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EXHIBIT 2.3
FORM OF
GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT
AMONG
QUANTUM CORPORATION,
INSULA CORPORATION
AND
MAXTOR CORPORATION
______________, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I CONTRIBUTION AND ASSUMPTION....................................................1
Section 1.1 Contribution of Assets and Assumption of Liabilities........................1
Section 1.2 HDD Assets..................................................................2
Section 1.3 Excluded Assets.............................................................5
Section 1.4 HDD Liabilities.............................................................6
Section 1.5 Excluded Liabilities........................................................7
Section 1.6 Governmental Approvals and Consents.........................................8
Section 1.7 Novation Relating to Assumed HDD Liabilities................................9
Section 1.8 Payment of Convertible Debt................................................10
ARTICLE II LITIGATION...................................................................11
Section 2.1 Allocation.................................................................11
ARTICLE III MISCELLANEOUS...............................................................11
Section 3.1 Entire Agreement...........................................................11
Section 3.2 Acknowledgment.............................................................11
Section 3.3 Governing Law..............................................................12
Section 3.4 Termination................................................................12
Section 3.5 Amendment..................................................................12
Section 3.6 Notices....................................................................12
Section 3.7 Interpretation.............................................................12
Section 3.8 Counterparts...............................................................14
Section 3.9 No Third Party Beneficiaries...............................................14
Section 3.10 Severability...............................................................14
Section 3.11 Other Remedies; Specific Performance.......................................14
Section 3.12 Assignment.................................................................14
Section 3.13 Authority..................................................................14
ARTICLE IV DEFINITIONS..................................................................15
Section 4.1 Action.....................................................................15
Section 4.2 Affiliated Company.........................................................15
Section 4.3 Ancillary Agreement........................................................15
Section 4.4 Consents...................................................................15
Section 4.5 Contracts..................................................................15
Section 4.6 Convertible Notes..........................................................15
Section 4.7 Delayed Transfer Assets....................................................15
Section 4.8 Delayed Transfer Liability.................................................15
Section 4.9 Excluded Assets............................................................15
Section 4.10 Excluded Liabilities.......................................................15
Section 4.11 Facilities.................................................................15
Section 4.12 Governmental Approvals.....................................................15
Section 4.13 Governmental Authority.....................................................16
Section 4.14 HDD Assets.................................................................16
Section 4.15 HDD Balance Sheet..........................................................16
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Section 4.16 HDD Business...............................................................16
Section 4.17 HDD Business Pro Rata Portion..............................................16
Section 4.18 HDD Contingent Gain........................................................16
Section 4.19 HDD Contingent Liability...................................................16
Section 4.20 HDD Liabilities............................................................16
Section 4.21 Indemnification Agreement..................................................16
Section 4.22 Indentures.................................................................16
Section 4.23 Intellectual Property......................................................16
Section 4.24 Intellectual Property Agreement............................................17
Section 4.25 Liabilities................................................................17
Section 4.26 Litigation Disclosure Letter...............................................17
Section 4.27 Merger Agreement...........................................................17
Section 4.28 Person.....................................................................17
Section 4.29 Redemption.................................................................17
Section 4.30 Redemption Date............................................................17
Section 4.31 Separation.................................................................17
Section 4.32 Separation Agreement.......................................................18
Section 4.33 Separation Date............................................................18
Section 4.34 Subsidiary.................................................................18
Section 4.35 Taxes......................................................................18
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SCHEDULES
SCHEDULE 1.1(c) Delayed Transfer Assets and Liabilities
SCHEDULE 1.3 Excluded Assets
SCHEDULE 1.5 Excluded Liabilities
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GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT
This General Assignment and Assumption Agreement (this "AGREEMENT") is
entered into on _________, 200__ among Quantum Corporation, a Delaware
corporation ("COMPANY"), Insula Corporation, a Delaware corporation ("SPINCO")
and Maxtor Corporation, a Delaware corporation ("MAXTOR"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
such terms in Article IV hereof, or in the Amended and Restated Agreement and
Plan of Merger and Reorganization among the parties hereto and a wholly owned
subsidiary of Maxtor dated October 3, 2000 (the "MERGER AGREEMENT"), as
applicable.
RECITALS
WHEREAS, Company hereby and by certain other instruments of even date
herewith transfers or will transfer to Spinco effective as of the Separation
Date, substantially all of the business, assets and liabilities of the HDD
Business owned and operated by Company in accordance with the Separation and
Redemption Agreement dated as of the date hereof among the parties hereto (the
"SEPARATION AGREEMENT") and the agreements and instruments provided for therein.
WHEREAS, Company, Spinco, Maxtor and a wholly owned subsidiary of Maxtor
have entered into the Merger Agreement pursuant to which, subsequent to the sale
or distribution of Spinco stock to Company's HDD stockholders, Spinco will merge
with and into Maxtor (the "MERGER") and Maxtor will become the
successor-in-interest to Spinco.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
CONTRIBUTION AND ASSUMPTION
SECTION 1.1 CONTRIBUTION OF ASSETS AND ASSUMPTION OF LIABILITIES.
(a) Transfer of Assets. Effective on the Separation Date, Company hereby
assigns, transfers, conveys and delivers to Spinco, and agrees to cause its
applicable Subsidiaries that have assets used primarily in or primarily related
to the HDD Business to assign, transfer, convey and deliver to Spinco's
applicable Subsidiaries, and Spinco hereby accepts from Company, and agrees to
cause its applicable Subsidiaries to accept from Company's applicable
Subsidiaries, all of Company's and its applicable Subsidiaries' respective
right, title and interest in all HDD Assets, other than the Delayed Transfer
Assets; provided, however, that any HDD Assets that are specifically assigned or
transferred pursuant to or the subject of another Ancillary Agreement shall not
be assigned or transferred pursuant to this Section 1.1(a).
(b) Assumption of Liabilities. Effective on the Separation Date, Spinco
hereby assumes and agrees faithfully to perform and fulfill, and agrees to cause
its applicable Subsidiaries to assume
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and fulfill, perform and fulfill all the HDD Liabilities not listed as Excluded
Liabilities in Section 1.5 below, other than the Delayed Transfer Liabilities,
in accordance with their respective terms.
(c) Delayed Transfer Assets and Liabilities. Each of the parties
hereto agrees that the Delayed Transfer Assets will be assigned, transferred,
conveyed and delivered, and the Delayed Transfer Liabilities will be assumed, in
accordance with the terms of the agreements that provide for such assignment,
transfer, conveyance and delivery, or such assumption, after the date of this
Agreement or as otherwise set forth on Schedule 1.1(c). Following such
assignment, transfer, conveyance and delivery of any Delayed Transfer Asset, or
the assumption of any Delayed Transfer Liability, the applicable Delayed
Transfer Asset or Delayed Transfer Liability shall be treated for all purposes
of this Agreement and the Ancillary Agreements as an HDD Asset or as an HDD
Liability, as the case may be.
(d) Misallocated Assets and Liabilities. In the event that at any
time or from time to time (whether prior to, on or after the Separation Date),
any party hereto (or any Subsidiary of such party), shall receive or otherwise
possess any asset or liability that was intended to be transferred to Spinco or
its Subsidiaries pursuant to this Agreement or any Ancillary Agreement as part
of the HDD Business, or that was inadvertently transferred to Spinco or its
Subsidiaries but is determined not to have been part of the HDD Business, the
party with the asset or liability shall promptly transfer, or cause to be
transferred, or re-transfer such asset or liability to the Person entitled
thereto and the Person entitled thereto shall assume or reassume such asset or
liability. Prior to any such transfer, the Person receiving or possessing such
asset shall hold such asset in trust for any such other Person.
(e) Documents Relating to Other Transfers of Assets and Assumption of
Liabilities. In furtherance of the assignment, transfer and conveyance of HDD
Assets and the assumption of HDD Liabilities set forth in this Agreement and
certain Ancillary Agreements, simultaneously with the execution and delivery
hereof or as promptly as practicable thereafter, (i) Company shall execute and
deliver, and shall cause its Subsidiaries to execute and deliver, such bills of
sale, stock powers, certificates of title, assignments of contracts,
supplemental trust indentures and other instruments of transfer, conveyance and
assignment as and to the extent necessary to evidence the transfer, conveyance
and assignment of all of Company's and its Subsidiaries' right, title and
interest in and to the HDD Assets and Delayed Transfer Assets to Spinco and its
Subsidiaries and (ii) Spinco and its Subsidiaries shall execute and deliver, to
Company and its Subsidiaries such bills of sale, stock powers, certificates of
title, assumptions of contracts, supplemental trust indentures and other
instruments of assumption as and to the extent necessary to evidence the valid
and effective assumption of the HDD Liabilities and Delayed Transfer Liabilities
by Spinco and its Subsidiaries.
SECTION 1.2 HDD ASSETS.
(a) Included HDD Assets. For purposes of this Agreement, "HDD ASSETS"
shall mean (without duplication) the following assets, except as otherwise
provided for in any Ancillary Agreement or other express agreement of the
parties:
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(b) all assets reflected in the June 30, 2000 Balance Sheet of the HDD
Business (the "BALANCE SHEET") subject to any dispositions of such assets in the
ordinary course of business or with the approval of Maxtor subsequent to the
date of such Balance Sheet;
(c) all assets that have been written off, expensed or fully
depreciated that, had they not been written off, expensed or fully depreciated,
would have been reflected in the Balance Sheet in accordance with the principles
and accounting policies under which the Balance Sheet was prepared;
(d) all assets that are used primarily by the HDD Business at the
Separation Date but that are not reflected in the Balance Sheet due to mistake
or unintentional omission;
(e) all assets acquired by Company or its Subsidiaries after the date
of the Balance Sheet that are (or should be) reflected in the consolidated
balance sheet of the HDD Business as of the Separation Date (including due to a
transfer by Company to the HDD Business in contemplation of the Separation)
prepared using the same principles and accounting policies under which the
Balance Sheet was prepared, including but not limited to:
(i) all inventories of HDD products, parts, packaging, raw
materials, supplies, work-in-progress, finished goods and similar tangible
property (wherever located, including in the possession of vendors or other
third parties), and open purchase orders and unfilled orders therefor;
(ii) all computer software programs, applications, source code
(including annotations), object code, design software, program specifications
and related materials, documentation and instructions used exclusively in the
HDD Business, not covered by the Intellectual Property Agreement and which can
be separated and delivered without undue cost, disruption or expense and copies
of all data relating exclusively to the HDD Business and stored on other
programs of the Company, in a form acceptable to Maxtor;
(iii) all prepaid expenses, trade accounts, deposits and other
accounts and notes receivable, including intracompany accounts receivable to the
extent they relate to the HDD Business;
(iv) all apparatus, equipment (including equipment used for
research and development), machinery, computers, vehicles, furniture, fixtures,
special and general tools, test devices, prototypes, models and other tangible
personal property;
(v) all (1) accounts receivable and other rights to payment for
goods or services sold, leased or otherwise provided in the conduct of the HDD
Business that, as of the Separation Date, are payable by a third party to
Company or any of Company's subsidiaries, whether past due, due or to become
due, including any interest, sales or use taxes, finance charges, late or
returned check charges and other obligations of the accounts debtor with respect
thereto, and any proceeds of any of the foregoing and (2) other miscellaneous
assets for which an adjustment is made in the Balance Sheet;
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(vi) all cash on the Balance Sheet, allocated account-by-account
in a manner reasonably acceptable to Maxtor where entire accounts were not
historically dedicated to the HDD Business, and all marketable securities on the
HDD Balance Sheet, allocated in a manner reasonably acceptable to Maxtor where
specific marketable securities were not historically denoted as HDD Business
securities;
(vii) all claims or other rights of Company or its Subsidiaries
that primarily relate to the HDD Business (but only to the extent they relate to
the HDD Business), whenever arising, against any Person or entity, if and to the
extent that (i) such claim or right arises out of the events, acts or omissions
occurring on or before the Separation Date (based on then existing law) and (ii)
the existence or scope of the obligation of such other Person or entity as of
the Separation Date was not acknowledged, fixed or determined in any material
respect, due to a dispute or other uncertainty as of the Separation Date or as a
result of the failure of such claim or other right to have been discovered or
asserted as of the Separation Date. A claim or right meeting the foregoing
definition shall be considered an "HDD CONTINGENT GAIN" regardless of whether
there was any action pending, threatened or contemplated as of the Separation
Date with respect thereto. In the case of any claim or right a portion of which
arises out of events, acts or omissions occurring prior to the Separation Date
and a portion of which arises out of events, acts or omissions occurring on or
after the Separation Date, only that portion that arises out of events, acts or
omissions occurring prior to the Separation Date shall be considered an HDD
Business Contingent Gain. For purposes of the foregoing a claim or right shall
be deemed to have accrued as of the Separation Date if all the elements of the
claim necessary for its assertion shall have occurred on or prior to the
Separation Date, would not be dismissed by a court on ripeness or similar
grounds. Notwithstanding the foregoing, none of (i) any insurance proceeds, (ii)
any Excluded Assets (as defined below) or (iii) any matters relating to Taxes
which are governed by the Tax Sharing Agreement shall be deemed to be a HDD
Contingent Gain;
(viii) all contracts in which Company or its Subsidiaries are
party or by which they or any of their assets is bound whether or not in writing
that relate primarily to the HDD Business (but only to the extent they relate to
the HDD Business), except as otherwise specified as an Excluded Asset, provided
for in any Ancillary Agreement or agreed in any other express agreement of the
parties including:
(f) all rights under contracts, agreements, customer orders,
warranties, guarantees and representations made for the benefit of the HDD
Business, all claims or rights against any person or entity arising from the
ownership of any HDD Asset, all rights in connection with any bids or offers and
all claims, choices in action or similar rights, whether accrued or contingent;
(g) to the extent assignable, all rights under agreements with
employees and consultants of the HDD Business concerning confidentiality,
noncompetition, nonsolicitation or the assignment of inventions;
(h) to the extent permitted by law and subject to any agreement
regarding indemnification and/or insurance matters, all rights of the HDD
Business under any of insurance policies and rights in the nature of insurance,
indemnification or contribution of the Company and its Subsidiaries;
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(i) all licenses, permits, approvals, authorizations and applications
therefor which have been issued by any governmental authority that relates
solely to the HDD Business, to the extent transferable with the HDD Business;
(j) all books, records, written technical information, data,
specifications, research and development information, engineering drawings,
artwork, design, development and manufacturing files, operating and maintenance
manuals, analyses and materials prepared by consultants and other third parties,
customer files, sales and pricing data, cost information, quality records and
reports, and lists of and correspondence with customers, prospects, vendors and
suppliers relating to past conduct of the HDD Business, whether in paper,
microfilm, computer tape or disk or any other form (provided, however, that
Company may retain copies except as otherwise expressly provided in the
Ancillary Agreements);
(k) all real estate interests which neither the HDD Business nor Company
employees are occupying as of the date of the Merger Agreement and which are
included on the Balance Sheet; and
(l) all assets that are expressly agreed by Maxtor and the Company to
be HDD Assets.
SECTION 1.3 EXCLUDED ASSETS. The following assets shall be excluded from
the HDD Assets (the "EXCLUDED ASSETS"):
(a) the assets listed or described on Schedule 1.3 and cash in the
amount, to the extent not previously paid, to satisfy all of the Company's
expenses (including legal, accounting and financial advisory fees) incurred in
connection with the Merger, the Separation and the transactions contemplated
thereby, including costs, expenses and taxes related to implementing the
separation;
(b) the Company Intellectual Property except to the extent addressed in
the Intellectual Property Agreement;
(c) the Credit Agreements, dated April 19, 2000, among Company, Banc of
America Securities, LLC, Bank of America, N.A., Fleet National Bank, the Bank of
Nova Scotia and other specified banks, and the rights thereunder;
(d) Real property, easements, leases, mortgages, deeds of title and
other documents relating to real property, except as provided in Section 1.1(c)
and Section 1.6(b) and on Schedule 1.1(c) (the "FACILITIES");
(e) any Assets that are expressly agreed by Maxtor and the Company to be
Excluded Assets.
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SECTION 1.4 HDD LIABILITIES.
(a) Included HDD Liabilities. For the purposes of this Agreement, "HDD
LIABILITIES" shall mean (without duplication) the following Liabilities, except
as otherwise provided for in any Ancillary Agreement or other express agreement
of the parties:
(b) all Liabilities reflected in the Balance Sheet, subject to any
discharge of such Liabilities subsequent to the date of the Balance Sheet
including contractual assumption of the HDD Business Pro Rata Portion of the
Convertible Notes.
(c) all Liabilities of Company or its Subsidiaries that arise after the
date of the Balance Sheet that would be reflected in the consolidated balance
sheet of the HDD Business as of the Separation Date if such consolidated balance
sheet was prepared using the same principles and accounting policies under which
the Balance Sheet was prepared;
(d) all Liabilities that are related primarily to the HDD Business at
the Separation Date but are not reflected in the Balance Sheet due to mistake or
unintentional omission;
(e) the payment obligations for the Facilities (provided, however, that
payments for space under the Transition Services Agreement shall be paid by
Maxtor to Company to pay to the appropriate landlords and as otherwise provided
in Section 1.1(c));
(f) taxes which Spinco and Maxtor indemnify the Company for under the
Tax Sharing Agreement;
(g) all Liabilities, whether arising before, on or after the Separation
Date, relating to, arising out of or resulting from:
(i) the operation of the HDD Business, as conducted at any time
prior to, on or after the Separation Date (including any Liability relating to,
arising out of or resulting from any act or failure to act by any director,
officer, employee, agent or representative (whether or not such act or failure
to act is or was within such person or entity's authority));
(ii) the operation of any business conducted by the HDD Business
at any time after the Separation Date (including any Liability relating to,
arising out of or resulting from any act or failure to act by any director,
officer, employee, agent or representative (whether or not such act or failure
to act is or was within such person or entity's authority)); or
(iii) any HDD Assets;
(h) any Liability of Company or the HDD Business that relates to the HDD
Business, to any person or entity, if and to the extent that (i) such Liability
arises out of the events, acts or omissions occurring on or before the
Separation Date and (ii) the existence or scope of the
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obligation as of the Separation Date with respect to such Liability was not
acknowledged, fixed or determined in any material respect, due to a dispute or
other uncertainty as of the Separation Date or as a result of the failure of
such Liability to have been discovered or asserted as of the Separation Date (it
being understood that the existence of a litigation or other reserve with
respect to any Liability shall not be sufficient for such Liability to be
considered acknowledged, fixed or determined) (the "HDD BUSINESS CONTINGENT
LIABILITY"). In the case of any Liability a portion of which arises out of
events, acts or omissions occurring prior to the Separation Date and a portion
of which arises out of events, acts or omissions occurring on or after the
Separation Date, only that portion that arises out of events, acts or omissions
occurring prior to the Separation Date shall be considered an HDD Business
Contingent Liability. For purposes of the foregoing, a Liability shall be deemed
to have arisen out of events, acts or omissions occurring prior to the
Separation Date if all the elements necessary for the assertion of a claim with
respect to such Liability shall have occurred on or prior to the Separation
Date, such that the claim, were it asserted in an action on or prior to the
Separation Date, would not be dismissed by a court on ripeness or similar
grounds. For purposes of clarification of the foregoing, the parties agree that
no Liability relating to, arising out of or resulting from any obligation of any
person or entity to satisfy any obligation accrued under any employee stock
option plan, stock purchase plan or the like as of the Separation Date, shall be
deemed to be an HDD Business Contingent Liability;
(i) all accounts payable and other obligations of payment for goods or
services purchased, leased or otherwise received in the conduct of the HDD
Business that as of the Separation Date are payable to a third party by Company
or any of Company's Subsidiaries, whether past due, due or to become due,
including any interest, sales or use taxes, finance charges, late or returned
check charges and other obligations of Company or any of Company's Subsidiaries
with respect thereto, and any obligations related to any of the foregoing;
(j) payroll, bonus, pension, severance and other liabilities for
employees as specified in the Merger Agreement; and
(k) all other Liabilities that are expressly agreed by Maxtor and the
Company to be HDD Liabilities.
SECTION 1.5 EXCLUDED LIABILITIES. The following Liabilities shall be
excluded from the HDD Liabilities (the "EXCLUDED LIABILITIES"):
(a) all liabilities associated with Excluded Assets;
(b) all contingent liabilities relating to securities law compliance by
the Company relating to HDD Common Stock or breach of fiduciary duties by
Company's Board of Directors relating to the HDD Business;
(c) all Liabilities for Taxes except any tax Spinco or Maxtor
indemnifies the Company for under the Tax Sharing Agreement or expressly assumed
under Section 1.4;
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(d) all agreements and obligations of Company under the agreements
governing the Redemption and the Merger (prior to the Effective Time);
(e) all Liabilities that are expressly agreed by Company and the Company
to be Excluded Liabilities (including liabilities under any non-assigned
contract), including the liabilities set forth on Schedule 1.5; and
(f) all agreements and obligations of the Company under the Separation
Agreements.
SECTION 1.6 GOVERNMENTAL APPROVALS AND CONSENTS.
(a) Transfer In Violation of Laws. Company agrees to comply and to cause
its Subsidiaries to comply with all applicable bulk transfer, bulk sales and
similar requirements of all jurisdictions in connection with the transactions
contemplated hereby. If and to the extent that the valid, complete and perfected
transfer assignment or novation to Spinco or its Subsidiaries of any HDD Assets
or Delayed Transfer Assets and HDD Liabilities (or from any Affiliated Companies
of any non-HDD Assets) would be a violation of applicable laws or require any
Consent or Governmental Approval in connection with the Separation or the
Redemption, then, unless Company and Maxtor shall otherwise agree, the transfer,
assignment or novation to or from Spinco or its Subsidiaries, as the case may
be, of such HDD Assets or non-HDD Assets, shall be automatically deemed deferred
and any such purported transfer, assignment or novation shall be null and void
until such time as all legal impediments are removed and/or such Consents or
Governmental Approvals have been obtained. Notwithstanding the foregoing, if
such covenants or Governmental Approvals have not been obtained within six
months of the Separation Date, the parties will use their reasonable commercial
efforts to achieve an alternative solution in accordance with the parties'
intentions.
(b) Contracts as Delayed Transfer Assets. To the extent that any
contract or contractual or similar rights material to the HDD Business are not
assignable without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof, or thereunder, if
such assignment or attempted assignment would constitute a breach thereof, until
the necessary consents are obtained. Upon the request of Maxtor after the
Merger, Company agrees to make introductions to appropriate Maxtor personnel of
Company's contacts at such third parties, and agrees to provide reasonable
assistance to Maxtor, at Company's own expense, so that Maxtor may obtain
agreements from such third parties under terms and conditions acceptable to
Maxtor, including financial terms and conditions, that apply to Company and its
Subsidiaries, as provided in the Separation Agreement. Company also understands
that there are certain Delayed Transfer Assets between Company and third parties
which the parties intend to assign to Spinco in connection with the Separation
but for which a precondition to assignment may be the consent of the applicable
third party. Upon the request of Maxtor, Company agrees to assist Spinco and
Maxtor in seeking and obtaining the consent of such third parties to such
assignment. If any such consent shall not be obtained, Company and Spinco shall
cooperate to the maximum extent possible to provide for (a) Spinco the benefits
intended to be assigned to Spinco under any such Delayed Transfer Asset
(including enforcement at the cost and for the account of Spinco of any and all
rights of Company
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against the other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise) and (b) Spinco to relieve Company of
its obligations under any such Delayed Transfer Asset in the manner provided in
the Transition Services Agreement. The provisions of this Section 1.6(b) shall
not affect the conditions to the obligations of the Company contained in the
Merger Agreement.
(c) Transfers Not Consummated Prior to Separation Date. If the transfer,
assignment or novation of any assets intended to be transferred or assigned
hereunder is not consummated prior to or on the Separation Date, whether as a
result of the provisions of Section 1.6(b) or for any other reason, then the
Person retaining such asset shall thereafter hold such asset for the use and
benefit, insofar as reasonably possible, of the Person entitled thereto (at the
expense of the Person entitled thereto). In addition, the Person retaining such
asset shall take such other actions as may be reasonably requested by the Person
to whom such asset is to be transferred in order to place such Person, insofar
as reasonably possible, in the same position as if such asset had been
transferred as contemplated hereby and so that all the benefits and burdens
relating to such assets, including possession, use, risk of loss, potential for
gain, and dominion, control and command over such assets, are to inure from and
after the Separation Date to the Person intended to hold such asset under the
principles hereof. If and when the Consents and/or Governmental Approvals, the
absence of which caused the deferral of transfer of any Delayed Transfer Asset
pursuant to Section 1.6(b), are obtained, upon request of Maxtor, the transfer
of the applicable Delayed Transfer Asset shall be effected in accordance with
the terms of this Agreement and/or the applicable Ancillary Agreement.
(d) Expenses. The Person retaining an asset due to the deferral of the
transfer of such asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the Person
entitled to the asset, other than reasonable out-of-pocket expenses, attorneys'
fees and recording or similar fees, all of which shall be promptly reimbursed by
the Person entitled to such asset and other than in the case of an emergency, in
which case such Person shall use commercially reasonable efforts to take such
steps as it would if the asset were its own, and to seek compensation
thereafter. Notwithstanding the foregoing, if the Person retaining an asset
receives notice or becomes aware of any expenses that are necessary or
appropriate to maintain the asset, such Person shall promptly inform the Person
entitled to the asset of the related facts and circumstances.
SECTION 1.7 NOVATION RELATING TO ASSUMED HDD LIABILITIES.
(a) Reasonable Commercial Efforts. Each of Company and Spinco and their
Subsidiaries, at the request of another party, shall use their reasonable
commercial efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate (including with respect
to any federal government contract) or assign all rights and obligations under
agreements, leases, licenses and other obligations or Liabilities of any nature
whatsoever that constitute HDD Liabilities or to obtain in writing the
unconditional release of the Company and its Subsidiaries, so that, in any such
case, Spinco and its Subsidiaries will be solely responsible for such HDD
Liabilities; provided, however, that neither Company, Spinco nor their
Subsidiaries shall be obligated to pay any consideration therefor to any third
party from whom such consents,
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approvals, substitutions and amendments are requested. In the event that any
liabilities are improperly transferred to Spinco or its Subsidiaries, the
Company and its Subsidiaries shall use their reasonable commercial efforts to
obtain, or to cause to be obtained, any consent, substitution, approval or
amendment required to novate (including with respect to any federal government
contract) or assign all rights and obligations under agreements, leases,
licenses and other obligations or Liabilities of any nature whatsoever that
constitute HDD Liabilities or to obtain in writing the unconditional release
of Spinco or its Subsidiaries to such arrangements.
(b) Inability to Obtain Novation. If Company or Spinco is unable to
obtain, or to cause to be obtained, any such required consent, approval,
release, substitution or amendment, the party bound by the agreements, leases,
licenses and other obligations shall continue to be so bound and, unless not
permitted by law or the terms thereof (except to the extent expressly set forth
in this Agreement, the Separation Agreement or any other Ancillary Agreement),
Spinco shall, as agent or subcontractor for Company or such other Person, as the
case may be, pay, perform and discharge fully, or cause to be paid, transferred
or discharged all the obligations or other Liabilities of Company or such other
Person, as the case may be, thereunder from and after the date hereof. Company
shall, without further consideration, pay and remit, or cause to be paid or
remitted, to Spinco or its appropriate Subsidiary promptly all money, rights and
other consideration received by it or any of its Subsidiaries in respect of such
performance (unless any such consideration is an Excluded Asset). If and when
any such consent, approval, release, substitution or amendment shall be obtained
or such agreement, lease, license or other rights or obligations shall otherwise
become assignable or able to be novated, Company shall thereafter assign, or
cause to be assigned, all its rights, obligations and other Liabilities
thereunder or any rights or obligations of it or any of its Subsidiaries to
Spinco or an appropriate Subsidiary without payment of further consideration and
Spinco or its Subsidiary shall, without the payment of any further
consideration, assume such rights and obligations.
SECTION 1.8 PAYMENT OF CONVERTIBLE DEBT.
On each Interest Payment Date (as defined in the Indentures) and on each
date upon which the Company or any of its Affiliates makes any payment of
principal or any other payment in respect of the Convertible Notes under the
Indentures (each, a "PAYMENT DATE"), Maxtor shall, or shall cause one of its
affiliates, to pay to the Company or the Trustee the HDD Business Pro Rata
Portion of any such payment (each such payment, an "HDD BUSINESS PRO RATA
PAYMENT"). The Company shall provide Maxtor with 5 business days prior written
notice of any Payment Date, the amount of the HDD Business Pro Rata Payment, to
whom HDD Business Pro Rata Payment should be made and any other relevant payment
information to enable Maxtor to comply with its obligations under this Section
1.8. At Company's request, Maxtor will cooperate and pay its own costs and
expenses in seeking to effectuate an amendment, split or similar change to the
Indentures, so that Maxtor will be the sole obligor with respect to the HDD
Business Pro Rata Portion under the Indentures, provided that such amendment,
split or similar change will not result in any increase in interest rate,
penalty or cost of borrowing to Maxtor or adverse change in any other term or
condition applicable to Maxtor.
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ARTICLE II
LITIGATION
SECTION 2.1 ALLOCATION.
(a) Litigation to Be Transferred to Spinco. On the Separation Date, the
responsibilities for management of the litigation identified in Section 2.1(a)
of a litigation disclosure letter (the "LITIGATION DISCLOSURE LETTER"), which
will be delivered by Company to Spinco on the Separation Date, and which shall
relate to litigation affecting the HDD Business, shall be transferred in their
entirety from Company and its Subsidiaries to Spinco and its Subsidiaries. As of
the Separation Date and thereafter, Spinco shall manage the defense of this
litigation and shall cause its applicable Subsidiaries to do the same. If the
Company or its Subsidiaries are aware of any actions relating to such litigation
which should not reasonably be delayed for eight weeks after the Separation
Date, the Company shall expressly bring such matter to the attention of Maxtor.
(b) Litigation to be Defended by Company at Maxtor's Expense. Company
shall defend, and shall cause its applicable Subsidiaries to defend, at the
expense of Maxtor, the litigation identified in Section 2.1(b) of the Litigation
Disclosure Letter for 90 days, and thereafter if explicitly requested by Maxtor
to do so within 90 days of delivery of the Litigation Disclosure Letter. In
order to provide Maxtor with the information to determine whether it wishes
Company to defend such litigation, Company and its counsel shall provide all
non-privileged information Maxtor reasonably requests to evaluate the
litigation. All other matters relating to such litigation, including but not
limited to indemnification for such claims, shall be governed by the provisions
of the Indemnification Agreement.
(c) All Other Litigation. All other litigation pending, threatened or
outstanding at the Separation Date not included in the Litigation Disclosure
Letter shall remain with Company, and Spinco shall have no liability in
connection with, or responsibility for defending, such litigation.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 ENTIRE AGREEMENT. This Agreement, the Merger Agreement, the
Separation Agreement, the other Ancillary Agreements and the Exhibits and
Schedules referenced or attached hereto and thereto, constitute the entire
agreement between the parties with respect to the subject matter hereof and
shall supersede all prior written and oral and all contemporaneous oral
agreements and understandings with respect to the subject matter hereof.
SECTION 3.2 ACKNOWLEDGMENT. The parties acknowledge that rights and
obligations of Spinco shall be transferred to Maxtor by operation of law. From
and after the Effective Time (as defined in the Merger Agreement), Maxtor hereby
acknowledges and agrees that it shall be liable for all of Spinco's
responsibilities and obligations.
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SECTION 3.3 GOVERNING LAW. This Agreement shall be governed and
construed and enforced in accordance with the laws of the State of Delaware as
to all matters regardless of the laws that might otherwise govern under the
principles of conflicts of laws applicable thereto.
SECTION 3.4 TERMINATION. This Agreement may be terminated by mutual
consent of Company and Maxtor.
SECTION 3.5 AMENDMENT. Subject to applicable Law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 3.6 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or sent via facsimile (receipt confirmed) to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile numbers for a party as shall be specified by like notice):
(a) if to the Company, to:
QUANTUM CORPORATION
000 XxXxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
One Market, Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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(b) if to Spinco, to:
INSULA CORPORATION
000 XxXxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
One Market, Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(c) if to Maxtor, to:
MAXTOR CORPORATION
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx Xxxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
SECTION 3.7 INTERPRETATION. When a reference is made in this Agreement
to Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include,"
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"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect Subsidiaries of such entity.
SECTION 3.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party or parties hereto, it being
understood that all parties hereto need not sign the same counterpart.
SECTION 3.9 NO THIRD PARTY BENEFICIARIES. Except as provided in Section
3.2, this Agreement is not intended to confer upon any person other than the
parties to this Agreement any rights or remedies under this Agreement.
SECTION 3.10 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of the provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of the
provision, or the application of that provision, in any other jurisdiction.
SECTION 3.11 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
hereto shall be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by Law or equity upon such party, and the exercise by a
party hereto of any one remedy will not preclude the exercise of any other
remedy. The parties hereto agree that irreparable damage would occur in the
event that any of the terms of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 3.12 ASSIGNMENT. Except as provided in Section 3.2, no party may
assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the of the parties hereto.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
SECTION 3.13 AUTHORITY. Each of the parties hereto represents to the
others that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement,
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(b) the execution, delivery and performance of this Agreement by it have been
duly authorized by all necessary corporate or other actions, (c) it has duly and
validly executed and delivered this Agreement, and (d) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance with
the terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.
ARTICLE IV
DEFINITIONS
SECTION 4.1 ACTION. "ACTION" means any demand, action, suit,
countersuit, arbitration, inquiry, proceeding or investigation by or before any
federal, state, local, foreign or international governmental authority or any
arbitration or mediation tribunal.
SECTION 4.2 AFFILIATED COMPANY. "AFFILIATED COMPANY" means, with respect
to Company, any entity in which Company holds a 50% or less ownership interest,
and with respect to Spinco, any entity in which Spinco holds a 50% or less
ownership interest.
SECTION 4.3 ANCILLARY AGREEMENT. "ANCILLARY AGREEMENT" has the meaning
set forth in Section 2.1 of the Separation Agreement.
SECTION 4.4 CONSENTS. "CONSENTS" means any consents, waivers or
approvals from, or notification requirements to, any third parties.
SECTION 4.5 CONTRACTS. "CONTRACTS" means any contract, agreement, lease,
license, sales order, purchase order, instrument or other commitment that is
binding on any Person or any part of its property under applicable law.
SECTION 4.6 CONVERTIBLE NOTES. "CONVERTIBLE NOTES" means the 7%
subordinated convertible notes of the Company due 2004, limited in aggregate
principal amount of $287,500,000, which mature on August 1, 2004.
SECTION 4.7 DELAYED TRANSFER ASSETS. "DELAYED TRANSFER ASSETS" means any
HDD Assets that are expressly provided in this Agreement, the Separation
Agreement or any other Ancillary Agreement to be transferred after the date of
this Agreement.
SECTION 4.8 DELAYED TRANSFER LIABILITY. "DELAYED TRANSFER LIABILITY"
means any HDD Liability associated with a Delayed Transfer Asset.
SECTION 4.9 EXCLUDED ASSETS. "EXCLUDED ASSETS" has the meaning set forth
in Section 1.3 of this Agreement.
SECTION 4.10 EXCLUDED LIABILITIES. "EXCLUDED LIABILITIES" has the
meaning set forth in Section 1.5 of this Agreement.
SECTION 4.11 FACILITIES. "FACILITIES" has the meaning set forth in
Section 1.3(d) of this Agreement.
SECTION 4.12 GOVERNMENTAL APPROVALS. "GOVERNMENTAL APPROVALS" means any
notices, reports or other filings to be made, or any consents, registrations,
approvals, permits or authorizations to be obtained from, any Governmental
Authority.
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SECTION 4.13 GOVERNMENTAL AUTHORITY. "GOVERNMENTAL AUTHORITY" means any
federal, state, local, foreign or international court, government, department,
commission, board, bureau, agency, official or other regulatory, administrative
or governmental authority.
SECTION 4.14 HDD ASSETS. "HDD ASSETS" has the meaning set forth in
Section 1.2 of this Agreement.
SECTION 4.15 HDD BALANCE SHEET. "HDD BALANCE SHEET" has the meaning set
forth in the Merger Agreement.
SECTION 4.16 HDD BUSINESS. "HDD BUSINESS" means the Company's business
of designing, developing, manufacturing, marketing, selling and servicing hard
disk drives for the desk-top computer and consumer electronics devices markets
and generally comprises the HDD Assets and the HDD Liabilities.
SECTION 4.17 HDD BUSINESS PRO RATA PORTION. "HDD BUSINESS PRO RATA
PORTION" means that percentage of the total outstanding Convertible Notes
allocated to the HDD Business which shall not exceed $98 million of the total
principal amount outstanding under the notes as of the Effective Time.
SECTION 4.18 HDD CONTINGENT GAIN. "HDD CONTINGENT GAIN" has the meaning
set forth in Section 1.2(e)(vii) hereto.
SECTION 4.19 HDD BUSINESS CONTINGENT LIABILITY. "HDD BUSINESS CONTINGENT
LIABILITY" has the meaning set forth in Section 1.4(h) hereto.
SECTION 4.20 HDD LIABILITIES. "HDD LIABILITIES" has the meaning set
forth in Section 1.4 of this Agreement.
SECTION 4.21 INDEMNIFICATION AGREEMENT. "INDEMNIFICATION AGREEMENT"
means the Indemnification Agreement attached as Schedule 6 to the Merger
Agreement.
SECTION 4.22 INDENTURES. "INDENTURES" means the (i) Indenture, dated
August 1, 1997, between Company and La Salle National Bank as trustee (the
"Trustee"), relating to the Convertible Notes; (ii) the Supplemental Indenture,
dated August 1, 1997, between Company and the Trustee, relating to the
Convertible Notes, and (iii) the Supplemental Indenture to be entered into by
the Company and the Trustee in connection with the assumption by the Company of
the Company Pro Rata Portion of the Convertible Notes as provided in the Merger
Agreement.
SECTION 4.23 INTELLECTUAL PROPERTY. "INTELLECTUAL PROPERTY" means all
domestic and foreign patents and patent applications, together with any
continuations, continuations-in-part or divisional applications thereof, and all
patents issuing thereon (including reissues, renewals and re-examinations of the
foregoing); design patents, invention disclosures; mask works; copyrights, and
copyright applications and registrations; Web addresses, trademarks, service
marks, trade names,
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and trade dress, in each case together with any applications and registrations
therefor and all appurtenant goodwill relating thereto; trade secrets,
commercial and technical information, know-how, proprietary or confidential
information, including engineering, production and other designs, notebooks,
processes, drawings, specifications, formulae, and technology; computer and
electronic data processing programs and software (object and source code), data
bases and documentation thereof; inventions (whether patented or not); utility
models; registered designs, certificates of invention and all other intellectual
property under the laws of any country throughout the world.
SECTION 4.24 INTELLECTUAL PROPERTY AGREEMENT. "INTELLECTUAL PROPERTY
AGREEMENT" has the meaning set forth in the Merger Agreement.
SECTION 4.25 LIABILITIES. "LIABILITIES" means all debts, liabilities,
guarantees, assurances, commitments and obligations, whether fixed, contingent
or absolute, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out
of any Contract or tort based on negligence or strict liability) and whether or
not the same would be required by generally accepted principles and accounting
policies to be reflected in financial statements or disclosed in the notes
thereto.
SECTION 4.26 LITIGATION DISCLOSURE LETTER. "LITIGATION DISCLOSURE
LETTER" has the meaning set forth in Section 2.1(a) of this Agreement.
SECTION 4.27 MERGER AGREEMENT. "MERGER AGREEMENT" means that certain
Amended and Restated Agreement and Plan of Merger and Reorganization by and
among Company, Spinco, Maxtor and a wholly owned subsidiary of Maxtor dated as
of October 3, 2000.
SECTION 4.28 PERSON. "PERSON" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
SECTION 4.29 REDEMPTION. "REDEMPTION" has the meaning set forth in the
Merger Agreement.
SECTION 4.30 REDEMPTION DATE. "REDEMPTION DATE" has the meaning set
forth in the Merger Agreement.
SECTION 4.31 SEPARATION. "SEPARATION" means the transfer and
contribution from Company to Spinco, and Spinco's receipt and assumption of,
directly or indirectly, substantially all of the assets and Liabilities
currently associated with the HDD Business and the stock, investments or similar
interests currently held by Company in subsidiaries and other entities that
conduct such business.
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SECTION 4.32 SEPARATION AGREEMENT. "SEPARATION AGREEMENT" means the
Separation and Redemption Agreement among the parties hereto dated as of
_____________, and attached as Schedule 2 to the Merger Agreement.
SECTION 4.33 SEPARATION DATE. "SEPARATION DATE" means the effective date
and time of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation, which shall be
[______], Pacific Time, [________], or such date as may be fixed by the Board of
Directors of Company.
SECTION 4.34 SUBSIDIARY. "SUBSIDIARY" means with respect to any
specified Person, any corporation, any limited liability company, any
partnership or other legal entity of which such Person or its Subsidiaries owns,
directly or indirectly, more than 50% of the stock or other equity interest
entitled to vote on the election of the members of the board of directors or
similar governing body. Unless context otherwise requires, reference to Company
and its Subsidiaries shall not include the subsidiaries of Company that will be
transferred to Spinco after giving effect to the Separation.
SECTION 4.35 TAXES. "TAXES" has the meaning set forth in the Tax Sharing
Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties has caused the General
Assignment and Assumption Agreement to be executed on its behalf by its officers
thereunto duly authorized on the day and year first above written.
QUANTUM CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
INSULA CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
MAXTOR CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SIGNATURE PAGE TO GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT]
