Seller Disclosure Schedule or accrued
subsequent to the date hereof consistent with Section 5.01(f); provided, that in
lieu of crediting any Transferred Employee with more than one hundred sixty
(160) hours of vacation time, Purchaser may pay to such Transferred Employee an
amount in cash equal to the product of (i) the number of hours of accrued
vacation time held by such Transferred Employee in excess of one hundred sixty
(160) and (ii) such Transferred Employee's initial hourly wage as an employee of
Purchaser (or, in the case of salaried employees, the hourly wage implied by
such Transferred Employee's initial annual salary as an employee of Purchaser,
assuming a 52-week year and a 40-hour work week).
Purchaser shall discharge in a timely manner or shall make adequate provision
for all of the Assumed Liabilities. Notwithstanding the foregoing, Purchaser
shall have the ability to contest, in good faith, any claim of liability
asserted in respect of the Assumed Liabilities; provided, that Purchaser shall
indemnify Seller from and against any and all losses, damages, fines, fees,
Taxes, deficiencies, interest, judgments, claims, demands, actions, causes of
action, liabilities, costs and expenses (including Legal Expenses) incurred by
Seller primarily as a result of any such contest by Purchaser with respect to
any claim of liability that is determined (or agreed by Purchaser and Seller) to
be an Assumed Liability.
(b) Retained Liabilities. Except for the Assumed Liabilities, Purchaser
shall not assume by virtue of this Agreement or any of the Ancillary Agreements
or any of the transactions contemplated hereby or thereby, and shall have no
liability for, any Liability of Seller of any kind, character or description
whatsoever. Without limiting the generality of the foregoing, Purchaser shall
not assume (i) any Indebtedness, (ii) any Environmental Claim, (iii) any
Liability related to any businesses of Seller other than the Business, (iv) any
Liability related to Seller's employment of any of the Transferred Employees (or
any other employee of Seller) on or prior to the Closing Date or the termination
by Seller on or prior to the Closing Date of the employment of the Transferred
Employees (or any other employee of Seller), (v) any Liability related to
Seller's stock option plan and stock option agreements, (vi) any Liability for
Taxes with respect to Seller, the Purchased Assets or the Business relating to
taxable periods or portions thereof ending on or prior to the Closing Date, or
(vii) any Liability arising out of or based upon or resulting from the matters
set forth in Schedule 2.02(b) (collectively with other Liabilities not assumed
by Purchaser, the "Retained Liabilities"). Seller shall discharge in a
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timely manner or shall make adequate provision for all of the Retained
Liabilities. Notwithstanding the foregoing, Seller shall have the ability to
contest, in good faith, any claim of liability asserted in respect of the
Retained Liabilities; provided, that Seller shall indemnify Purchaser from and
against any and all losses, damages, fines, fees, Taxes, deficiencies, interest,
judgments, claims, demands, actions, causes of action, liabilities, costs and
expenses (including Legal Expenses) incurred by Purchaser primarily as a result
of any such contest by Seller with respect to any claim of liability that is
determined (or agreed by Seller and Purchaser) to be a Retained Liability.
Section 2.03 Purchase Price; Allocation. The aggregate cash purchase
price for the Purchased Assets and for the covenant of Seller not to compete
contained in Section 5.07 is as set forth in Schedule 2.03(i) (the "Purchase
Price"), payable in cash at the Closing in the manner provided in Section
2.04(b). Purchaser shall reimburse Seller for the amount of all prepaid rent and
deposits attributable to the Purchased Assets and the Business as well as the
amount of outstanding employee advances (but not loans or advances evidenced by
or amounts owed under promissory notes unless the same are transferred and
assigned to Purchaser) to any Transferred Employee, all as set forth in Schedule
2.03(ii). The covenant of Seller not to compete contained in Section 5.07 shall
be valued at the amount set forth in Schedule 2.03(iii) and the remainder of the
Purchase Price is allocable to, and deemed to be in consideration of, the
Purchased Assets. The amount of the Purchase Price shall be allocated by
Purchaser among the Purchased Assets (together with any Liability of Seller
assumed by Purchaser) (the "Allocation") and such Allocation shall be consistent
with the asset valuation prepared by Purchaser or its advisors and shall be
approved by Seller, which approval shall not be unreasonably withheld. The
Allocation shall be conclusive and binding upon Purchaser and Seller for all
purposes, and each of Purchaser and Seller agrees that all returns and reports
(including IRS Form 8594) and all financial statements shall be prepared in a
manner consistent with (and neither Purchaser nor Seller Parties shall otherwise
file a tax return position inconsistent with) the Allocation unless required by
the IRS or any other applicable Taxing Authority. If such Allocation is disputed
by any Governmental Entity, the party receiving notice of such dispute shall
promptly notify the other party hereto of the existence thereof, and shall
cooperate with the other party in resolving such dispute.
Section 2.04 Closing. Unless this Agreement shall have been terminated
and the transactions contemplated herein shall have been abandoned in accordance
with Section 8.01, the closing of the purchase and sale of the Purchased Assets
(the "Closing") shall take place on June 29, 2001 or such other date as the
parties hereto agree, but only after the satisfaction or waiver of each of the
conditions set forth in Article VII (the "Closing Date"). The Closing shall take
place in part at the Palo Alto office of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, Two
Embarcadero Place, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and in part at
the offices of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP in Atlanta, Georgia, or
at such other location or locations as the parties may agree. At the Closing:
(a) Seller shall deliver to Purchaser and Purchaser shall deliver to
Seller, at the offices of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP in Palo Alto,
California, fully executed originals of the opinions, certificates, contracts,
documents and instruments required by Article VII.
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(b) Purchaser shall (i) deliver to the Escrow Agent in cash the amount
set forth in Schedule 2.04(b)(i) (the "Escrow Amount") pursuant to Article IX,
to be held by the Escrow Agent in accordance with the escrow agreement to be
entered into on the Closing Date by Seller, Purchaser and the Escrow Agent, in
substantially the form of Exhibit B hereto (the "Escrow Agreement"), and (ii)
deliver to Seller in cash the amount set forth in Schedule 2.04(b)(ii). Pursuant
to Section 5.12, Purchaser shall reserve from its authorized but unissued shares
of Purchaser Common Stock, a number of shares of Purchaser Common Stock equal to
the quotient obtained by dividing seven million dollars ($7,000,000) by the
Purchaser Average Stock Price (the "Financial Incentive Shares"), to provide
financial incentive awards for the Transferred Employees; and pursuant to the
Stock Issuance Agreement of even date herewith by and between Purchaser and the
individual named in Schedule 7.01(d) in substantially the form of Exhibit I
hereto (the "Stock Issuance Agreement"), Purchaser shall reserve, from its
authorized but unissued shares of Purchaser Common Stock, the Designated Shares,
for issuance to the individual named in Schedule 7.01(d) on the terms, and
subject to the conditions, set forth therein.
(c) Simultaneously with the deliveries pursuant to Section 2.04(b),
Seller shall assign and transfer to Purchaser good and valid title in and to the
Purchased Assets, free and clear of all Encumbrances other than Permitted
Encumbrances, by delivery to Purchaser at the offices of Powell, Goldstein,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP in Atlanta, Georgia of (A) an assignment and ▇▇▇▇ of sale in
substantially the form included in the Assignment and Assumption Agreement and
▇▇▇▇ of Sale annexed as Exhibit C hereto, duly executed by Seller, (B)
instruments of assignment of the Seller Intellectual Property, duly executed by
Seller and in form and substance reasonably satisfactory to Purchaser, (C) such
other good and sufficient instruments of conveyance, assignment and transfer,
duly executed by Seller and in form and substance reasonably acceptable to
Purchaser and its legal counsel, as shall be effective to vest in Purchaser good
title to the Purchased Assets, (D) the Business Books and Records as provided by
Section 5.06, and (E) the FIRPTA certificate as provided by Section 6.02, the
tax clearance certificates as provided by Section 6.03 and any other
certifications which may be required or available under applicable Law stating
that no Taxes are due to any Taxing Authority for which Purchaser could have
liability to withhold or pay as a result of the transfer of the Purchased
Assets.
(d) Simultaneously with the deliveries contemplated by Section 2.04(b),
and Section 2.04(c), Purchaser shall assume from Seller the due payment,
performance and discharge of the Assumed Liabilities by delivery of an
assumption agreement in substantially the form included in the Assignment and
Assumption Agreement and ▇▇▇▇ of Sale annexed as Exhibit C hereto, duly executed
by Purchaser.
Section 2.05 Further Assurances; Post-Closing Cooperation.
(a) At any time or from time to time after the Closing, at Purchaser's
request and without further consideration, Seller shall execute and deliver to
Purchaser such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other actions
as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm
Purchaser's title to, all of the Purchased Assets, and, to the full extent
permitted by Law, to put Purchaser in actual possession and operating control of
the Business and the Purchased Assets and to assist
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Purchaser in exercising all rights with respect thereto, and otherwise to cause
Seller to fulfill its obligations under this Agreement and the Ancillary
Agreements. At any time or from time to time after the Closing, at Seller's
request and without further consideration, Purchaser shall execute and deliver
to Seller such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other actions
as Seller may reasonably request in order more effectively to transfer, convey
and assign to Purchaser, and to confirm Purchaser's right, title and interest
in, to and under, all of the Purchased Assets and to effect the assumption by
Purchaser of the Assumed Liabilities, and, to the full extent permitted by Law,
to put Purchaser in actual possession and operating control of the Business and
the Purchased Assets and to assist Purchaser in exercising all rights with
respect thereto, and otherwise to cause Purchaser to fulfill its obligations
under this Agreement and the Ancillary Agreements.
(b) Effective on the Closing Date, Seller hereby constitutes and
appoints Purchaser the true and lawful attorney of Seller, with full power of
substitution, in the name of Seller or Purchaser, but on behalf of and for the
benefit of Purchaser and at Purchaser's cost and expense: (i) to demand and
receive from time to time any and all the Purchased Assets and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and settle any and
all Actions or Proceedings that Purchaser may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Purchased
Assets; (iii) to defend or compromise any or all Actions or Proceedings in
respect of any of the Purchased Assets (other than Actions or Proceedings which
Seller acknowledges and agrees in a written instrument signed by Seller and
delivered to Purchaser constitute Retained Liabilities and except as otherwise
provided in Section 9.10); and (iv) to do all such acts and things in relation
to the matters set forth in the preceding clauses (i) through (iii) as Purchaser
shall deem desirable. Seller hereby acknowledges that the appointment hereby
made and the powers hereby granted are coupled with an interest and are not and
shall not be revocable by it in any manner or for any reason. Seller shall
deliver to Purchaser at Closing an acknowledged power of attorney to the
foregoing effect executed by Seller. Purchaser shall indemnify and hold harmless
Seller from any and all Damages caused by or arising out of Purchaser's exercise
of such power of attorney.
(c) Following the Closing, each party shall afford the other party, its
counsel and its accountants, during normal business hours, reasonable access to
the Books and Records relating to the Business in its possession with respect to
periods prior to the Closing and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting party in connection with (i) the preparation of Tax Returns, (ii) the
determination or enforcement of rights and obligations under this Agreement,
(iii) compliance with the requirements of any Governmental Entity, (iv) the
determination or enforcement of the rights and obligations of any Indemnified
Person, or (v) in connection with any actual or threatened Action or Proceeding.
Prior to the sixth (6th) anniversary of the Closing Date neither party will
destroy or otherwise dispose of any such Books and Records unless such party
shall first offer in writing to surrender such Books and Records to the other
party and such other party shall not agree in writing to take possession thereof
during the twenty (20) day period after such offer is made.
(d) If, in order properly to prepare its Tax Returns, other documents or
reports required to be filed with any Governmental Entity or its financial
statements, including filings for protection of
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its Intellectual Property, or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional information, documents or
records relating to the Business not referred to in Section 2.05(c), and such
information, documents or records are in the possession or control of the other
party, such other party shall use commercially reasonable best efforts to
furnish or make available such information, documents or records (or copies
thereof) at the recipient's request, cost and expense. Any information obtained
by a party in accordance with this paragraph shall be held confidential by such
party in accordance with Section 5.03.
(e) Notwithstanding anything to the contrary contained in this Section
2.06, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
Sections 2.05(c) and 2.05(d) shall be subject to applicable rules relating to
discovery, to the extent such information, documentation and records relates to
the subject matter of such litigation or arbitration.
Section 2.06 Third Party Consents. To the extent that any Business
Contract or Business License is not assignable without the consent of another
party, this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would constitute a
breach thereof. Seller shall use its commercially reasonable best efforts to
obtain the consent or waiver of such other party for the assignment of any such
Business Contract or Business License to Purchaser in all cases in which such
consent or waiver is or may be required for such assignment so that the
condition set forth in Section 7.03(e) shall be satisfied. If any such consent
or waiver shall not be obtained, Seller shall cooperate with Purchaser in any
commercially reasonable arrangement proposed by Purchaser (after consultation
with Seller), or proposed by Seller and accepted by Purchaser, which is designed
to provide for Purchaser the benefits intended to be assigned to Purchaser under
the affected Business Contract or Business License, including enforcement at the
cost and for the account of Purchaser of any and all rights of Seller against
the other party thereto arising out of the breach or cancellation thereof by
such other party or otherwise. If and to the extent that such arrangement cannot
be made, Purchaser shall have no obligation pursuant to any provision of this
Agreement with respect to any such Business Contract or Business License. The
provisions of this Section 2.06 shall not affect the right of Purchaser not to
consummate the purchase of Purchased Assets contemplated by this Agreement if
any condition to Purchaser's obligation to purchase the Purchased Assets set
forth in Article VII has not been satisfied.
Section 2.07 Insurance Proceeds. If any of the Purchased Assets are
destroyed or damaged or taken in condemnation, the insurance proceeds or
condemnation award with respect thereto shall be a Purchased Asset. At the
Closing, Seller shall pay or credit to Purchaser any such insurance proceeds or
condemnation awards received by it on or prior to the Closing and shall assign
to or assert for the benefit of Purchaser all of its rights against any
insurance companies, Governmental Entity and others with respect to such damage,
destruction or condemnation. As and to the extent that there is available
insurance under policies maintained by Seller and its Affiliates, predecessors
and successors in respect of any Assumed Liability, except for any such
insurance proceeds with respect to which the insured is directly or indirectly
self-insured or has agreed to indemnify the insurer, Seller shall cause such
insurance to be applied toward the payment of such Assumed Liability. The
provisions of this Section 2.07 shall not affect the right of Purchaser not to
consummate the purchase of Purchased Assets contemplated by this
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Agreement if any condition to Purchaser's obligation to purchase the Purchased
Assets set forth in Article VII has not been satisfied.
Section 2.08 Shared Intellectual Property.
(a) Seller shall sell, transfer, convey, assign and deliver to
Purchaser, free and clear of all Encumbrances, an undivided one half (_)
ownership interest in the products and inventions identified in Schedule
2.08(a), such that after Closing, Seller and Purchaser shall be co-equal owners
of such product or invention, each with independent and full rights of
ownership, including rights to transfer, assign, license, sublicense, create
derivative works from and modify such product or invention without accounting or
contribution to the other. Seller shall exclusively own any and all derivative
works, enhancements and other modifications to such product or invention after
Closing made at its expense. Purchaser shall exclusively own any and all
derivative works, enhancements and other modifications to such product or
invention after Closing at its expense. Seller and Purchaser shall each take
commercially reasonable steps to protect Intellectual Property rights in such
product or invention, including treating it as Confidential Information.
(b) Seller shall grant to Purchaser a non-exclusive, world-wide,
perpetual, royalty-free license to use and sublicense the current version of the
product identified in Schedule 2.08(b) and related computer code and technology
in connection with Purchaser's sale of products of the Business and related
license of such product and related computer code and technology.
(c) The Purchased Assets shall include the products set forth in
Schedule 2.08(c)(i) and related Intellectual Property. The products set forth in
Schedule 2.08(c)(ii) shall constitute Excluded Assets. Notwithstanding that the
products set forth in Schedule 2.08(c)(ii) are Excluded Assets, Seller shall, at
the Closing, sell, assign, transfer, convey and deliver to Purchaser, free and
clear of all Encumbrances, an undivided one half (1/2) ownership interest in the
Intellectual Property cores contained in the products set forth in Schedule
2.08(c)(ii), including the Intellectual Property cores set forth in Schedule
2.08(c)(iii) (the "Shared Seller IP Cores"), such that after the Closing, Seller
and Purchaser shall be co-equal owners of the Shared Seller IP Cores, each with
independent and full rights of ownership, including rights to transfer, assign,
license, sublicense, create derivative works from and modify the Shared Seller
IP Cores without account or contribution to the other.
Notwithstanding that the products set forth in Schedule 2.08(c)(i) are
Purchased Assets, Purchaser shall, at the Closing, sell, assign, transfer,
convey and deliver to Seller, free and clear of all Encumbrances, an undivided
one half (1/2) ownership interest in the Intellectual Property cores contained
in the products set forth in Schedule 2.08(c)(i), including the Intellectual
Property cores set forth in Schedule 2.08(c)(iv) (the "Shared Purchaser IP
Cores"), such that after the Closing, Seller and Purchaser shall be co-equal
owners of the Shared Purchaser IP Cores, each with independent and full rights
of ownership, including rights to transfer, assign, license, sublicense, create
derivative works from and modify the Shared Purchaser IP Cores without account
or contribution to the other.
Seller shall exclusively own any and all derivative works, enhancements
and other modifications to the Shared Seller IP Cores and Shared Purchaser IP
Cores after Closing made at
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its expense. Purchaser shall exclusively own any and all derivative works,
enhancements and other modifications to the Shared Seller IP Cores and Shared
Purchaser IP Cores after Closing made at its expense. Seller and Purchaser shall
each take commercially reasonable steps to protect the Intellectual Property
rights in the Shared Seller IP Cores and the Shared Purchaser IP Cores,
including treating such property as Confidential Information.
Notwithstanding that the product set forth in Schedule 2.08(c)(v) is a
Purchased Asset, Purchaser shall grant to Seller a world-wide, perpetual,
non-exclusive license to use the netlist of such product for the purpose of
enabling Seller to build derivative ASICs subject to the restrictions set forth
in Schedule 2.08(c)(vi).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that, subject to the
exceptions specifically disclosed in writing in a schedule delivered by Seller
to Purchaser prior to (or contemporaneously with) the signing of this Agreement
(the "Seller Disclosure Schedule"), the statements set forth in this Article III
are true and correct. The Seller Disclosure Schedule shall be arranged in
sections and subsections corresponding to the numbered sections and lettered
subsections of this Agreement, and all exceptions shall reference a specific
representation set forth in this Article III and shall apply only to such
numbered section and lettered subsection unless expressly cross-referenced in
another numbered section and lettered subsection.
Section 3.01 Organization, Standing and Power. Seller is a corporation
duly organized, validly existing and in good standing under the Laws of the
state of its incorporation. Seller has the corporate power to own, use, license
and lease the Purchased Assets and to carry on its business as now being
conducted and as currently proposed to be conducted and is duly qualified,
licensed or admitted to do business and is in good standing in each jurisdiction
in which the ownership, use, licensing or leasing of the Purchased Assets, or
the conduct or nature of its business, makes such qualification, licensing or
admission necessary, except where the failure or omission to be so qualified,
licensed or admitted or to be in good standing would not have a Material Adverse
Effect on the Business or a material adverse effect on the ability of Seller to
consummate the transactions contemplated by this Agreement or any of the
Ancillary Agreements.
Section 3.02 Authority. Seller has all requisite corporate power and
authority to enter into, execute and deliver this Agreement and the Ancillary
Agreements to which it is a party, to consummate the transactions contemplated
hereby and thereby, and to perform its obligation hereunder and thereunder. The
execution and delivery of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate and stockholder action on the part of
Seller. This Agreement and the Ancillary Agreements to which Seller is a party
have been duly executed and delivered by Seller and constitute the legal, valid
and binding obligations of Seller enforceable against Seller in accordance with
their terms, except as the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally or by general equitable principles.
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Section 3.03 No Conflicts. The execution and delivery of this Agreement
and the Ancillary Agreements by Seller does not, and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(a) conflict with, or result in any violation or breach of, or default
under (with or without notice or lapse of time, or both) (i) any provision of
the Certificate of Incorporation, bylaws or other charter or organizational
documents of Seller, as presently in effect, or (ii) any of the Real Property
Leases, Business Contracts, Personal Property Leases, or Business Licenses, or
any other material mortgage, indenture, lease, Contract, or other instrument,
permit, concession, franchise, or license applicable to Seller or any of the
Purchased Assets;
(b) conflict with or result in a violation or breach of any Law or Order
applicable to Seller or any of the Purchased Assets;
(c)(i) conflict with or result in a violation or breach of, (ii)
constitute a default (or an event that, with or without notice or lapse of time
or both, would constitute a default) under, (iii) require Seller to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of; (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, or (vi) result in the loss of any material benefit under, any
of the terms, conditions or provisions of any Business Contract or Business
License; or
(d) result in the creation or imposition of (or the obligation to create
or impose) any Encumbrance upon any of the Purchased Assets.
Section 3.04 No Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Seller or any of the Purchased Assets
in connection with the execution and delivery of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby, except for (i) such consents, authorizations, filings, approvals and
registrations which would not prevent or alter or delay any of the transactions
contemplated by this Agreement or any of the Ancillary Agreements, (ii) such
consents approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state or federal securities Laws;
and (iii) such filings as may be required under the HSR Act.
Section 3.05 Title to Purchased Assets; Absence of Encumbrances.
(a) With the exception of the matters regarding Seller Intellectual
Property which are exclusively addressed in Section 3.13 hereof, Seller has good
valid title to (or, in the case of Purchased Assets that are leased by Seller as
lessee, valid and enforceable leasehold interests in) all of the Purchased
Assets free and clear of any Encumbrances except for Permitted Encumbrances.
Seller has full right and power to sell, convey, assign, transfer and deliver to
Purchaser good and valid title to all of the Purchased Assets, free and clear of
any and all Encumbrances except for Permitted Encumbrances. The Purchased Assets
are not subject to any preemptive right, right of
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first refusal or other right or restriction; are in good operating condition and
repair, reasonable wear and tear excepted; and are suitable and adequate for use
in the ordinary course of business.
(b) All of the Real Property Leases, Personal Property Leases are, and,
when executed and delivered, the Norcross Sublease will be, valid, binding and
enforceable on Seller in accordance with their terms, and, to the knowledge of
Seller, are enforceable against the other party or parties thereto in accordance
with their terms. Seller is not in default under any such lease and there has
not occurred any event that, either alone or with the giving of notice or lapse
of time or both, would constitute a default by Seller under such lease. To the
knowledge of Seller, there is no current default by any other party to any such
lease and no event has occurred that, either alone or with the giving of notice
or lapse of time or both, would constitute a default by such party under any
such lease.
(c) The sale, transfer and assignment of the Purchased Assets as
contemplated by this Agreement will give Purchaser possession of, and the right
to use, all of the Assets and Properties required for the conduct of the
Business as presently conducted. The products listed on Annex A hereto comprise
all of the RAID and RAID-related products of Seller existing or under
development. After the Closing Date, Purchaser will be entitled to the continued
possession and use of the real property covered by the Real Property Leases and
the Tangible Personal Property covered by the Personal Property Leases for the
terms specified in such leases and for the purposes consistent with the past
practices of Seller. Except for the Purchased Assets, there are no other Assets
or Properties that will be required by Purchaser after the Closing in order to
conduct the Business substantially consistent in all material respects with the
manner in which Seller conducts the Business on and as of the date of this
Agreement. Without limiting the generality of the foregoing, the
Product-Specific Tools, Machinery and Equipment constitute all of the test
tools, machinery and equipment designed and used exclusively for products of the
Business.
Section 3.06 Financial Statements and Schedules. Seller has delivered to
Purchaser its unaudited income statements of the Business (the "Unaudited
Financial Statements") for the twelve (12)-month period ended December 31, 2000
(the "Unaudited Financial Statement Date) and for the months ended January 31,
February 28, March 31, and April 30, 2001 and the quarter ended March 31, 2001.
Set forth in Section 3.06 of the Seller Disclosure Schedule are schedules of the
book value as of the date hereof of the Assets and Properties comprising each of
the categories of the Purchased Assets and the book amount as of the date hereof
of the Liabilities comprising each of the categories of the Assumed Liabilities,
corresponding to the categories set forth in Schedule 2.01(a) and Section
2.02(a), respectively (the "Purchased Asset Schedules" and the "Assumed
Liability Schedules," respectively). The Unaudited Financial Statements,
Purchased Asset Schedules and Assumed Liability Schedules delivered to Purchaser
are correct and complete in all material respects and were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated and with each other. The Unaudited Financial Statements present fairly
and accurately the operating results of the Business for the periods, indicated
therein, subject to normal year-end audit adjustments, which adjustments will
not be material in amount, and the Purchased Asset Schedules and Assumed
Liability Schedules present fairly and accurately the book value of the
Purchased Assets and the book amount of the Assumed Liabilities, respectively,
as of the date hereof. Seller maintains and, through the Closing Date, will
continue to maintain a system of internal bookkeeping and accounting controls
that (i) is
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reasonably and in good faith believed by Seller to be adequate for the
preparation of income statements in compliance with GAAP and (ii) is
administered in accordance with GAAP.
Section 3.07 Absence of Certain Changes. Since the Unaudited Financial
Statement Date, Seller has conducted the Business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
would reasonably be expected to result in, a Material Adverse Effect on the
Business, or (ii) any acquisition, sale, transfer or encumbrance of any of the
Purchased Assets or any Assets and Properties that would, if owned or held by
Seller as of the Closing, constitute a Purchased Asset. In addition, without
limiting the generality of the foregoing, except as expressly provided or
permitted by this Agreement, since the Unaudited Financial Statement Date:
(a) Seller has not entered into any strategic alliance, joint
development or joint marketing Contract relating to or involving the Business;
(b) there has not been any amendment or other modification (or agreement
to do so) or violation of the terms of, any of the Business Contracts, Business
Licenses, Real Property Leases or Personal Property Leases or the Norcross
Lease;
(c) Except for the transactions expressly contemplated by the agreements
annexed as Exhibits F, I, J.2 and K, Seller has not entered into any transaction
with any employee engaged in the conduct of the Business, other than pursuant to
Business Contracts in effect on the Unaudited Financial Statement Date and
disclosed to Purchaser pursuant to (and so identified in) Section 3.20(c) of the
Seller Disclosure Schedule;
(d) Seller is not a party to any Contract pursuant to which any other
Person is granted manufacturing, marketing, distribution, licensing or similar
rights of any type or scope with respect to any product of the Business;
(e) no Action or Proceeding has been commenced or, to the knowledge of
Seller, threatened by or against Seller relating to the Business or any of the
Purchased Assets, and Seller has not received any request for indemnification
with respect to any product of the Business or any Seller Intellectual Property
that constitutes a Purchased Asset;
(f) there has not been any transfer (by way of a License or otherwise)
to any Person of rights to any Seller Intellectual Property that constitutes a
Purchased Asset;
(g) Seller has not made or agreed to make any waiver of rights to, or
license, lease or other disposition of, any of the Purchased Assets (other than
the sale and transfer of the Purchased Assets to Purchaser contemplated by this
Agreement);
(h) Except as specifically and expressly identified on the Unaudited
Financial Statements, Seller has not made or agreed or determined to make any
write-off, write-down or revaluation of any of the Purchased Assets or any
change in any reserves or Liabilities associated therewith;
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(i) Seller has not granted any severance or termination pay, and has not
paid or agreed or made any commitment to pay any discretionary or stay bonus, to
any Transferred Employee or any current independent contractor of or consultant
to the Business;
(j) Seller has not made, granted or approved any (A) grant of options,
restricted stock or phantom stock or any change in the vesting schedule
applicable thereto, or (B) increase in salary, rate of commissions, rate of
consulting fees or other compensation of any Transferred Employee or any current
independent contractor or consultant engaged in the conduct of the Business, and
Seller has not paid or approved the payment of any other consideration of any
nature whatsoever (other than salary, commissions or consulting fees and
customary benefits paid to any Transferred Employee or any current independent
contractor of or consultant to the Business) to any Transferred Employee or any
current independent contractor of or consultant to the Business;
(k) except with respect to Taxes that constitute Retained Liabilities,
Seller has not made or changed any election in respect of any Tax, adopted or
changed any accounting method in respect of any Tax, entered into any Tax
allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing
agreement, settlement or compromise of any claim or assessment in respect of any
Tax, or consented to any extension or waiver of the limitation period applicable
to any claim or assessment in respect of any Tax;
(l) Seller has not made any change in accounting policies, principles,
methods, practices or procedures (including for bad debts, contingent
liabilities or otherwise, respecting capitalization or expense of research and
development expenditures, depreciation or amortization rates or timing of
recognition of income and expense) used in connection with the Business;
(m) Seller has observed in all material respects all Laws and Orders
which are applicable either to the Business or to any of the Purchased Assets;
(n) Seller has taken all action required to procure, maintain, renew,
extend or enforce the Seller Intellectual Property used or held for use in the
Business, including submission of required documents or fees during the
prosecution of patent, trademark or other applications for Seller Intellectual
Property rights; and
(o) there has been no physical damage, destruction or other loss
(whether or not covered by insurance) affecting any material Purchased Asset or
any material amount of Purchased Assets in any material respect.
Section 3.08 Absence of Undisclosed Liabilities. Seller has no
Liabilities of any nature that constitute Assumed Liabilities other than those
set forth in the Assumed Liability Schedule.
Section 3.09 Litigation.
(a) There is no private or governmental Action or Proceeding pending,
or, to the knowledge of Seller, threatened by or against Seller, relating to the
Purchased Assets or the operation of the Business, and no judgment, decree or
Order applicable to Seller or any of the Purchased Assets, that could reasonably
be expected to prevent, enjoin, alter or delay any of the transactions
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contemplated by this Agreement or the Ancillary Agreements or to have a Material
Adverse Effect on the Business.
(b) Seller is in full compliance in all material respects with the
protective order pertaining to the litigation identified in Schedule 3.09(b).
(c) No confidential or trade secret information of the litigant
identified in Schedule 3.09(c), including any information received in connection
with the litigation, has been disclosed or used by Seller or any of its
employees or consultants, or disclosed in violation of the protective order or
otherwise incorporated into products of the Business.
Section 3.10 Product Liability Claims. Neither Seller, nor to the
knowledge of Seller, any of Seller's predecessors in interest, has been subject
to any product liability claim, relating to any of the products of the Business
or operation of the Business and, to the knowledge of Seller, no such claim is
threatened and no circumstance or condition exists that would reasonably be
expected to give rise to such a claim, specifically excluding from the coverage
of this entire representation and warranty any claims for breach of warranty.
Section 3.11 Restrictions on Business Activities. There is no agreement,
judgment, injunction, Order or decree binding upon Seller which would reasonably
be expected to apply to Purchaser after the Closing and which has, or would
reasonably be expected to have, the effect of prohibiting or impairing any
current business practice of Seller relating to the Business or the conduct of
the Business as currently conducted by Seller.
Section 3.12 Governmental Authorization. Seller has obtained each U.S.
federal, state and local and each foreign governmental consent, license, permit,
grant, and other authorization (i) pursuant to which Seller currently operates
or holds any interest in any of the Purchased Assets or (ii) that is required
for the operation of the Business or the holding of any such interest ((i) and
(ii) herein collectively called the "Seller Authorizations"), and all of the
Seller Authorizations are in full force and effect, except where the absence of
any of the Seller Authorizations would not reasonably be expected to have a
Material Adverse Effect on the Business.
Section 3.13 Intellectual Property.
(a) Seller owns all right, title and interest in and to, or is licensed
or otherwise possesses a valid and enforceable right to use, all the Seller
Intellectual Property, and no Action or Proceeding or claim to the contrary or
any challenge by any other Person to the rights of Seller with respect to the
foregoing is pending or, to the knowledge of Seller, threatened. Seller has not
(i) licensed any of the Seller Intellectual Property in source code form to any
party or (ii) entered into any exclusive agreements related to the Seller
Intellectual Property.
(b) The Seller Intellectual Property constitutes all the Intellectual
Property used or, held for use primarily in or necessary for the conduct of the
Business as a going concern as it currently is conducted, including the design,
development, distribution, marketing, manufacture, use, import, license, and
sale of the products, technology and services of the Business (including
products, technology, or services of the Business currently under development by
Seller).
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(c) No Action or Proceeding or claim relating to the Seller Intellectual
Property is pending or, to the knowledge of Seller, threatened against Seller or
any of its officers or directors.
(d) Seller knows of no claim or threatened claim that the Business as
currently conducted or as currently proposed to be conducted by Seller infringes
or would infringe any currently existing third-party Intellectual Property.
(e) Each material license agreement relating to the Business is in
effect, and Seller has not taken or failed to take any action and, to the
knowledge of Seller, no other event has occurred that could subject any such
license agreement to termination or otherwise cause any such license agreement
not to be in effect in the foreseeable future. Seller has paid all royalties due
and performed all obligations under all such license agreements. Seller is not
presently in default and has received no notice of default under any such
license agreement.
(f) Seller has received no request for indemnification or contribution
from any third party in respect of any claim that relates to the Business or any
of the Purchased Assets or Assumed Liabilities.
(g) Section 3.13(g) of the Seller Disclosure Schedule lists (i) all
patents and patent applications and all registered and unregistered trademarks,
trade names and service marks, registered copyrights, registered domain names,
and registered maskworks, contained in the Seller Intellectual Property, the
jurisdictions in which each such Seller Intellectual Property right has been
issued or registered or in which any application for such issuance and
registration has been filed, and the nature and extent of the ownership interest
or other right held by Seller in each such Seller Intellectual Property right;
(ii) all licenses, sublicenses and other agreements as to which Seller is a
party and pursuant to which any Person is authorized to use any Seller
Intellectual Property; (iii) all licenses, sublicenses and other agreements as
to which Seller or any Subsidiary of Seller is a party and pursuant to which
Seller or any Subsidiary of Seller is authorized to use Intellectual Property of
a third party (other than generally available "shrink-wrap" and similar
commercial end-user licenses) which are incorporated in, are, or form a part of
any product of the Business; and (iv) any Action or Proceeding pending as of the
date hereof before any Governmental Entity (including the PTO or equivalent
authority anywhere in the world) related to any such Seller Intellectual
Property; and (v) certain unpatented ideas, improvements and trade secrets of
the Business described in Schedule 3.13(g)(v). Each such item of Seller
Intellectual Property listed (or required to be listed) in Section 3.13(g) of
the Seller Disclosure Schedule is owned exclusively by Seller (excluding
Intellectual Property licensed to Seller under any License and is free and clear
of any Encumbrances). Seller (i) owns exclusively all trademarks, service marks
and trade names constituting Seller Intellectual Property, and (ii) owns
exclusively, and has good title to, each copyrighted work that is a Business
product and each other work of authorship related to the Business.
(h) To the knowledge of Seller, there is no unauthorized use,
disclosure, infringement or misappropriation of any Seller Intellectual
Property, or any third-party Intellectual Property, by Seller or any third
party, including any employee or former employee of Seller. Seller has not
entered into any agreement to indemnify any other person against any charge or
claim of infringement or misappropriation of any Seller Intellectual Property or
third party Intellectual Property.
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(i) Seller is not, and will not as a result of the execution and
delivery of this Agreement or any of the Ancillary Agreements or the performance
of Seller's obligations hereunder or thereunder, be in breach of any license,
sublicense or other agreement relating to the Seller Intellectual Property or
any third party Intellectual Property rights.
(j) No Seller Intellectual Property or product, technology or service of
Seller that constitutes part of the Business is subject to any Order, Action or
Proceeding or third-party right that is reasonably expected to restrict in any
manner, the use, transfer or licensing of any Seller Intellectual Property by
Seller or that may affect the validity, use or enforceability of such Seller
Intellectual Property, including any "march in" right.
(k) All patents, registered trademarks, service marks and copyrights
owned by Seller are valid and subsisting, and all necessary registration,
maintenance, renewal fees, annuity fees and taxes in connection with such Seller
Intellectual Property have been paid, and all necessary documents, affidavits
and certificates in connection with such Seller Intellectual Property have been
filed with all relevant patent, copyright, trademark or other authorities in all
applicable jurisdictions, for the purposes of maintaining such Seller
Intellectual Property. Seller (i) has not received notice that Seller has been
named as a party in any Action or Proceeding which involves a claim of
infringement of any Seller Intellectual Property, or violation of any trade
secret or other proprietary right, of any third party; (ii) has no knowledge
that the manufacturing, marketing, licensing, sale or offer of licensing or sale
of products of the Business, including software, infringes or misappropriates
any patent, trademark, service ▇▇▇▇, copyright, trade secret, mask work or other
proprietary right of any third party; and (iii) has not brought any Action or
Proceeding for infringement of any of the Seller Intellectual Property or breach
of any license or agreement involving any of the Seller Intellectual Property
against any third party.
(l) Seller does not, in connection with the operation of the Business,
(i) own any product, technology, service or publication, (ii) publish or
distribute any material or (iii) engage in any conduct or speech (oral or
written) that would constitute a defamatory or libelous statement or material or
false advertising or otherwise violate in any material respect any Law.
(m) Seller has secured valid and enforceable written agreements with all
consultants, independent contractors, employees, and other Persons who
developed, created, or contributed to the development or creation of Seller
Intellectual Property and has either (i) obtained ownership of, and is the
exclusive owner of, all such Seller Intellectual Property by operation of Law or
by valid assignment or (ii) has obtained a valid and enforceable license under
or to such Seller Intellectual Property that Seller does not already own by
operation of Law.
(n) Seller has taken all commercially reasonable steps to protect and
preserve the confidentiality of all Seller Intellectual Property and all
confidential information regarding or relating to the Business or any of the
Purchased Assets not otherwise protected by issued patents or copyrights of
Seller. Seller (i) has secured valid and enforceable written assignments from
all employees, consultants and independent contractors who contributed to the
creation or development of the Seller Intellectual Property, and (ii) has, and
enforces, a policy requiring each employee, consultant and independent
contractor to execute proprietary information, confidentiality and invention and
copyright assignment agreements substantially in the form attached to Section
3.13(n) of the Seller Disclosure Schedule, and all current and former employees,
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consultants and independent contractors of Seller have executed such an
agreement and copies of all such agreements have been provided to Purchaser or
made available to Purchaser or Purchaser's counsel for review. All use,
disclosure or appropriation of Seller Intellectual Property has been pursuant to
the terms of a written agreement between Seller and such third party protecting
the confidentiality of and limiting the use of such Seller Intellectual
Property. All use, disclosure or appropriation by Seller of confidential and
proprietary information owned by third parties and relating to the Business or
any of the Purchased Assets has been pursuant to the terms of a written
agreement permitting such use, disclosure or appropriation between Seller, as
the case may be, and the owner of such confidential and proprietary information,
or is otherwise lawful.
(o) All products of the Business comply in all material respects with
(i) all applicable U.S. federal, state and local, foreign and industry standards
and (ii) the feature specifications and performance standards set forth in
Seller's product data sheets (except for any claims for breach of warranty). All
product performance presentations heretofore furnished by Seller to customers of
the Business or Purchaser are accurate in all material respects as of the dates
so furnished except, in the case of presentations to customers, to the extent
otherwise stated in such presentations in a manner sufficient to negate such
customers' reliance on any contrary information in such presentations, and
except, in the case of presentations to Purchaser, as set forth in Section
3.13(o) of the Seller Disclosure Schedule.
(p) There are no actions that must be taken by Seller within one hundred
and eighty (180) days following the date of this Agreement that, if not taken,
will result in the loss of any Seller Intellectual Property, including the
payment of any registration, maintenance or renewal fees, annuity fees and taxes
or the filing of any responses, documents, applications, affidavits or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any such Seller Intellectual Property. In each case in
which Seller has acquired from any Person ownership of any Seller Intellectual
Property, Seller has obtained a valid and enforceable assignment sufficient to
transfer all rights in such Seller Intellectual Property (including the right to
seek future damages with respect to such Seller Intellectual Property) to Seller
and, to the extent provided for by and reasonably required to protect Seller's
ownership rights in and to such Seller Intellectual Property in accordance with
applicable Laws, Seller has recorded each such assignment of Seller Intellectual
Property with the relevant Governmental Entity, including the PTO, the U.S.
Copyright Office, or comparable authorities in any relevant foreign
jurisdiction, as the case may be.
(q) Neither the execution and delivery of this Agreement and the
Ancillary Agreements nor the consummation of the transactions contemplated
hereby and thereby will result in Seller granting any rights or licenses with
respect to the Seller Intellectual Property to any Person other than Purchaser.
(r) All of the rights and interests possessed by Seller in the Seller
Intellectual Property are fully and completely transferable to Purchaser in
connection with the transactions contemplated hereby, without the consent or
approval of any Governmental Entity or other third party.
Section 3.14 Environmental Matters.
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(a) Seller has not: (i) operated any underground storage tanks on or
under any site or facility to be transferred to Purchaser pursuant to this
Agreement, whether owned, operated, occupied or leased, or (ii) illegally
released any amount of any Hazardous Material (other than office and janitorial
supplies properly and safely maintained) at, in, on, under or from any such site
or facility. No Hazardous Materials (other than office and janitorial supplies
properly and safely maintained) are present at, in, on or under any such site or
facility, whether owned, operated, occupied or leased.
(b) Seller has not transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of any Law in effect on or before the Closing Date, nor has Seller disposed of,
transported, sold, or manufactured any product containing a Hazardous Material
(any or all of the foregoing being collectively referred to herein as "Hazardous
Materials Activities") in violation of any rule, regulation, treaty or statute
promulgated by any Governmental Entity in effect prior to or as of the date
hereof to prohibit, regulate or control Hazardous Materials or any Hazardous
Material Activity.
(c) Seller currently holds all environmental approvals, permits,
licenses, clearances and consents (the "Environmental Permits") necessary for
the conduct of Seller's Hazardous Material Activities, respectively, and other
businesses of Seller as such activities and businesses are currently being
conducted and as currently contemplated to be conducted.
(d) No Environmental Claim relating to any of the Purchased Assets, and
no action, proceeding, revocation proceeding, amendment procedure, writ,
injunction or claim concerning any Environmental Permit, Hazardous Material or
any Hazardous Materials Activity of Seller relating to any of the Purchased
Assets, is pending or, to the knowledge of Seller, threatened. Seller has no
knowledge of any fact or circumstance which is reasonably likely to involve
Seller in any environmental litigation or to impose upon Seller any
environmental liability.
Section 3.15 Taxes.
(a) With respect to any Tax that is not a Retained Liability (if any) or
that, by operation of Law, could become a Liability of Purchaser or result in an
Encumbrance against any of the Purchased Assets: Seller has properly completed
and timely filed all Tax Returns required to be filed by it and has paid all
Taxes that relate in any way to the Purchased Assets or the Business through the
date of this Agreement and will properly complete and timely file all Tax
Returns and pay all Taxes that relate in any way to the Purchased Assets and the
Business for taxable periods or portions thereof through the Closing Date. There
is and at Closing there will be (i) no claim for any Tax that is an Encumbrance
against any of the Purchased Assets or that is being asserted against Seller
relating to any of the Purchased Assets or the Business, (ii) no audit of any
Tax Return relating to any of the Purchased Assets or the Business being
conducted by any Taxing Authority, and (iii) no extension of any statute of
limitations on the assessment of any Tax with respect to any of the Purchased
Assets or the Business granted by Seller and in effect. Solely for purposes of
this Section 3.15, the term "Taxes" shall be limited to Taxes for which
Purchaser could be held liable by any Taxing Authority as a transferee of or
successor to Seller or which could constitute an Encumbrance against any of the
Purchased Assets.
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(b) Seller has withheld all amounts required to be withheld by Law in
connection with compensation paid to the Transferred Employees. Seller has
timely paid to the appropriate Taxing Authority all amounts so withheld or
otherwise due in connection with the employment by Seller of such employees, and
has timely filed all requisite returns with the Taxing Authorities with respect
to such Taxes. Seller is not a party to any Tax proceeding with respect to the
withholding of Taxes from its employees and/or payment to any Taxing Authority
of Taxes or other dues withheld from compensation paid to such employees with
respect to their employment with Seller. To the knowledge of Seller, no
investigation is being conducted against Seller by any Taxing Authority with
respect to any of the above withholding, payment, filing or any other
obligations in connection with the above. Seller shall not recover or attempt to
recover from any of the Transferred Employees any withholding Taxes asserted
against Seller and/or collected from Seller as a result of any underwithholding,
non-withholding or non-payment of Tax in respect of any of the Transferred
Employees for any period, whether prior to or upon the Closing, to the extent
that Seller's underwithholding, non-withholding or non-payment of any such
amount constitutes a breach of any representation or warranty in this Section
3.15(b).
Section 3.16 Employee Benefit Plans.
(a) Section 3.16(a) of the Seller Disclosure Schedule lists the
employees of Seller engaged principally in the conduct of the Business and, with
respect to each such listed employee, his/her position, salary, incentive
compensation and all major employment benefits. No salary, incentive
compensation, pension or other major employment benefits have been granted to
any such persons on terms and conditions which are more favorable than those
indicated in Section 3.16(a) of the Seller Disclosure Schedule.
(b) Each payment made or authorized by Seller to its employees,
consultants or independent contractors who are engaged in the conduct of the
Business was made in an arm's length transaction. Seller has not entered into
any Contract, undertaking or commitment with any such employee, consultant or
independent contractor which was not made in the ordinary course of business.
(c) There are no outstanding, pending or, to the knowledge of Seller,
threatened: (i) claims, disputes or other controversies between Seller and any
of its respective employees who are engaged principally in the conduct of the
Business; (ii) unfair labor practice complaints or other complaint or grievances
against Seller in connection with its operation of the Business; (iii) labor
strike, slowdown or stoppage against Seller affecting the operation of the
Business; or (iv) inspection or prosecution orders against Seller's Business
under any labor employment or occupational health and safety legislation and
there is no basis for any such action.
(d) Section 3.16(d) of the Seller Disclosure Schedule contains a true
and complete list of all Benefit Plans maintained by Seller, or by any trade or
business (whether or not incorporated) which is, in connection with the conduct
of the Business, treated as a single employer with Seller (an "ERISA Affiliate")
pursuant to Section 414(b), (c), (m) or (o) of the Internal Revenue Code, with
respect to each employee or other service provider employed by Seller in the
conduct of the Business (collectively, the "Business Benefit Plans"). A copy of
each such Business Benefit Plan has been provided to Purchaser, together with
all related plan documents (including trust documents, insurance policies or
contracts, employee booklets, summary plan descriptions and
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other authorizing documents, and any material written employee communications
relating thereto that have been distributed by Seller to such employees).
Section 3.17 Employee Stock Options. Each employee of Seller who may
become a Transferred Employee is the registered and beneficial owner of that
number of shares of Seller capital stock and/or Seller options or other
securities convertible into or exercisable or exchangeable for Seller capital
stock set forth opposite such employee's name in Section 3.17 of the Seller
Disclosure Schedule. Section 3.17 of the Seller Disclosure Schedule sets forth
the grant date of each such option, the number of shares of Seller stock subject
to each such option, the portion of such stock or option that is vested as of
the date of this Agreement and the exercise or vesting schedule in effect for
each such stock or option, the exercise price per share pursuant to each such
option, the maximum term of each such option, and the effect on such option of
the transactions contemplated by this Agreement and the termination of the
holder's employment with Seller. True and complete copies of all agreements
relating to the capital stock and options listed in Section 3.17 of the Seller
Disclosure Schedule have been provided to Purchaser, and such agreements have
not been amended, modified or supplemented, and there are no agreements to
amend, modify or supplement such agreements in any case from the form provided
to Purchaser.
Section 3.18 Certain Agreements Affected by the Acquisition. Neither the
execution and delivery of this Agreement and the Ancillary Agreements nor the
consummation 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 Transferred Employee or any
consultant or independent contractor of Seller engaged in the conduct of the
Business, (ii) increase any benefits otherwise payable by Seller to any
Transferred Employee or any consultant or independent contractor engaged in the
conduct of the Business, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits of any Transferred Employee or any
consultant or independent contractor engaged in the conduct of the Business.
Section 3.19 Employee Matters.
(a) Since January 1, 1998, (i) there has been no federal or state claim
based on sex, sexual or other harassment, age, disability, race or other
discrimination or common law claim, including claims of wrongful termination, by
any Transferred Employee and there is no fact or circumstance known to Seller
that could reasonably be expected to give rise to such a complaint or claim; and
(ii) Seller has not received any notice of any claim that it has not complied in
any respect with any Law relating to the employment of any of the Transferred
Employees, including any provisions thereof relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination, the WARN Act, employee safety, or that
it is liable for any arrearage of wages or any Tax or penalty for noncompliance
with any of the foregoing.
(b) Seller has paid all amounts due to be paid to each Transferred
Employee.
(c) There is no pending claim against Seller by any Transferred Employee
under any workers compensation plan or policy or for long term disability. There
is no controversy pending or threatened between Seller and any Transferred
Employee which has or could reasonably be
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expected to result in an Action or Proceeding. Seller is not a party to any
collective bargaining agreement or other labor union contract nor does Seller
know of any activities or proceedings of any labor union or to organize any
Transferred Employees. There has been no work stoppage, strike or other
concerted action by any Transferred Employees.
(d) Each Transferred Employee of Seller engaged in the conduct of the
Business is employed at will. To the knowledge of Seller, no Transferred
Employee is in violation of any term of any employment contract, patent
disclosure agreement, enforceable noncompetition agreement, or any enforceable
restrictive covenant to a former employer relating to the right of any such
employee to be employed by Seller, as the case may be, because of the nature of
the Business conducted, including products of the Business under design or
development as of the date hereof, or to the use of trade secrets or proprietary
information of others. No Transferred Employee has given notice to Seller, and
to Seller's knowledge, no Transferred Employee intends to terminate his or her
employment with Seller. Section 3.19(d) of the Seller Disclosure Schedule lists
each employee of Seller engaged in the conduct of the Business under the heading
"Employees," and each consultant and independent contractor to Seller engaged in
the conduct of the Business under the heading "Consultants and Independent
Contractors," and each such Person's applicable position, and annual
compensation as of the date hereof and the Closing Date.
(e) To Seller's knowledge, no Transferred Employee and no consultant or
independent contractor of Seller who is engaged in the conduct of the Business
is obligated under any Contract or subject to any Order or Law that would
interfere with the conduct of the Business as currently conducted, including
products of the Business under design or development as of the date hereof.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Business as presently conducted nor any activity of such employees or
consultants in connection with the carrying on of the Business as presently
conducted, will conflict with or result in a breach of the terms, conditions or
provisions of, constitute a default under, or trigger a condition precedent to
any rights under any Contract under which any of such employees, consultants or
independent contractors is now bound.
Section 3.20 Interested Party Transactions.
(a) Section 3.20 of the Seller Disclosure Schedule sets forth an
accurate and complete list of all agreements, contracts, arrangements,
understandings, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business
consistent with past practice, to or by which both Seller and any Affiliate of
Seller are parties and that are currently pending or in effect and relate to or
affect the Business or any of the Purchased Assets or Assumed Liabilities, in
either case where the amount paid or payable by Seller in any consecutive twelve
(12) month period exceeds fifty thousand dollars ($50,000) in the aggregate.
(b) Each agreement, contract, arrangement, understanding, transfer of
assets or liabilities or other commitments or transactions set forth or required
to be set forth in Section 3.20 of the Seller Disclosure Schedule was (i)
entered into, or incurred, as the case may be, on terms and conditions as
favorable to Seller as would have been obtainable by Seller in a comparable
arm's-length transaction with a Person other than an Affiliate of Seller.
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(c) No stockholder, officer, director, partner or employee of Seller
(or, to Seller's knowledge, any agent of Seller) (i) owns, directly or
indirectly, on an individual or joint basis, (A) any interest in any Purchased
Asset or (B) to Seller's knowledge, any interest (other than a passive
investment interest in less than one percent (1%) of the outstanding shares of
any class of capital stock of a publicly traded company) in any Person that is a
supplier, customer or competitor of the Business; (ii) to Seller's knowledge,
serves as an officer, director or employee of any person that is a supplier,
customer or competitor of the Business; or (iii) to Seller's knowledge, has
received any loan from or is otherwise a debtor of or, or made any loan in
excess of fifty thousand dollars ($50,000) to or is otherwise a creditor of,
Seller that is secured by the Purchased Assets.
Section 3.21 Insurance. Section 3.21 of the Seller Disclosure Schedule
contains a complete and correct list of all insurance policies and bonds
maintained by Seller related to any of the Purchased Assets, the Assumed
Liabilities or the Business. There is no claim pending under any such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds other than customary reservation of
rights provisions. Each policy listed in Section 3.21 of the Seller Disclosure
Schedule is valid and binding and in full force and effect, all premiums due and
payable under all such policies and bonds have been paid and Seller is otherwise
in compliance with the terms of such policies and bonds. Neither Seller nor the
Person to whom such policy has been issued has received any written notice of
cancellation or termination of, or premium increase with respect to, any such
policies.
Section 3.22 Compliance With Laws. Seller is not in violation in any
material respect of and has not received any pending unresolved written notice
of violation with respect to, any federal, state, local or foreign Law with
respect to the conduct of the Business or the ownership or operation of the
Purchased Assets.
Section 3.23 Books and Records. The Business Books and Records have been
made available to Purchaser or its counsel, and such books and records are
complete and correct in all material respects and have been maintained in
accordance with sound business practices. Seller's minute books contain a
complete and accurate summary of all meetings of directors and stockholders or
actions by written consent that relate to the Business or any of the Purchased
Assets, through the date of this Agreement, and reflect all transactions
involving the Purchased Assets referred to in such minutes accurately in all
material respects. Prior to the execution of this Agreement, Seller has
delivered to Purchaser true copies of its certificate of incorporation and
bylaws, both as amended through the date of this Agreement.
Section 3.24 Brokers' and Finders' Fees; Third Party Expenses. Seller
has not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders', financial advisor's fees or agents' commissions or
investment bankers' fees or any similar charges, fees or commission in
connection with this Agreement or any transaction contemplated hereby.
Section 3.25 Customers and Suppliers.
(a) Section 3.25(a)(i) of the Seller Disclosure Schedule lists each
customer of the Business that individually accounts for more than five percent
(5%) of the consolidated gross revenues of the
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Business during the twelve (12)-month period ending on March 31, 2001, on the
basis of revenues collected. Section 3.25(a)(ii) of the Seller Disclosure
Schedule lists the ten (10) largest suppliers of the Business on the basis of
cost of goods or services purchased for the most recent fiscal year. To Seller's
knowledge, no such customer or supplier is threatened with bankruptcy or
insolvency.
(b) Neither HP nor Dell nor any other customer required to be disclosed
in Section 3.25(a)(i) of the Seller Disclosure Schedule or supplier required to
be disclosed in Section 3.25(a)(ii) of the Seller Disclosure Schedule has ceased
or reduced, has canceled or otherwise terminated, or made any written threat to
Seller to cancel or otherwise terminate its relationship with Seller relating to
the Business, or has decreased its services or supplies to Seller, in the case
of any such supplier, or its usage of any service or purchase of any product of
the Business, in the case of such customer, and, to Seller's knowledge, neither
HP nor Dell nor any other such supplier or customer intends to cancel or
otherwise terminate its relationship with Seller or to decrease its services or
supplies to Seller or its purchases of services or products of the Business or
to seek an increase in the price it charges (as a supplier) for such services or
supplies or a reduction in the price which it pays (as a customer) for services
or products of the Business or a modification of any other material term
applicable to such sale of services or supplies to or such purchase of services
or products. Seller has not knowingly breached, so as to provide a benefit to
Seller that was not intended by the parties, any agreement with, or engaged in
any fraudulent conduct with respect to, any customer or supplier of the
Business.
Section 3.26 Business Contracts.
(a) Section 3.26(a) of the Seller Disclosure Schedule contains a true
and complete list of each of the Business Contracts (true and complete copies
or, if none, reasonably complete and accurate written descriptions of which,
together with all amendments and supplements thereto and all waivers of any
terms thereof, have been delivered to Purchaser prior to the execution of this
Agreement (other than employee offer letters).
(b) Except for the Contracts described in Section 3.26(a) of the Seller
Disclosure Schedule, Seller is not a party to or bound by any material Contract,
including:
(i) any distributor, agency, advertising agency, manufacturer's
representative or material sales Contract related to the Business;
(ii) any continuing Contract for the purchase of materials, supplies,
equipment or services for use in connection with the Business which is not
subject to cancellation by Seller, or which is subject to cancellation by the
other party thereto on sixty (60) or fewer days' notice;
(iii) any Business Contract or any Contract otherwise binding upon any
of the Purchased Assets or relating to any of the Assumed Liabilities that had
or would reasonably be expected to have, either individually or in the aggregate
with any other similar Contracts, a Material Adverse Effect on the Business;
(iv) any Contract related to the conduct of the Business that expires or
may be renewed at the option of any Person other than Seller so as to expire
more than one year after the date of this Agreement;
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(v) any Contract related to the conduct of the Business that (x)
automatically terminates or provides for termination by any Person other than
Seller upon consummation of the transactions contemplated by this Agreement or
(y) contains any covenant or other provision which limits Seller's (and, after
the Closing, would limit Purchaser's) ability to compete with any Person in any
line of business comprising the Business or in any market, area, jurisdiction or
territory; or
(vi) any trust indenture, mortgage, promissory note, loan agreement or
other Contract for the borrowing of money, any currency exchange, commodities or
other hedging arrangement or any leasing transaction related to the conduct of
the Business or binding on the Purchased Assets of the type required to be
capitalized in accordance with GAAP;
(vii) any Contract for capital expenditures related to the conduct of
the Business in excess of ten thousand dollars ($10,000) individually or fifty
thousand dollars ($50,000) in the aggregate;
(viii) any Contract related to the Business with any person with whom
Seller does not deal at arm's length; or
(ix) any Contract of guarantee, support, indemnification, assumption or
endorsement of, or any similar commitment with respect to, obligations or
Liabilities secured by any of the Purchased Assets.
Section 3.27 No Breach of Business Contracts. All of the Business
Contracts are in written form. Seller has performed in all material respects all
of the obligations required to be performed by it and is entitled to all
benefits under, and is not in default, and is not alleged to be in default, in
respect of any Business Contract. Each of the Business Contracts is in full
force and effect, and there exists no default or event of default or event,
occurrence, condition or act, with respect to Seller or, to Seller's knowledge,
with respect to the other contracting party, which, with the giving of notice,
the lapse of time or the happening of any other event or conditions, would
become a default or event of default under any Business Contract.
Section 3.28 Third Party Consents. Section 3.28 of the Seller Disclosure
Schedule lists (a) all Business Contracts that require a novation or consent to
assignment, as the case may be, prior to the Closing Date so that Purchaser
shall be made a party in place of Seller, or as assignee and (b) every Business
Contract which, if no novation occurs to make Purchaser a party thereto or if no
consent to assignment is obtained, would adversely affect Purchaser's ability to
operate the Business in the same manner as the Business was operated by Seller
prior to the Closing Date.
Section 3.29 Export Control Laws. Seller has obtained all export
licenses and other approvals required for its exports of products, software and
technologies of the Business from the United States. Seller is in compliance in
all material respects with the terms of all applicable export licenses and all
other approvals required for the operation of the Business.
Section 3.30 [Intentionally omitted]
Section 3.31 Solvency. Seller is, and immediately after the consummation
of the transactions contemplated herein will be, solvent. For purposes of this
Agreement, "solvent" shall mean that, on the date specified (a) the fair value
of the Assets and Properties of Seller shall be greater than the total amount of
its Liabilities, including those arising under any Law, Order, Contract,
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arrangement, commitment or undertaking; (b) the present fair salable value of
Seller's Assets and Properties is not less than the amount that will be required
to pay the probable debts and liabilities of Seller on its debts as they become
absolute and matured in accordance with their stated terms; (c) Seller does not
intend to, and does not believe that it will, incur debts or liabilities beyond
its ability to pay as such debts and liabilities mature; and (d) Seller is not
engaged in, and is not about to be engaged in, a business or a transaction for
which its property would constitute unreasonably small capital.
Section 3.32 Epidemic Failure. With the possible exception of the
matters described in Schedule 2.02(b)(3), there is no claim (and, to Seller's
knowledge, there is no basis for any such claim) against Seller alleging, and no
Liability of Seller (or any predecessor of Seller) on account of, any Epidemic
Failure.
Section 3.33 Representations Complete. None of the representations or
warranties made by Seller herein, and none of the statements, representations or
warranties contained in the Seller Disclosure Schedule or in any certificate,
list or other writing furnished to Purchaser by Seller pursuant to this
Agreement or any of the Ancillary Agreements (including the Purchased Asset
Schedules and Assumed Liability Schedules), when all such documents are read
together in their entirety, contains or will contain at the Closing Date any
untrue statement of a material fact, or omits or will omit at the Closing Date
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading. Seller has provided Purchaser with all material documents and
information concerning the Business, the Purchased Assets and the Assumed
Liabilities in the possession, control or custody of Seller, that is responsive
in all material respects to the information requests submitted in writing on
behalf of Purchaser prior to the date hereof. It is the explicit intent of each
party hereto that Seller is making no representation or warranty except as set
forth in this Agreement, the Ancillary Agreements, the Seller Disclosure
Schedule, and the certificates, documents and instruments delivered in
connection herewith or therewith and except further that nothing in this
sentence shall be construed to absolve Seller from liability for fraud or
intentional misrepresentation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller, that, subject to the
exceptions specifically disclosed in writing in a schedule delivered by
Purchaser to Seller prior to (or contemporaneously with) the signing of this
Agreement (the "Purchaser Disclosure Schedule"), the statements set forth in
this Article IV are true and correct. The Purchaser Disclosure Schedule shall be
arranged in sections and subsections corresponding to the numbered section and
lettered subsections of this Agreement, and all exceptions shall reference a
specific representation set forth in this Article IV and shall apply only to
such numbered section and lettered subsection unless expressly cross-referenced
in another numbered section and lettered subsection.
Section 4.01 Organization and Qualification. Purchaser has been duly
organized and is validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has the requisite
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corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Purchaser is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except as could
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the ability of Purchaser to consummate the transactions
contemplated by, and to perform its obligations under, this Agreement.
Section 4.02 Authority Relative to this Agreement. Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and the other Ancillary Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Purchaser of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation by Purchaser of the transactions contemplated hereby and thereby,
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Purchaser are necessary to authorize
this Agreement or the other Ancillary Agreements to which it is a party or to
consummate such transactions. This Agreement has been, and the other Ancillary
Agreements to which Purchaser is a party will be, duly executed and delivered by
Purchaser. This Agreement constitutes, and the other Ancillary Agreements to
which Purchaser is a party, when executed and delivered as contemplated by this
Agreement, will constitute, assuming the due authorization, execution and
delivery by each of the other parties hereto and thereto, legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with their respective terms.
Section 4.03 No Conflict; Required Filings and Consents. The execution
and delivery by Purchaser of this Agreement and the Ancillary Agreements to
which Purchaser is a party do not, and the performance by Purchaser of its
obligations hereunder and/or thereunder, as the case may be, and the
consummation by Purchaser of the transactions contemplated by this Agreement
will not (i) conflict with or violate any provision of the Certificate of
Incorporation or Bylaws of Purchaser, (ii) conflict with or violate in any
material respect any Law applicable to Purchaser or by which any of its Assets
and Properties is bound, or (iii) result in any breach of or constitute a
default (or an event which with the giving of notice or lapse of time or both
could reasonably be expected to become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Purchaser is a party or by
which any of its Assets and Properties is bound so as to impair the ability of
Purchaser to carry out its obligations under, or to prevent or delay the
completion of the transactions contemplated by, this Agreement.
Section 4.04 Financial Resources. Purchaser has sufficient cash on hand
to pay, and borrowing capacity under committed lines of credit to finance, the
Purchase Price.
Section 4.05 Litigation. Except as disclosed in the Purchaser SEC
Reports, there is no Action or Proceeding pending, and, to the knowledge of
Purchaser, no person has threatened to commence any Action or Proceeding, that
challenges, or would reasonably be expected to have the effect of preventing,
delaying, making illegal or otherwise interfering with, the transactions
contemplated by this Agreement or any of the Ancillary Agreements.
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Section 4.06 No Further Representations. It is the explicit intent of
each party hereto that Purchaser is making no representation or warranty except
as set forth in this Agreement, the Ancillary Agreements, the Purchaser
Disclosure Schedule, and the certificates, documents and instruments delivered
in connection herewith or therewith and except further that nothing in this
sentence shall be construed to absolve Purchaser from liability for fraud or
intentional misrepresentation.
Section 4.07 Financial Incentive Shares. The shares of Purchaser Common
Stock constituting the Financial Incentive Shares shall be properly reserved
from Purchaser's authorized but unissued shares of Purchaser Common Stock, and,
when issued, shall be free and clear of all Encumbrances and shall be duly
authorized, validly issued, fully paid and non-assessable.
Section 4.08 Purchaser Due Diligence. Purchaser has no further requests
for information in connection with Purchaser's due diligence efforts regarding
the Purchased Assets and Business.
ARTICLE V
COVENANTS
Section 5.01 Section 4.01 Conduct of Business by Seller Pending the
Closing. Seller agrees that, between the date of this Agreement and the Closing
Date, unless Purchaser shall otherwise agree in writing, Seller shall (w)
conduct the Business only in the ordinary course consistent with past practice;
(x) pay and perform any of its debts, obligations and Liabilities relating to
the Business and the Purchased Assets as and when due and the Contracts and
other commitments relating to the Business and the Purchased Assets in
accordance with the terms and provisions thereof; (y) comply in all material
respects with all Laws that may be applicable to any of the Purchased Assets or
the Business; and (z) use its commercially reasonable best efforts to keep
available the services of the Transferred Employees and to preserve current
relationships with corporate partners, customers, suppliers, manufacturers and
other persons doing business with the Business in order to preserve
substantially intact the Business in all material respects. By way of
amplification and not limitation, Seller shall not, between the date of this
Agreement and the Closing Date, directly or indirectly, take, agree to take or
allow, cause or permit any other Person to take, agree, agree to take or allow,
cause or permit any of the following actions without the prior written consent
of Purchaser:
(a) sell, pledge, dispose of, grant, transfer, lease, license, guarantee
or encumber, or authorize the issuance, sale, pledge, disposition, grant,
transfer, lease or license of, or any Encumbrance on, any of the Purchased
Assets except in the ordinary course of business consistent with past practice
where immaterial (both individually and in the aggregate) in both amount and
significance;
(b) acquire any Assets and Properties that would constitute Purchased
Assets other than in the ordinary course of business consistent with past
practice, or acquire or make any arrangement to acquire any Inventory in excess
of the amount of Inventory which, together with Inventory existing as of the
date hereof, is reasonably necessary to fulfill purchase orders on hand with
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delivery dates prior to the Closing Date, and obligations of Seller under
long-term purchase contracts with delivery dates prior to the Closing Date,
which, in each case, Seller is responsible for fulfilling prior to the Closing
or which Seller will be responsible for fulfilling after the Closing giving
effect to the terms of this Agreement and the transactions contemplated hereby;
(c) engage with any Person in any merger, consolidation or other
business combination transaction, unless such Person agrees in a written
instrument in form and substance reasonably satisfactory to Purchaser to adopt
and comply with the terms and conditions of this Agreement as though such Person
was an original signatory hereto;
(d) violate, breach or default under in any material respect, or take or
fail to take any action that (with or without notice or lapse of time or both)
would constitute a material violation or breach of, or default under, any term
or provision of any Business Contract or any Business License; or terminate,
cancel or request any material change in, or agree to any material change in,
any Business Contract; or enter into or amend any Contract, agreement,
commitment or arrangement that would constitute a Business Contract and that, if
fully performed, would not be permitted under this Section 5.01;
(e) make or authorize any capital expenditure with respect to the
Business, other than capital expenditures in the ordinary course of business
consistent with past practice that have been budgeted for the fiscal period in
question and have heretofore been disclosed in writing to Purchaser;
(f) (i) increase the compensation payable or to become payable to, or
the rate of vacation accrual of, any of the Transferred Employees; (ii) grant
any options or any rights to severance or termination pay to any Transferred
Employee, or enter into any employment or severance agreement with any
Transferred Employee which provides benefits triggered by the transactions
contemplated hereby; (iii) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any Transferred Employee except to the extent
required by applicable Law or the terms of a collective bargaining agreement in
effect as of the date hereof; (iv) enter into or amend any Contract, commitment
or arrangement with any of the Transferred Employees; or (v) make any
representation or promise, oral or written, to any Transferred Employee
concerning any Benefit Plan, except for statements as to the rights or accrued
benefits of any Transferred Employee under the terms of any Benefit Plan in
effect as of the date hereof;
(g) incur, cancel, pay, prepay, discharge or satisfy any claim or
Liability, other than Liabilities which constitute Retained Liabilities and
could not reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement;
(h) engage in any transaction with respect to any of the Purchased
Assets or the Business with any officer, director, Affiliate or Associate of
Seller, or any Associate of any such officer, director or Affiliate, either
outside the ordinary course of business consistent with past practice or other
than on an arm's-length basis;
(i) make any change with respect to Seller's accounting policies,
principles, methods or procedures, including revenue recognition policies, other
than as required by GAAP;
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(j) except with respect to Taxes that constitute Retained Liabilities,
make any material Tax election or settle or compromise any material Tax
liability relating to the Business or any of the Purchased Assets;
(k) permit any insurance policy naming Seller as a beneficiary or a loss
payee and relating to the Business or any of the Purchased Assets or Assumed
Liabilities to be cancelled, terminated or not renewed, except in the ordinary
course of business;
(l) maintain the Books and Records relating either to the Business or to
any of the Purchased Assets in a manner not consistent with past business
practices;
(m) take any action which would adversely affect the goodwill of its
suppliers, manufacturers, customers, licensees and others with whom it has
business relations in connection with the Business in any material respect; or
(n) authorize or enter into any Contract or otherwise make any
commitment to do any of the foregoing or to take any action which would make any
of the representations or warranties of Seller contained in this Agreement
untrue or incorrect in any material respect or prevent Seller from performing or
cause Seller not to perform its covenants and agreements herein or result in any
of the conditions to the Closing set forth herein not being satisfied.
Section 5.02 Notice of Certain Events. Each of Purchaser and Seller
shall give prompt notice to the other of (i) any notice or other communication
from any Person alleging that any consent, waiver or approval of such Person is
or may be required in connection with any of the transactions contemplated by
this Agreement; (ii) any notice or other communication from any Governmental
Entity in connection with any of the transactions contemplated by this Agreement
or the Ancillary Agreements; (iii) any Action or Proceeding commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
Purchaser or Seller that relates to the Business or may affect the consummation
of any of the transactions contemplated by this Agreement or the Ancillary
Agreements; (iv) the occurrence of a default or event that, with the giving of
notice or lapse of time or both, will become a default under any Business
Contract; and (v) any change, event or occurrence that could reasonably be
expected to render any of Purchaser's or Seller's representations and warranties
untrue or incorrect in any material respect, or to materially delay or
materially impede the ability of either Purchaser or Seller to perform their
respective obligations pursuant to this Agreement and to effect the consummation
of the purchase and sale of the Purchased Assets and the other transactions
contemplated by this Agreement or the Ancillary Agreements.
Section 5.03 Access to Information; Confidentiality.
(a) Between the date of this Agreement and the Closing Date, Seller
shall (i) provide Purchaser (and its officers, directors, employees,
accountants, consultants, legal counsel, financial advisers, accountants, agents
and other representatives (collectively, "Representatives")) access at
reasonable times upon prior notice to its officers, employees, agents,
properties, offices and other facilities and to the Books and Records thereof,
and (ii) promptly furnish to Purchaser and its Representatives such information
concerning the Business, the Purchased Assets, the Assumed Liabilities and the
Transferred Employees (including the full personnel files of the Transferred
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Employees which shall be provided promptly upon signing) as Purchaser or its
Representatives may reasonably request. No investigation conducted pursuant to
this Section 5.03 shall affect or be deemed to modify any representation or
warranty made in this Agreement. Seller shall have no obligation under this
Section 5.03(a) to furnish any information that relates exclusively to
businesses of Seller other than the Business or to Assets and Properties of
Seller other than the Purchased Assets.
(b) Prior to the Closing, neither Seller nor Purchaser nor any of their
respective Representatives shall use, release or disclose any "Confidential
Information" (as such term is defined in the Confidentiality Agreement)
("Confidential Information"), including Confidential Information furnished
pursuant to Section 5.03(a), except as permitted by the Confidentiality
Agreement or as otherwise reasonably required for the performance of the
obligations of Seller or Purchaser under this Agreement and the Ancillary
Agreements or for the consummation or implementation of the transactions
contemplated by this Agreement and the Ancillary Agreements. If the purchase and
sale of the Purchased Assets contemplated by this Agreement is consummated, then
from and after the Closing: (i) all provisions of the Confidentiality Agreement
providing for the ownership by Seller, or limiting or prescribing the use,
disclosure, care, return and treatment by Purchaser and its Representatives, of
Confidential Information shall terminate and cease and shall be of no further
force or effect insofar as they relate to the Business, the Purchased Assets and
the Assumed Liabilities; (ii) Purchaser shall be treated as the "Disclosing
Party" and owner of all Confidential Information relating to the Business, the
Purchased Assets and the Assumed Liabilities; and (iii) all provisions of the
Confidentiality Agreement providing for the ownership by Seller, or limiting or
prescribing the use, disclosure, care, return and treatment by Purchaser and its
Representatives, of Confidential Information shall remain in full force and
effect insofar as they relate to businesses of Seller other than the Business,
the Excluded Assets and Retained Liabilities. If this Agreement is terminated
and the purchase and sale of the Purchased Assets contemplated by this Agreement
is not consummated, the terms and provisions of the Confidentiality Agreement,
as amended and modified by the first sentence of this Section 5.03(b), and the
parties' obligations thereunder shall remain in full force and effect. Except as
amended or modified by this Section 5.03(b), and except for Sections 4 and 8 of
the Confidentiality Agreement (which shall be suspended for as long as this
Agreement is in effect), all other terms and provisions of the Confidentiality
Agreement and the parties' obligations thereunder shall remain in full force and
effect.
Section 5.04 No Solicitation of Transactions. Seller shall not take, nor
shall it permit any of its Representatives, Affiliates or Associates to take,
directly or indirectly, any action to solicit, negotiate, assist or otherwise
facilitate or intentionally encourage (including by furnishing confidential
information with respect to the Business or permitting access to the Assets and
Properties or Books and Records of Seller) any offer, proposal, inquiry or
request for information from any Person concerning the direct or indirect
acquisition of the Business or any of the Purchased Assets by any Person (an
"Alternate Transaction") other than Purchaser. If Seller or any of its
Representatives, Affiliates or Associates receives from any Person any such
offer, proposal, inquiry or request for information, Seller shall promptly
advise such Person, by written notice, of the terms of this Section 5.04 and
shall immediately, orally and in writing, advise Purchaser of such offer,
proposal, inquiry or request and deliver a copy of such notice to Purchaser. Any
violation of the restrictions set forth in this Section 5.04 by any
Representative, Affiliate or Associate of Seller shall be deemed to be a breach
of this Section 5.04 by Seller.
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Any notice required to be delivered pursuant to this Section 5.04 shall include
the identity of the Person making such offer, proposal, inquiry request, and the
terms of such offer, proposal, inquiry or request, and shall keep Purchaser
apprised, on a current basis, of the status of such offer, proposal, inquiry or
request. Seller shall immediately cease and cause to be terminated (and Seller
hereby represents and warrants that it has the legal and contractual right,
without liability of any sort, to cease and cause to be terminated) all existing
discussions or negotiations with any Persons conducted heretofore with respect
to any such offer, proposal, inquiry or request. Seller shall not release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which such third party is a party.
Section 5.05 Financial Statements and Reports.
(a) As promptly as practicable and in any event no later than twenty
(20) days after the end of each calendar month, forty-five (45) days after the
end of each fiscal quarter and ninety (90) days, respectively, after the end of
each fiscal year ending after the date hereof and before the Closing Date,
Seller shall deliver to Purchaser true and complete copies of the unaudited
income statements for the Business for the fiscal quarter or month and the
portion of the fiscal year then ended (in the case of any such fiscal quarter
and calendar month), together with the notes, if any, relating thereto, which
financial statements shall be prepared in accordance with GAAP.
(b) As promptly as practicable, Seller shall deliver to Purchaser true
and complete copies of such other financial statements, reports and analyses
relating to the Business or any of the Purchased Assets as may be prepared or
received by Seller.
(c) As promptly as practicable, Seller shall deliver copies of all
License applications and other filings made by Seller in connection with the
operation of the Business after the date hereof and before the Closing Date with
any Governmental Entity (other than routine, recurring filings made in the
ordinary course of business consistent with past practice).
Section 5.06 Delivery of Books and Records; Removal of Property.
(a) The parties hereto acknowledge and agree that all source code within
the Seller Intellectual Property is located in Atlanta, Georgia, and will be
delivered to Purchaser at the Closing in Atlanta, Georgia or by electronic
transmission from Seller in Atlanta, Georgia to Purchaser in California, as
Purchaser shall direct. On the Closing Date, Seller: (i) shall deliver to
Purchaser at the applicable site of the Closing, copies or originals of all of
the Real Property Leases, the Personal Property Leases, the material Business
Contracts and the material Business Licenses, and shall make available to
Purchaser at the locations at which the Business is conducted, all of the other
Business Books and Records, and (ii) shall deliver or make available to
Purchaser at the locations at which the Business is conducted all other
Purchased Assets in Seller's possession or, under Seller's control at other
locations. If at any time after the Closing Seller discovers in its possession
or under its control any other Business Books and Records or other Purchased
Assets, it shall forthwith deliver such Business Books and Records or other
Purchased Assets to Purchaser.
(b) Within thirty (30) days after the Closing Date, Seller shall remove
all Assets and Properties not being sold to Purchaser hereunder from the
premises that constitute Purchased Assets except
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as may be otherwise provided by the Transition Services Agreement (as defined
below). Such removal shall be at the sole cost and risk of Seller, including
risk of loss and damage to such Assets and Properties. Purchaser shall have no
liability to Seller with respect to such removal and transportation. Seller
shall be responsible for all repairs to the premises that constitute Purchased
Assets due to damage caused by Seller and its employees and agents in connection
with the removal of Seller's Assets and Properties other than ordinary wear and
tear.
Section 5.07 Noncompetition.
(a) Seller shall, for a period of three (3) years from and after the
Closing Date, refrain from, either alone or in conjunction with any other
Person, whether directly or indirectly through any one or more of its present or
future Affiliates, anywhere in the world: (i) employing, engaging or seeking to
employ or engage any Person who is or at any time during the period commencing
three (3) months prior to the date of this Agreement and ending on the Closing
Date was an employee of Seller or any of its Affiliates engaged in the conduct
of the Business, unless such Person (A) voluntarily resigns from employment with
Seller (prior to the Closing Date) or with Purchaser (after the Closing Date),
without any solicitation, promise or inducement from Seller or any of its
Affiliates (it being acknowledged and agreed that the placement of general
advertisements in trade and industry publications of general circulation shall
not constitute a solicitation for purposes of this Section 5.07(a)) or (B) is
terminated by Purchaser or any of its Affiliates after the Closing Date; (ii)
causing or attempting to cause (A) any client, customer or supplier of the
Business to terminate or materially reduce the level of its business relating to
the Business with Purchaser or any of its Affiliates or (B) any officer,
employee or consultant of Purchaser or any of its Affiliates engaged in the
conduct of the Business after the Closing to resign or sever a relationship with
Purchaser or any of its Affiliates; (iii) disclosing (unless compelled by
judicial or administrative process) or using any confidential or secret
information relating to the Business or to any client, customer or supplier of
the Business; or (iv) participating or engaging in (other than through the
ownership of one percent (1%) or less of any class of securities registered
under the Securities Exchange Act of 1934, as amended), or except as expressly
permitted by Section 5.07(b), otherwise knowingly (after reasonable inquiry)
assisting (financially or otherwise) any Person in participating or engaging in,
the design, development, testing, marketing, sale (or bundling for combined
sale), licensing, distribution, support or maintenance of any RAID product or
any technology, hardware, software, firmware or utility used to achieve RAID
functionality, or any of the lines of business that comprised the Business on
the Closing Date anywhere in the world. Without limiting the generality of the
foregoing, Seller shall not sell or transfer any unsold Inventory (if any)
remaining as of the Closing Date to any Person other than Purchaser.
(b) Notwithstanding anything in Section 5.07(a)(iv) to the contrary, and
without purporting to set forth all of the activities in which Seller may engage
without violating Section 5.07(a), Purchaser acknowledges and agrees that: (i)
Seller's lines of business and products (including the network-attached-storage
products referred to below) may use, utilize or enable the RAID functionality
provided by any major operating system provided by a third party, including
Microsoft NT, Linux, BSD and Novell, and, in connection therewith, Seller may
provide such support as is necessary to enable the RAID functionality provided
by such an operating system, including testing the RAID functionality provided
by such operating system; provided, however, that such lines of business and
products are not marketed as a "RAID business" or "RAID product" and
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provided further, that all marketing and related literature regarding such lines
of business and products, including Seller's web site, clearly and prominently
state that the RAID functionality of such line of business or product is
"enabled by the operating system"; (ii) Seller may test third-party RAID
adapters to evaluate compatibility with Seller's products and may identify (by
name only and not by features or functionality) compatible products in Seller's
marketing and related literature regarding Seller's lines of business and
products, including Seller's web site (provided, however, that such marketing
and related literature and web site shall identify Purchaser as Seller's
Preferred Provider, and shall give precedence and priority to Purchaser's
products, consistent with Section 5.07(c)); and (iii) the fact that any of
Seller's lines of business or products utilize RAID-related integrated circuits
(including simple SCSI or fibre channel controllers) or software of Purchaser
or, subject to Section 5.07(c), a third party solely for the purpose of
interfacing with a RAID product shall not violate Section 5.07(a). In connection
with the foregoing, Purchaser acknowledges that Seller's current
network-attached-storage product family will not conflict with the provisions of
Section 5.07(a), provided, that such product family is designed, developed,
tested, marketed, sold, supported and maintained by Seller consistent with the
provisions of clauses (i), (ii) and (iii) of this Section 5.07(b) and with the
specifications set forth in Schedule 5.07(b) hereto. Subject to the foregoing,
Purchaser acknowledges and agrees that (except as otherwise expressly set forth
therein) the products set forth on Annex B hereto are not within the scope of
the Business.
(c) For three (3) years after the Closing Date, to the extent that
Seller offers any storage product that requires RAID or RAID-related software or
hardware possessing functionality that can be provided by a product of
Purchaser, Seller agrees to introduce or recommend Purchaser as the preferred
third-party provider for such hardware or software consistent with the Preferred
Provider Agreement in substantially the form of Exhibit L hereto (the "Preferred
Provider Agreement"). Nothing herein shall constitute either an offer or license
of such hardware or software by Purchaser or an obligation on the part of Seller
to purchase and use such hardware or to license such software from Purchaser.
(d) The parties hereto recognize that the Laws and public policies of
the various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section 5.07. It
is the intention of the parties that the provisions of this Section 5.07 be
enforced to the fullest extent permissible under the Laws and policies of each
jurisdiction in which enforcement may be sought, and that the unenforceability
(or the modification to conform to such Laws or policies) of any provisions of
this Section 5.07 shall not render unenforceable, or impair, the remainder of
the provisions of this Section 5.07. Accordingly, if any provision of this
Section 5.07 shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(e) The parties hereto acknowledge that while the Purchased Assets and
employees engaged in the conduct of the Business are currently located in
Norcross, Georgia and Fremont, California, Seller has conducted the Business
with parties throughout the United States and the world, that the relevant
market for the Business is national, international and worldwide in scope, and
that there exists intense national, international and worldwide competition for
the products and services of the Business.
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(f) The parties hereto further acknowledge and agree (i) that the
restrictions contained in this Section 5.07 are reasonable and necessary in
order to protect the value of the Purchased Assets and the goodwill of the
Business, and (ii) that any remedy at Law for any breach of the provisions of
this Section 5.07 would be inadequate, and Seller hereby consents to the
granting by any court of an injunction or other equitable relief, without the
necessity of actual monetary loss being proved, in order that the breach or
threatened breach of such provisions may be effectively restrained.
Section 5.08 Notice and Cure.
(a) Seller shall notify Purchaser in writing of, and shall
contemporaneously provide Purchaser with true and complete copies of any and all
information or documents relating to, and shall use all commercially reasonable
efforts to cure before the Closing, any event, transaction or circumstance, as
soon as practicable after it becomes known to Seller, occurring after the date
of this Agreement that causes or may cause any covenant or agreement of Seller
under this Agreement to be breached or that renders or may render untrue in any
material respect any representation or warranty of Seller contained in this
Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. Seller also shall notify Purchaser in writing of,
and shall use all commercially reasonable efforts to cure, before the Closing,
any violation or breach, as soon as practicable after it becomes known to
Seller, of any representation, warranty, covenant or agreement made by Seller in
this Agreement, whether occurring or arising before, on or after the date of
this Agreement. No notice given pursuant to this Section 5.08(a) shall have any
effect on the representations, warranties, covenants or agreements contained in
this Agreement for purposes of determining satisfaction of any condition
contained herein or shall in any way limit Purchaser's rights under any
provision of this Agreement or any of the Ancillary Agreements, including
Purchaser's right to seek indemnification under Article IX.
(b) Purchaser shall notify Seller in writing of, and shall
contemporaneously provide Seller with true and complete copies of any and all
information or documents relating to, and shall use all commercially reasonable
efforts to cure before the Closing, any event, transaction or circumstance, as
soon as practicable after it becomes known to Purchaser, occurring after the
date of this Agreement that causes or may cause any covenant or agreement of
Purchaser under this Agreement to be breached or that renders or may render
untrue in any material respect any representation or warranty of Purchaser
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Purchaser shall notify Seller in
writing of, and shall use all commercially reasonable efforts to cure, before
the Closing, any violation or breach, as soon as practicable after it becomes
known to Purchaser, of any representation, warranty, covenant or agreement made
by Purchaser in this Agreement, whether occurring or arising before, on or after
the date of this Agreement. No notice given pursuant to this Section 5.08(b)
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit Seller's rights
under any provision of this Agreement or any of the Ancillary Agreements.
Section 5.09 Fulfillment of Conditions. Each party shall execute and
deliver at the Closing each Ancillary Agreement that such party is required
hereby to execute and deliver as a condition to either
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party's obligations pursuant to Article VII, and, subject to the limitations
elsewhere set forth in this Agreement, shall take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of the other party contained in this
Agreement (including the mutual conditions set forth in Section 7.01), and shall
not take or fail to take any action that could reasonably be expected to result
in the nonfulfillment of any such condition.
Section 5.10 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all requisite commercially reasonable efforts to (i)
take, or cause to be taken, all appropriate action, and do, or cause to be done,
all things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the transactions contemplated hereby, (ii) obtain
from all applicable Governmental Entities all consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Purchaser or Seller in connection with the authorization, execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
including those required under the HSR Act, and (iii) make all necessary
filings, and thereafter make any other required or appropriate submissions, with
respect to this Agreement and the transactions contemplated hereby required
under any applicable Laws. The parties hereto shall cooperate and consult with
each other in connection with the making of all such filings and with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings (if any) under or relating to the HSR Act or any other federal,
state or foreign antitrust or fair trade Law. Notwithstanding any other
provision of this Agreement, nothing in this Agreement shall require Purchaser
to agree to any divestiture or hold-separate arrangement or any other
restriction on its ownership of the Purchased Assets or conduct of the Business
after the Closing, or to respond to any second request for information pursuant
to the HSR Act or other pre-merger or pre-acquisition review procedure under
foreign Law where responding would, in Purchaser's good faith judgment, be
unreasonably burdensome, expensive, time-consuming or otherwise detrimental to
significant interests of Purchaser, or to litigate in response to the
institution of any Action or Proceeding by any Governmental Entity seeking to
restrain or enjoin any of the transactions contemplated by this Agreement.
(b) Seller shall give any notices to all third parties, and use
reasonable efforts to obtain any consents and waivers from all third parties
necessary (including such consents, novations and amendments required under the
Business Contracts listed in Section 3.28 of the Seller Disclosure Schedule) to
consummate the transactions contemplated by this Agreement.
Section 5.11 Employment Matters.
(a) On the Closing Date, Purchaser shall offer employment, at will, to
substantially all of the employees listed in Section 3.16(a) of the Seller
Disclosure Schedule (who Seller represents and warrants constitute all of the
employees of Seller engaged principally in the conduct of the Business as of the
date hereof), on terms and conditions (including job responsibility, cash
compensation and health and welfare benefits but not including terms and
conditions relating to stock, stock options and other equity incentives) no less
favorable, in the aggregate, to them than the terms and conditions under which
they are currently employed by Seller, and all such
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employees shall be entitled to carry over up to one hundred sixty (160) hours of
accrued but unused vacation time which accrued while any such employee was an
employee of Seller and to receive a cash payment in the amount set forth in
Section 2.02(a)(v) for any such accrued but unused vacation time in excess of
one hundred sixty (160) accrued hours. All such employees who accept offers of
and actually commence and enter into employment with Purchaser (the "Transferred
Employees") will, upon such acceptance, be employees of Purchaser and not
employees of Seller.
(b) Seller shall use its commercially reasonable efforts to persuade
each of the employees of Seller listed in Section 3.16(a) of the Seller
Disclosure Schedule to accept offers of employment from Purchaser on the Closing
Date and shall not offer such employees a choice between receiving severance and
an offer of employment with Purchaser. Seller shall notify all such employees
that effective upon the Closing their employment with Seller will terminate and
their employment with Purchaser will commence, provided that such employees have
accepted Purchaser's offer of employment.
(c) Seller shall be responsible for offering the continued health
coverage required under Internal Revenue Code Section 4980B ("COBRA Coverage")
with respect to (i) any Transferred Employees or their eligible dependents who
elect COBRA Coverage under Seller's group health plan in lieu of enrollment in
the Purchaser's health plan and (ii) any other terminated employees of Seller
(other than Transferred Employees who enroll in Purchaser's health plan) and
their eligible dependents. Purchaser shall be responsible for providing COBRA
Coverage for any Transferred Employees or their dependents who, with respect to
their coverage under the Purchaser's health plan, incur a qualifying event under
Internal Revenue Code Section 4980B at any time after the Closing Date.
(d) Seller agrees to amend its pension plan to provide each of the
Transferred Employees with a nonforfeitable right to their accrued benefit and
each Transferred Employee shall be entitled to any pension benefit that is
conditioned on being an employee of Seller on the last day of the year in which
the Closing Date occurs.
Section 5.12 Financial Incentive Payments. On the Closing Date,
Purchaser shall use the Financial Incentive Shares to establish a plan for the
benefit of the Transferred Employees which shall be used by Purchaser to provide
financial retention payments to the Transferred Employees on such terms and
conditions to be determined by Purchaser at its sole good faith discretion.
Section 5.13 Public Announcements. Until the earlier of the termination
of this Agreement and the Closing Date, Purchaser, on the one hand, and Seller,
on the other hand, shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the Agreement
or the transactions contemplated hereby and shall not issue any such press
release or make any such public statement that is not approved by the other
party, except as may be required by Law or applicable stock exchange rules, in
which case the parties shall make reasonable efforts to consult with each other
prior to the making of such public statement.
ARTICLE VI
ADDITIONAL AGREEMENTS
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Section 6.01 Assistance and Cooperation. After the Closing Date, each of
Seller and Purchaser shall (and shall cause their respective Affiliates and
Representatives to): (a) assist the other party in preparing any Tax Returns
which such other party is responsible for preparing and filing related to the
Purchased Assets; (b) cooperate fully in preparing for any audits of, or
disputes with any Taxing Authority regarding, any Tax Returns of Seller; (c)
make available to the other and to any Taxing Authority as reasonably requested
all information, records, and documents relating to Taxes of Seller; (d) provide
timely notice to the other in writing of any pending or threatened Tax audit or
assessments of Seller for taxable periods for which the other may have a
liability under this Agreement; and (e) furnish the other with copies of all
correspondence received from any Taxing Authority in connection with any Tax
audit with respect to any taxable period for which the other may have a
liability under this Agreement. Seller and Purchaser shall assist each other in
the orderly transition of the Business by providing the services as contemplated
by the Transition Services Agreement.
Section 6.02 FIRPTA Certificate. At or prior to the Closing, Seller
shall provide Purchaser with a certificate described in Treas. Reg. Section
1.1445-2(b)(2) to the effect that, as contemplated by such certificate, Seller
is not a foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury Regulations).
Section 6.03 Tax Clearance Certificates. At or prior to the Closing,
Seller shall provide Purchaser with tax clearance certificates issued by the
California State Board of Equalization and the Georgia Department of Revenue -
Sales Tax Division to the effect that there is no sales or use Tax Liability of
Seller for which Purchaser can be held liable as a successor or transferee.
Section 6.04 Bulk Sales Act. Purchaser and Seller hereby waive
compliance with all bulk sales acts and other comparable statutory provisions of
each applicable jurisdiction that may apply to the purchase and sale of the
Purchased Assets contemplated by this Agreement.
Section 6.05 Special Purpose Subsidiary. Seller acknowledges and agrees
that Purchaser may wish to effect the purchase of the Purchased Assets and the
other transactions contemplated by this Agreement through a Subsidiary, and that
Purchaser may wish to establish a new Subsidiary for such purpose. Seller agrees
and consents to the assignment by Purchaser of all or part of Purchaser's rights
and the delegation by Purchaser of all of Purchaser's obligations under this
Agreement (other than the obligation to pay the Purchase Price) to such new
Subsidiary or any other wholly owned Subsidiary of Purchaser, in each case in
Purchaser's sole discretion. In the event of such an assignment and delegation,
Purchaser shall cause the assignee and delegatee Subsidiary to perform all of
the obligations of Purchaser under this Agreement in accordance with their terms
and shall be jointly and severally liable with such Subsidiary for all such
obligations.
Section 6.06 Trademark and Web Site Agreement; Preferred Provider
Agreement. At or prior to the Closing, the parties will enter into (a) a
trademark and web site agreement governing Purchaser's use of certain of
Seller's trademarks, the transfer to Purchaser of the portions of the content of
Seller's web site relating to the Business and certain related matters, in
substantially the form of Exhibit D hereto (the "Trademark and Web Site
Agreement") and (b) the Preferred Provider Agreement.
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ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to the Obligations of Each Party to Consummate
the Transaction. The obligations of the parties hereto to consummate the
purchase and sale of the Purchased Assets and the other transactions which occur
at the Closing pursuant to Article II are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following conditions:
(a) No court of competent jurisdiction shall have issued or entered any
order, writ, injunction or decree, and no other Governmental Entity shall have
issued any order, which is then in effect and has the effect of making the
transaction contemplated hereby illegal or otherwise prohibiting the
consummation of the purchase and sale of the Purchased Assets and the other
transactions which occur at the Closing pursuant to Article II.
(b) All consents, approvals and authorizations legally required to be
obtained to consummate the purchase and sale of the Purchased Assets and the
other transactions which occur at the Closing pursuant to Article II shall have
been obtained from all Governmental Entities, and the waiting period under the
HSR Act (if applicable) shall have expired or early termination thereof shall
have been granted.
(c) The Escrow Agent shall have executed and delivered the Escrow
Agreement, and such agreement shall be in full force and effect.
(d) The individual named in Schedule 7.01(d) shall have executed and
delivered an Employment Separation and Waiver Agreement terminating, waiving and
releasing his rights (if any) under his employment and stock option agreements
with Seller and his spouse shall have executed a consent thereto, in each case
in substantially the form of Exhibit K hereto, and the Employment Separation and
Waiver Agreement and such consent shall be in full force and effect.
Section 7.02 Additional Conditions to the Obligations of Seller. The
obligation of Seller to consummate the sale of the Purchased Assets to Purchaser
and the other transactions which occur at the Closing pursuant to Article II is
subject to the satisfaction or waiver of each of the following further
conditions:
(a) Each of the representations and warranties of Purchaser contained in
this Agreement, the Ancillary Agreements and the annexes, schedules and exhibits
to this Agreement shall be true and correct in all material respects (other than
representations and warranties subject to "materiality" or "Material Adverse
Effect" limitations or exceptions, which shall be true, complete and correct in
all respects) both as of the date of this Agreement and at and as of the Closing
Date as if made at and as of the Closing Date (other than representations and
warranties which address matters only as of a specified date, which shall be
true and correct as of such specified date), except where the failure of such
representations and warranties to be true and correct without regard to any
materiality or Material Adverse Effect qualification contained therein, would
not, either individually or in the aggregate, reasonably be expected to have a
material adverse effect on Purchaser's ability to consummate the transactions
contemplated by
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this Agreement or to perform its obligations hereunder, and Seller shall have
received a certificate of an officer of Purchaser, acting in his or her capacity
as such, to such effect.
(b) Purchaser shall have performed or complied in all material respects
with all covenants required by this Agreement to be performed or complied with
by it on or prior to the Closing Date and Seller shall have received a
certificate of an officer of Purchaser, acting in his or her capacity as such,
to such effect.
(c) As of the Closing Date, Seller shall have received from Purchaser
the following documents: (i) a certificate of existence and good standing from
the state of incorporation as to the corporate status of Purchaser; (ii) a true
and complete copy of the resolutions, certified by the Secretary of Purchaser,
adopted on behalf of Purchaser, authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which Purchaser is
a party and all transactions contemplated hereby and thereby; (iii) a
certificate from Purchaser's Secretary as to the incumbency and signatures of
the officers who will execute documents at the Closing or who have executed this
Agreement; (iv) a certificate from the Secretary of Purchaser that its Articles
of Incorporation have not been amended since the date of the certificate
described in Section 7.02(c)(ii); and (v) such other documents and instruments
(if any) as Seller may reasonably request in order to effectuate the
transactions contemplated by this Agreement.
(d) Purchaser shall have executed and delivered the Escrow Agreement,
and such agreement shall be in full force and effect.
(e) All corporate approvals of Purchaser required for the lawful
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements to which Purchaser is a party shall have been obtained and
shall be in full force and effect.
(f) Purchaser shall have signed and delivered the General Purchase
Agreement in substantially the form of Exhibit G hereto (the "General Purchase
Agreement"), and the General Purchase Agreement in such form shall be in full
force and effect. Purchaser shall have signed and delivered the Preferred
Provider Agreement in substantially the form of Exhibit L hereto and the
Preferred Provider Agreement in such form shall be in full force and effect
(g) Purchaser shall have signed and delivered the Trademark and Web Site
Agreement in substantially the form of Exhibit D hereto, and the Trademark and
Web Site Agreement in such form shall be in full force and effect.
(h) Purchaser shall have signed and delivered a transition services
agreement (the "Transition Services Agreement") in substantially the form of
Exhibit H hereto, and the Transition Services Agreement in such form shall be in
full force and effect.
(i) Purchaser shall have signed and delivered a sublease (and landlord
consent) for a portion of the premises located at No. 6145 D-J Northbelt
Parkway, Norcross, Georgia in substantially the form of Exhibit M hereto with
such changes as the parties may reasonably agree (the "Norcross Sublease") and
the lease assignments for facilities of the Business in Marlborough,
Massachusetts; Fremont, California; Ismaning, Germany; and Middlesex, England
(collectively, the "Lease Assignments"), and the Norcross Sublease in such form
and the Lease Assignments in form reasonable satisfactory to Seller shall be in
full force and effect.
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Section 7.03 Additional Conditions to the Obligations of Purchaser. The
obligation of Purchaser to consummate the purchase of the Purchased Assets from
Seller and the other transactions which occur at the Closing pursuant to Article
II is subject to the satisfaction or waiver of each of the following further
conditions:
(a) Each of the representations and warranties of Seller contained in
this Agreement and the annexes, schedules and exhibits to this Agreement shall
be true and correct in all material respects (other than representations and
warranties subject to "materiality" or "Material Adverse Effect" limitations or
exceptions, which shall be true and correct in all respects) both as of the date
of this Agreement and at and as of the Closing Date as if made at and as of the
Closing Date (other than representations and warranties which address matters
only as of a specified date, which shall be true and correct as of such
specified date), except where the failure of such representations and warranties
to be true and correct without regard to any materiality or Material Adverse
Effect qualification contained therein, would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Business, and Purchaser shall have received a certificate of the chief executive
officer and chief financial officer of Seller, acting in their capacities as
such, to such effect.
(b) Seller shall have performed or complied in all material respects
with all covenants and agreements required by this Agreement, the annexes,
schedules and exhibits to this Agreement to be performed or complied with by it,
on or prior to the Closing Date and Purchaser shall have received a certificate
of the chief executive officer and chief financial officer of Seller, acting in
their capacities as such, to such effect.
(c) Purchaser shall have received a legal opinion from Powell,
Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, outside legal counsel to Seller, in
substantially the form of Exhibit E hereto.
(d) There shall have been no Material Adverse Effect on the Business,
and no event shall have occurred which would reasonably be expected to result in
a Material Adverse Effect on the Business, since December 31, 2000.
(e) All consents and waivers of third parties and novations and
amendments to all Business Contracts and Business Licenses required in
connection with the transactions contemplated hereby shall have been obtained
(or other arrangements shall have been proposed and accepted in accordance with
Section 2.06), and all such consents, waivers, novations, amendments and
arrangements shall be in full force and effect in forms reasonably acceptable to
Purchaser, including all consents and waivers necessary to assign and transfer
to Purchaser the Dell Agreement.
(f) All corporate and stockholder approvals of Seller required for the
lawful consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements to which Seller is a party shall have been obtained and
shall be in full force and effect. Without limiting the generality of the
foregoing, and without acknowledging that such approval is required by Law, this
Agreement and the sale by Seller of the Purchased Assets shall have been
approved by the holders of a majority of the issued and outstanding shares of
capital stock of Seller entitled to vote on the subject transaction, and such
approval shall be in full force and effect.
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(g) Each of the Transferred Employees hired by Purchaser shall have
signed and delivered to Purchaser Purchaser's customary forms of non-competition
agreement, proprietary inventions agreement and non-solicitation agreement, and
all such agreements shall be in full force and effect. At least ninety percent
(90%) of the employees of Seller listed in Section 3.16(a) of the Seller
Disclosure Schedule shall have accepted offers of employment with Purchaser and
shall have become employees of Purchaser at Closing and one hundred percent
(100%) of the persons listed on Schedule 7.03(g) shall have accepted offers of
employment with Purchaser and become employees of Purchaser at Closing.
(h) The individual named in Schedule 7.01(d) shall have signed and
delivered to Purchaser an employment agreement in substantially the form of
Exhibit F hereto (the "Employment Agreement") and the Stock Issuance Agreement
in substantially the form of Exhibit I hereto, and the Employment Agreement and
the Stock Issuance Agreement in such forms shall be in full force and effect.
(i) Seller shall have signed and delivered the Trademark and Web Site
Agreement in substantially the form of Exhibit D hereto, and the Trademark and
Web Site Agreement in such form shall be in full force and effect.
(j) Seller shall have signed and delivered the General Purchase
Agreement in substantially the form of Exhibit G hereto, and the General
Purchase Agreement in such form shall be in full force and effect.
(k) Seller shall have signed and delivered the Preferred Provider
Agreement in substantially the form of Exhibit L hereto and the Preferred
Provider Agreement in such form shall be in full force and effect.
(l) Seller shall have signed and delivered the Transition Services
Agreement in substantially the form of Exhibit H hereto, and the Transition
Services Agreement in such form shall be in full force and effect.
(m) Seller shall have signed and delivered the Norcross Sublease and the
Lease Assignments and the Norcross Sublease in substantially the form of Exhibit
M hereto with such changes as the parties may reasonably agree and the Lease
Assignments in forms reasonable satisfactory to Purchaser, and the same shall be
in full force and effect.
(n) ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have signed and delivered to Purchaser a
non-competition agreement in substantially the form of Exhibit J.1 hereto,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have signed and delivered to Purchaser a non-competition
agreement in substantially the form of Exhibit J.2 hereto, and the individual
named in Schedule 7.01(d) shall have signed and delivered to Purchaser a
non-competition agreement in substantially the form of Exhibit J.3 hereto
(collectively, the "Non-Competition Agreements"), and each of the
Non-Competition Agreements in such form shall be in full force and effect.
(o) HP and Seller shall have continued to transact business and
otherwise to act substantially in accordance with the terms of the HP Agreements
(without regard to the temporal term or expiration of the HP Agreements)
consistent with their established course of conduct as of the date hereof. HP
shall not have sought, or indicated any intention to seek, a reduction in the
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prices it currently pays for products and services of the Business or any other
material modification of any payment term or other material term applicable to
its purchases of products and services of the Business.
(p) Seller shall have executed and delivered the Escrow Agreement, and
such agreement shall be in full force and effect.
(q) SouthTrust Bank, N.A. (formerly, Southtrust Bank of Georgia, N.A.)
and Branch Banking and Trust Company (together, the "Seller Banks") shall have
released and discharged all Encumbrances on the Purchased Assets. Such releases
and discharges shall include each of Seller Banks making the appropriate UCC
termination or amendatory filings under the Georgia Uniform Commercial Code and
the Uniform Commercial Codes of all other applicable states that shall be
required to release and discharge such Encumbrances. Seller shall provide
letters from each of the Seller Banks attesting to such release and discharge
and also provide file stamped copies of all related UCC filings.
(r) As of the Closing Date, Purchaser has received from Seller tax
clearance certificates issued by the California State Board of Equalization and
the Georgia Department of Revenue - Sales Tax Division to the effect that there
is no sales or use Tax Liability of Seller for which Purchaser can be held
liable as a successor or transferee.
(s) As of the Closing Date, Purchaser shall have received from Seller
the following documents: (i) a certificate of existence and good standing from
the state of incorporation as to the corporate status of Seller; (ii) a true and
complete copy of the Articles of Incorporation of Seller and all amendments
thereto certified by the state of incorporation of Seller; (iii) a true and
complete copy of the Bylaws of Seller certified by the Secretary of Seller; (iv)
a true and complete copy of the resolutions, certified by the Secretary of
Seller, adopted on behalf of Seller authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which Seller is a
party and all transactions contemplated hereby and thereby; (v) a certificate
from the Secretary of Seller that its Articles of Incorporation have not been
amended since the date of the certificate described in Section 7.03(s)(ii) and
that nothing has occurred since the date of issuance of the good standing
certificate specified in subsection (i) of this Section 7.03(s) that would
adversely affect its corporate good standing; (vi) a certificate from Seller's
Secretary as to the incumbency and signatures of Seller's officers who will
execute documents at the Closing or who have executed this Agreement; and (vii)
such other documents and instruments (if any) as Purchaser may reasonably
request in order to effectuate the transactions contemplated by this Agreement
and the Ancillary Agreements.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date, notwithstanding any requisite adoption and approval of this
Agreement, as follows:
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(a) by mutual written consent duly authorized by the boards of directors
of each of Purchaser and Seller;
(b) by either Purchaser or Seller, if the Closing shall not have
occurred on or before November 30, 2001; provided, however, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to
any party whose action or failure to act has been the cause or resulted in the
failure of the transactions contemplated hereby to occur on or before such date
and such action or failure to act constitutes a breach of this Agreement;
(c) by either Purchaser or Seller, if any Order, writ, injunction or
decree preventing the consummation of the transactions contemplated hereby shall
have been entered by any court of competent jurisdiction and shall have become
final and nonappealable;
(d) by Purchaser, upon a breach in any material respect of any covenant
or agreement on the part of Seller set forth in this Agreement that would, if
uncured prior to the Closing Date, cause the condition set forth in Section
7.03(b) not to be satisfied, or if any representation or warranty of Seller
shall have become untrue or incorrect in any respect that would, if uncured
prior to the Closing Date, cause the condition set forth in Section 7.03(a) not
to be satisfied; provided, however, that if such breach or such failure to be
true and correct is curable by Seller through the exercise of its commercially
reasonable efforts within thirty (30) days and Seller continues to exercise such
efforts during such period, Purchaser may not terminate this Agreement under
this Section 8.01(d) unless such breach or such failure to be true and correct
remains uncured at the expiration of such period;
(e) by Seller, upon a breach in any material respect of any covenant or
agreement on the part of Purchaser set forth in this Agreement that would, if
uncured prior to the Closing Date, cause the condition set forth in Section
7.02(b) not to be satisfied, or if any representation or warranty of Purchaser
shall have become untrue or incorrect in any respect that would, if uncured
prior to the Closing Date, cause the condition set forth in Section 7.02(a) not
to be satisfied; provided, however, that if such breach or such failure to be
true and correct is curable by Purchaser through the exercise of its
commercially reasonable efforts within thirty (30) days and Purchaser continues
to exercise such efforts during such period, Seller may not terminate this
Agreement under this Section 8.01(e) unless such breach or such failure to be
true and correct remains uncured at the expiration of such period; or
(f) The right of any party hereto to terminate this Agreement pursuant
to this Section 8.01 will remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers, directors
or Representatives, whether prior to or after the execution of this Agreement.
Section 8.02 Effect of Termination. Except as provided in Section 8.03,
in the event of termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of any party hereto or any of its Affiliates or any of its
or their officers or directors, and all rights and obligations of each party
hereto shall cease; provided, however, that nothing herein shall relieve any
party hereto from liability for the willful or intentional breach of any of its
representations and warranties in this Agreement or any of its covenants or
agreements in this Agreement prior to its termination and, provided further,
that (a)
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if this Agreement is terminated by Purchaser pursuant to Section 8.01(b) or
Section 8.01(d) because (in either case) of a misrepresentation or inaccuracy in
or breach of any representation or warranty of Seller as of the date hereof that
shall have caused (or, in the case of termination pursuant to Section 8.01(d),
would cause) the condition set forth in Section 7.03(a) not to be satisfied,
Seller shall pay to Purchaser promptly following such termination, and nothing
herein shall relieve Seller from liability to Purchaser for, the actual
documented out-of-pocket expenses incurred by Purchaser in connection with the
negotiation of this Agreement and the Ancillary Agreements, its consideration of
the transactions contemplated hereby and thereby, and its enforcement of its
rights under this Section 8.02; (b) if this Agreement is terminated by Seller
pursuant to Section 8.01(b) or Section 8.01(e) because (in either case) of a
misrepresentation or inaccuracy in or breach of any representation or warranty
of Purchaser as of the date hereof that shall have caused (or, in the case of
termination pursuant to Section 8.01(e), would cause) the condition set forth in
Section 7.02(a) not to be satisfied, Purchaser shall pay to Seller promptly
following such termination, and nothing herein shall relieve Purchaser from
liability to Seller for, the actual documented out-of-pocket expenses incurred
by Seller in connection with the negotiation of this Agreement and the Ancillary
Agreements, its consideration of the transactions contemplated hereby and
thereby, and its enforcement of its rights under this Section 8.02; and (c) the
provisions of Section 5.03, this Section 8.02, Section 8.03, Article IX and
Article X shall remain in full force and effect and survive any termination of
this Agreement. The payments provided for herein shall be the sole remedy
available to a party upon termination as contemplated by this Section 8.02.
Section 8.03 Expenses and Transfer Taxes. All 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 transactions
contemplated hereby are consummated.
ARTICLE IX
SURVIVAL, INDEMNIFICATION AND ESCROW
Section 9.01 Survival of Representations and Warranties. Notwithstanding
any knowledge of facts determined or determinable by Purchaser pursuant to
investigation or right of investigation, the representations and warranties of
Purchaser and Seller contained in this Agreement, the Seller Disclosure
Schedule, the Purchaser Disclosure Schedule, the Ancillary Agreements, and the
certificates, instruments and documents delivered by a party pursuant to this
Agreement or any of the Ancillary Agreements shall survive the Closing for a
period of twelve (12) months from and after the Closing Date, except: (a) the
representations and warranties contained in Section 3.01 (Organization, Standing
and Power), Section 3.02 (Authority), Section 3.03 (No Conflicts) and Section
3.05 (Title to Purchased Assets; Absence of Encumbrances) and Sections 4.01
(Organization and Qualification), Section 4.02 (Authority Relative to this
Agreement) and Section 4.03 (No Conflict; Required Filings and Consents), and
the indemnification obligations of Seller hereunder with respect to Section 3.01
(Organization, Standing and Power), Section 3.02 (Authority), Section 3.03 (No
Conflicts) and Section 3.05 (Title to Purchased Assets; Absence of Encumbrances)
shall survive forever, (b) the representations and warranties contained in
Section 3.13 (Intellectual Property) (other than Sections 3.13(l),(m),(n),(o)
and (p)) and the indemnification obligations of Seller hereunder with respect
thereto shall survive until the second anniversary of the Closing Date and (c)
the
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representations and warranties contained in Section 3.14 (Environmental Matters)
and Section 3.15 (Taxes), and the indemnification obligations of Seller
hereunder with respect thereto, shall survive until the sixth anniversary of the
Closing Date. Neither the period of survival nor the liability of either party
with respect to its representations and warranties shall be reduced by any
investigation made at any time by or on behalf of the other party hereto.
Notwithstanding any other provisions of this Agreement, if written notice of a
claim has been given by Purchaser to Seller prior to the expiration of the
applicable representations and warranties, then such representations and
warranties shall survive as to such claim until such claim has been finally
resolved.
Section 9.02 Escrow Fund. On or as soon as reasonably practicable after
the Closing Date, in accordance with Section 2.05, the Escrow Amount shall be
deposited with U.S. Bank Trust National Association (or its successor in
interest or other institution selected by Purchaser with the consent of Seller,
which consent shall not be unreasonably withheld), as escrow agent (the "Escrow
Agent"). The Escrow Amount so deposited, together with interest and other income
thereon, shall constitute the "Escrow Fund" and shall be governed by the terms
set forth in this Agreement and in the Escrow Agreement. The Escrow Fund shall
be available to compensate Purchaser pursuant to the indemnification obligations
of Seller.
Section 9.03 Indemnification.
(a) From and after the Closing Date, subject to the limitations set
forth in this Article IX, Seller shall indemnify, defend and hold harmless
Purchaser and its officers, directors, advisors, Affiliates, agents, employees,
and each person, if any, who controls or may control Purchaser within the
meaning of the Securities Act (hereinafter referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and
against, any and all losses (including lost revenues and profits and diminution
in value), damages, fines, fees, Taxes, penalties, deficiencies, interest,
judgments, settlements, claims, demands, actions, causes of action, liabilities,
costs and expenses (including Legal Expenses) (collectively, "Damages") arising
out of, based upon or resulting from:
(i) any misrepresentation or inaccuracy in or breach of any of the
representations or warranties given or made by Seller in this Agreement, the
Seller Disclosure Schedule, any of the Ancillary Agreements, or any certificate,
instrument or document delivered to Purchaser pursuant to this Agreement or any
of the Ancillary Agreements;
(ii) any breach of or default in connection with any of the covenants or
agreements given or made by Seller in this Agreement, the Seller Disclosure
Schedule, any of the Ancillary Agreements, or any certificate, instrument or
document delivered to Purchaser pursuant to this Agreement or any of the
Ancillary Agreements;
(iii) any Retained Liability, whether arising before or after the
Closing Date; and/or
(iv) any noncompliance by Seller with any applicable bulk sales Law.
(b) Purchaser and Seller each acknowledges that the Damages, if any,
would relate to unresolved contingencies existing at the Closing Date, which if
resolved at the Closing Date would have led
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to a reduction in the Purchase Price, Purchaser would have agreed to pay in
connection with the transactions contemplated hereby.
Section 9.04 Limits on Indemnification. The maximum amount of Damages
which may be recovered from Seller for claims under Section 9.03(a)(i): (a) for
Damages arising out of, based upon or resulting from any misrepresentation or
inaccuracy in or breach of any of the representations or warranties by Seller
set forth in Section 3.01 (Organization, Standing and Power), Section 3.02
(Authority), Section 3.03 (No Conflicts), Section 3.05 (Title to Purchased
Assets; Absence of Encumbrances), Section 3.14 (Environmental Matters) and
Section 3.15 (Taxes) (the "Extended Representations") shall be an amount equal
to the Purchase Price, and (b) for Damages arising out of, based upon or
resulting from any misrepresentation or inaccuracy in or breach of any other
representation or warranty by Seller in this Agreement, the Seller Disclosure
Schedule, any of the Ancillary Agreements to which Seller is a party, or any
certificate, instrument or document delivered by Seller pursuant hereto or
thereto shall be an amount equal to the Escrow Amount plus all interest actually
earned thereon prior to the termination of the Escrow Fund pursuant to Section
9.06. Notwithstanding anything to the contrary contained in this Agreement,
there shall be no limit as to the Indemnified Persons' recovery of Damages with
respect to fraud or intentional misrepresentation or willful or intentional
breach by Seller. The Escrow Fund shall be partial security for the
indemnification obligations of Seller under Section 9.03 and, except as
expressly set forth in this Article IX, shall not be a limitation on
indemnification or other recovery. All claims for indemnification pursuant to
Section 9.03 shall be made first against the Escrow Fund to the extent any funds
remain therein and are available to satisfy such claims for indemnification, and
the Escrow Fund shall be the sole and exclusive remedy or source of recovery for
indemnification under this Agreement to the extent of such remaining available
funds.
Section 9.05 Damages Threshold. Notwithstanding the foregoing, an
Indemnified Person may not make any claim under Section 9.03(a) for Damages
(other than claims under Section 9.03(a)(iii)) until the aggregate amount of
claims by such Indemnified Person exceeds five hundred thousand dollars
($500,000); provided, however, that once the aggregate amount of Damages of such
Indemnified Person exceeds five hundred thousand dollars ($500,000), then such
Indemnified Person shall have the right to recover the full amounts due without
regard to the threshold. Once such threshold has been reached, any materiality
or Material Adverse Effect limitation or exception contained in a
representation, warranty, covenant or agreement shall be disregarded in
determining the amount of any Damages.
Section 9.06 Escrow Period. The Escrow Fund shall commence on the
Closing Date and shall terminate (a) eighteen (18) months after the Closing Date
with respect to claims under Section 9.03(a)(i) for Damages arising out of,
based upon or resulting from any misrepresentation or inaccuracy in or breach of
any of the Extended Representations and claims under Section 9.03(a)(iii), and
(b) twelve (12) months after the Closing Date for all other claims under Section
9.03(a). Promptly following the first anniversary of the Closing Date, Seller
shall be entitled to receive, from the Escrow Fund, one-half of the Escrow
Amount minus (i) the amount of all claims (if any) theretofore paid to any of
the Indemnified Persons out of the Escrow Fund and (ii) the amount reasonably
believed in good faith to be necessary to satisfy all claims (if any) then
pending against the Escrow Fund. Notwithstanding any other provision of this
Agreement, a portion of the Escrow Fund that is necessary to satisfy any
unsatisfied claims made prior to the time that the
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Escrow Fund would (but for this sentence) have terminated, and such claims
relate to facts and circumstances that existed prior to the time that the Escrow
Fund would (but for this sentence) have terminated, shall remain in the Escrow
Fund until such claims have been resolved.
Section 9.07 Procedure for Claims Upon Escrow Fund.
(a) All claims with the Escrow Agent for indemnification by any
Indemnified Person from the Escrow Fund shall be made in accordance with the
provisions of this Section 9.07 and the Escrow Agreement.
(b) Upon receipt by the Escrow Agent, on or before the day which is (i)
eighteen (18) months after the Closing Date in the case of claims asserted under
Section 9.03(a)(i) on the basis of any of the Extended Representations or under
Section 9.03(a)(iii), or (ii) twelve (12) months after the Closing Date in the
case of all other claims asserted under Section 9.03(a), of a certificate signed
by any officer of Purchaser stating that an Indemnified Person is seeking
indemnification hereunder, citing the section of this Agreement under which
indemnification is claimed, and setting forth a summary of the basis for such
claim (an "Officer's Certificate"), the Escrow Agent shall, subject to the
provisions of Section 9.08 and Section 9.09, deliver to Purchaser out of the
Escrow Fund, as promptly as practicable, an amount equal to the amount of
Damages set forth in such Officer's Certificate. Purchaser shall simultaneously
deliver to Seller a duplicate copy of any Officer's Certificate delivered to the
Escrow Agent.
Section 9.08 Objections to Claims. For a period of twenty-five (25) days
after such delivery of an Officer's Certificate, the Escrow Agent shall make no
delivery of any amount from the Escrow Fund pursuant to Section 9.07 unless the
Escrow Agent shall have received written authorization from Seller to make such
delivery. After the expiration of such twenty-five (25) day period, the Escrow
Agent shall make delivery of the applicable amount, except that no such payment
or delivery may be made if Seller shall object in a written statement to the
claim made in the Officer's Certificate, and such statement shall have been
delivered to the Escrow Agent and to Purchaser prior to the expiration of such
twenty-five (25) day period.
Section 9.09 Resolution of Conflicts; Arbitration.
(a) If Seller shall timely object in writing to any claim or claims by
Purchaser made in any Officer's Certificate in accordance with the provisions of
Sections 9.03 or 9.08, Purchaser shall have twenty-five (25) days after receipt
by the Purchaser of objection by Seller to respond in a written statement to the
objection of Seller. If after such twenty-five (25) day period there remains a
dispute as to any claims, Seller and Purchaser shall attempt in good faith for
sixty (60) days to agree upon the rights of the respective parties with respect
to each of such claims. If Seller and Purchaser should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum and shall distribute the applicable amount from the
Escrow Fund in accordance with the terms thereof.
(b) If no such agreement can be reached after good faith negotiation,
either Purchaser or Seller may, by written notice to the other, demand
arbitration of the matter unless the amount of Damages is at issue in pending
litigation with a third party, in which event arbitration shall not
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be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
conducted by three arbitrators. Within fifteen (15) days after such written
notice is sent, Purchaser and Seller shall each select one arbitrator, and the
two arbitrators so selected shall select a third arbitrator. The decision of the
arbitrators as to the validity and amount of any claim shall be binding and
conclusive upon the parties to this Agreement, and, with respect to claims from
the Escrow Fund, the Escrow Agent shall be entitled to act in accordance with
such decision and make or withhold payments out of the Escrow Fund in accordance
therewith.
(c) Judgment upon any award rendered by the arbitrators may be entered
in any court having jurisdiction. Any such arbitration shall be held in such
jurisdiction as is determined pursuant to Section 10.06 (for purposes of which
the party seeking arbitration shall be deemed to be the initiating party) under
the commercial rules then in effect of the American Arbitration Association. For
purposes of this Section 9.09, in any arbitration hereunder in which any claim
or the amount thereof stated in the Officer's Certificate is at issue, Purchaser
shall be deemed to be the non-prevailing party unless the arbitrators award
Purchaser more than one-half (1/2) of the amount in dispute; otherwise, Seller
shall be deemed to be the non-prevailing party. The non-prevailing party to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association, and the expenses,
including without limitation, attorneys' fees and costs, reasonably incurred by
the other party to the arbitration.
Section 9.10 Third Party Claims.
(a) In the event an Indemnified Person becomes aware of an Action or
Proceeding involving the assertion of a third-party claim which such Indemnified
Person believes may result in a demand against the Escrow Fund or Seller for
indemnification hereunder (a "Third Party Claim"), such Indemnified Person shall
give Seller notice of such Third Party Claim within thirty (30) days after the
receipt by such Indemnified Person of such notice; provided, however, that the
failure to provide such notice shall not release Seller from any of its
obligations under this Article IX except to the extent Seller is materially
prejudiced by such failure and shall not relieve Seller from any other
obligation or liability that it may have to such Indemnified Person otherwise
than under this Article IX.
(b) If Seller notifies the Indemnified Person within ten (10) days of
delivery of a notice by such Indemnified Person of a Third Party Claim that
Seller desires to defend the Indemnified Person with respect to such Third Party
Claim, then Seller shall have the right to conduct and control, through outside
legal counsel reasonably acceptable to such Indemnified Person, the defense,
compromise or settlement of any such Action or Proceeding involving the
assertion of a Third Party Claim, and in any such case the Indemnified Person
shall cooperate in connection therewith and shall furnish such records,
information, access to employees and testimony and shall attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by Seller in connection therewith; provided, that
notwithstanding the foregoing, Seller shall not have the right to conduct and
control the defense, compromise or settlement of any such Action or Proceeding
if such Action or Proceeding also involves the assertion of a claim or claims
which is not subject to indemnification by Seller hereunder; and provided
further that the Indemnified Person may participate, through counsel chosen by
it and at its own expense, in the defense, compromise and settlement of any such
Action or Proceeding
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which Seller has so elected to conduct and control. Seller shall not, without
the written consent of the Indemnified Person, pay, compromise or settle any
Action or Proceeding involving the assertion of such Third Party Claim unless
such payment, compromise or settlement is paid exclusively and entirely by
Seller and includes a full and unconditional release of such Indemnified Person
from any Liability with respect to such Action or Proceeding. In the event
Seller, without the consent of the Indemnified Person, settles an Action or
Proceeding involving the assertion of a Third Party Claim and is not paid
exclusively or entirely by Seller or and does not obtain such full and
unconditional release of the Indemnified Person, then Seller shall have no power
or authority to object under any provision of this Article IX to the amount of
any claim by the Indemnified Person against Seller or the Escrow Fund for
indemnification with respect to such settlement. If Seller does not so notify
the Indemnified Person of its intent to conduct and control the defense of the
Action or Proceeding involving the assertion of a Third Party Claim or if Seller
otherwise fails to take timely steps to assume and conduct the defense of such
Action or Proceeding, then the Indemnified Person shall have the right to
conduct and control, through counsel of its choosing, in such manner as it may
deem appropriate at Seller's cost and expense, and Seller shall not have the
right to conduct and control, the defense, compromise or settlement of such
Action or Proceeding, and Seller shall promptly reimburse the Indemnified Person
therefor in accordance with the terms hereof.
(c) Notwithstanding the provisions of Section 9.10(b), if (i) an Action
or Proceeding involving the assertion of a Third Party Claim includes a request
for equitable relief (or any other relief, whether at law or in equity, other
than monetary damages) against any Indemnified Person (whether or not in
conjunction with other relief) or (ii) the amount of Damages specified in the
pleadings in an Action or Proceeding involving the assertion of a Third Party
Claim, when aggregated with the amount of Damages specified in the pleadings in
all other Actions and Proceedings involving the assertion of a Third Party Claim
then pending, exceeds Seller's indemnification obligations under Section 9.04,
the Indemnified Person shall have the right to conduct and control, through
counsel of its choosing, and Seller shall not have the right to conduct and
control, the defense, compromise or settlement of such Action or Proceeding. In
any such case, Seller shall cooperate in connection therewith and shall furnish
such records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
Indemnified Person in connection therewith. The Indemnified Person shall not,
without the consent of Seller, pay, compromise or settle such Action or
Proceeding, provided, however, that (i) Seller's consent shall not be
unreasonably withheld, delayed or conditioned and (ii) no consent of Seller
shall be required if the Indemnified Person shall waive (by means of a written
waiver signed by the Indemnified Person) any right to indemnification therefor
hereunder and shall obtain a release of Seller from and against any liability as
a consequence of such Action or Proceeding. In the event Seller has consented to
any such settlement, Seller shall have no power or authority to object under any
provision of this Article IX to the amount of any claim by the Indemnified
Person against the Escrow Fund for indemnity with respect to such settlement.
The Indemnified Person shall have the right to defend such Action or Proceeding
in such manner as it may deem appropriate at Seller's cost and expense, and
Seller shall promptly reimburse the Indemnified Person therefor in accordance
with the terms hereof. Seller may participate, through counsel chosen by it and
at its own expense, in the defense of any such Action or Proceeding the defense,
compromise or settlement of which the Indemnified Person has so elected to
conduct and control. Notwithstanding any other provision of this Agreement,
Purchaser shall not be entitled to indemnification hereunder for
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costs or expenses incurred in making any person who is then an employee of
Purchaser (including any of the Transferred Employees) available to Seller after
the Closing to provide records, information or testimony or to attend
conferences, discovery proceedings, hearings, trials and appeals in connection
with Seller's defense of a Third Party Claim.
(d) At the request of the Indemnified Person at any time, Seller shall
assume and conduct the defense of a Third Party Claim with outside legal counsel
reasonably acceptable to the Indemnified Person. In such event, the Indemnified
Person shall be entitled to participate in the defense of such Third Party Claim
at the cost and expense of Seller; provided, however, that (i) the Indemnified
Person shall be entitled (at its own expense) to participate in the defense of
such Third Party Claim and to employ counsel to assist in the handling of such
claim; (ii) Seller shall not, without the written consent of the Indemnified
Person (which consent shall not be unreasonably withheld, delayed or
conditioned), pay, compromise or settle any such Third Party Claim; and (iii)
the Indemnified Person shall thereafter cooperate in connection therewith and
shall furnish such records, information, access to employees and testimony and
attend such conferences, discovery proceedings, hearings and trials and appeals
as may be reasonably requested by Seller in connection with such defense.
(e) The reimbursement of fees, costs and expenses required by this
Section 9.10 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
The Indemnified Parties shall have the right, but shall not be required, to
recover such fees, costs and expenses by means of a claim against the Escrow
Fund.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon confirmation of delivery) by delivery in
person, by telecopy or facsimile, by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier service
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 10.01):
(a) if to Seller:
American Megatrends, Inc.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Purchaser:
LSI Logic Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.02 Amendment. This Agreement may be amended or modified by
the parties hereto by action taken by or on behalf of their respective boards of
directors at any time prior to the Closing Date. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
Section 10.03 Waiver, Rights and Remedies Cumulative. At any time prior
to the Closing Date, any party hereto may (a) extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto, (b) waive any misrepresentation or inaccuracy in or breach of any
of the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance by the other party with any
of the agreements or conditions contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by extending
or waiving party or parties. No delay on the part of either party in exercising
any right, power or privilege hereunder shall operate as a waiver hereof, nor
shall any single or partial waiver or exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. The rights and remedies provided
herein are cumulative and are not exclusive of any rights or remedies that
either party may otherwise have at law or in equity.
Section 10.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner to the fullest extent permitted by applicable Law in order that the
transactions
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contemplated hereby may be consummated as originally contemplated to the fullest
extent possible.
Section 10.05 Assignment; Binding Effect; No Third Party Beneficiary.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties hereto, except
that Purchaser shall have the right, exercisable in its sole discretion and
without the consent or agreement of any other party, to assign all of its rights
and to delegate all of its obligations under this Agreement and the Annexes,
Schedules and exhibits hereto to any wholly-owned Subsidiary of Purchaser in a
manner consistent with the provisions of Section 6.05. 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.
Notwithstanding anything contained in this Agreement to the contrary, other than
Article IX, nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights or remedies under
or by reason of this Agreement.
Section 10.06 Governing Law. This Agreement shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of the
State of California applicable to contracts made and to be performed entirely
within that state, and no effect shall be given to any conflict-of-laws
principles thereof directing the application of any Law other than the laws of
the State of California. Any Action or Proceeding initiated by Seller against
Purchaser arising out of or relating to this Agreement and the agreements,
instruments and documents contemplated hereby shall be brought in the United
States District Court for the judicial district set forth in Schedule 10.06(a)
and the state courts set forth in Schedule 10.06(b). Any Action or Proceeding
initiated by Purchaser against Seller arising out of or relating to this
Agreement and the agreements, instruments and documents contemplated hereby
shall be brought in the United States District Court for the judicial district
set forth in Schedule 10.06(c) and the state courts set forth in Schedule
10.06(d). The parties hereby consent to and agree to submit to the exclusive
jurisdiction of such courts. Each of the parties hereto waives, and agrees not
to assert in any such dispute, to the fullest extent permitted by applicable
Law, any claim that (i) such party is not personally subject to the jurisdiction
of such courts, (ii) such party and such party's property is immune from any
legal process issued by such courts, or (iii) any litigation commenced in such
courts is brought in an inconvenient forum.
Section 10.07 Waiver of Jury Trial. Each party hereto hereby irrevocably
waives all right to trial by jury in any proceeding (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or any
transaction or agreement contemplated hereby or the actions of any party hereto
in the negotiation, administration, performance or enforcement hereof.
Section 10.08 Headings; Interpretation. The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
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65
Section 10.09 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
Section 10.10 Entire Agreement. This Agreement (including the annexes,
schedules and exhibits to this Agreement), the Seller Disclosure Schedule and
the Purchaser Disclosure Schedule and the Confidentiality Agreement constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
LSI LOGIC CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman & CEO
AMERICAN MEGATRENDS, INC.
By: /s/ SHANKAR
-------------------------------
Name: ▇. ▇▇▇▇▇▇▇
Title: President
AMERICAN MEGATRENDS, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇. ▇▇▇▇▇
Title: Ex. ▇.▇.
▇▇
▇▇
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
SCHEDULE 2.03(i)
Two hundred twenty-one million five hundred thousand dollars ($221,500,000).
SCHEDULE 2.03(ii)
PREPAID RENT AND DEPOSITS AND EMPLOYEE ADVANCES
Schedule of Deposits and Prepaids
Rent Deposit - AMI, CA 4,792.30
ENDL Publications 1,515.00
Total Prepaids $6,277.30
-----------------------------------------------------------------------------------------
Schedule of Employees Advances
-----------------------------------------------------------------------------------------
9/21/00 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ 2,750.00
7/1/00 ▇▇▇▇▇▇▇, ▇▇▇▇▇ 615.70
5/2/01 ▇▇▇▇▇▇, ▇▇▇▇ 150.00
4/20/01 ▇▇▇▇▇▇, ▇▇▇▇ 438.88
=========
Total Advances $3,954.58
-----------------------------------------------------------------------------------------
Total Allocation $10,231.88
=========================================================================================
SCHEDULE 2.04(b)(i)
Twenty-three million nine hundred thousand dollars ($23,900,000)
SCHEDULE 2.04(b)(ii)
One hundred ninety seven million, six hundred ten thousand, two hundred thirty
one dollars and eighty eight cents ($197,610,231.88).
