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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of September 12, 1995 (the
"Agreement"), is made between MICRODYNE CORPORATION, a Maryland corporation
(the "Purchaser"), and NATIONAL SEMICONDUCTOR CORPORATION, a Delaware
corporation (the "Seller"). Either Purchaser or Seller may be referred to
herein as a Party or the Parties, as the case may require.
Purpose of the Agreement
Seller is in the business of manufacturing, having manufactured,
packaging, selling, distributing, designing, enhancing, maintaining and
repairing certain NE2OOO Plus, NE32OO, and 10/10 ISA adapter card assemblies.
Purchaser desires to purchase, and Seller desires to sell all assets, tangible
and intangible, and the related goodwill associated with this adapter card
business.
ARTICLE I
DEFINITIONS
Wherever used in this Agreement, the following terms shall have the
following meanings:
1.1 "Assets" means the assets of the Business as specified in
Section 3.1
1.2 "Business" means Seller's manufacturing (including
manufacturing for Seller), packaging, selling, distributing,
designing, enhancing, maintaining and repairing of the
Ethernet Cards.
1.3 "Closing" means the consummation of the transactions provided
for in Article VIII on the terms and subject to the conditions
of this Agreement.
1.4 "Closing Date" means the date on which the Closing is held.
1.5 "Ethernet Cards" means Seller's NE 2000 Plus, NE3200, PCMCIA
and 10/100 ISA adapter card assemblies, identified by the part
numbers specified in Schedule 1.5.
1.6 "Product Warranties" means the express warranties given by
Seller with respect to the Inventory as specified in Schedule
8.8.
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ARTICLE II
PURCHASE AND SALE
Section 2.1 Delivery By Seller. At the Closing, Seller shall
sell, transfer and convey to Purchaser all right, title and interest of the
Seller in the Assets of the Business as provided herein and shall grant and
assign Purchaser the rights associated with the Business as specified in this
Agreement.
Section 2.2 Deliveries and Payment by Purchaser. At the
Closing, Purchaser shall assume the obligations specified herein and deliver to
Seller the amount specified in Section 6.2 by wire transfer of immediately
available funds to Bank of America, ABA # 000000000, 0000 Xxxxxxx Xxxxxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000, Attention: National Semiconductor Corporation,
Account No. 1233203690.
ARTICLE III
ASSETS TO BE SOLD, RIGHTS TO BE GRANTED,
OBLIGATIONS TO BE ASSUMED
Section 3.1 The Assets. The Assets to be sold at Closing
shall be free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature whatsoever and
shall consist of the following:
(a) The Inventory of the Business listed on Schedule 1.5 (the
"Inventory")
The Inventory includes:
(i) saleable finished goods inventory, and "grey bag"
(completed board level product in a static bag)
inventory of the NE 2000 Plus and NE3200 series
adapter card assemblies (the "NE 2000 Plus
Inventory") owned by Seller on the Closing Date
excluding, however, the NE2000 Plus Inventory
located at NSC facilities in Japan in the
approximate amount of 100 pieces;
(ii) saleable finished goods inventory, and raw
materials on hand and useable for the 10/100 ISA
adapter card assemblies (the "10/100 Inventory")
owned by Seller on the Closing Date excluding
however, kits of raw materials sufficient to make
approximately 19,100 10/100 adapter card
assemblies;
(iii) raw materials on hand and currently being used in
the manufacture of Seller's NE 2000 Plus adapter
card assemblies, provided the materials are used
in Purchaser's NE 2000 Plus
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series adapter card assemblies, as specified on
Purchaser's applicable parts purchase list.
(iv) saleable finished goods inventory and grey bag
inventory of the PCMCIA adapter cards (the
"PCMCIA Inventory") existing at NSC on the
Closing Date excluding, however, the PCMCIA
Inventory located at NSC facilities in Japan in
the approximate amount of 300 pieces.
The Inventory will be subject to a physical count which will be conducted at
Seller's facilities in Santa Clara, California immediately prior to the Closing
in a manner mutually agreed to by the Parties. Inventory which cannot be
counted prior to Closing because it is not physically located at Seller's
facilities in Santa Clara, California at the time of Closing will be shipped by
Seller to Seller's Santa Clara, California facilities and counted in a manner
mutually agreed to by the Parties as soon as possible after the Closing. The
actual purchase price paid shall be adjusted based on the results of the
physical count in accordance with the terms of Article v.
(b) A documentation package consisting of all information
including technologies, methods, formulations, databases,
trade secrets, engineering, manufacturing and repair
information, drawings, packages, modifications, know-how,
inventions, concepts, and designs for the Ethernet Cards, and
designs and work in process for new Ethernet Card products and
modifications, revisions or enhancements thereto, used in or
relating to the Seller's manufacture, sale and maintenance of
computer boards for the Ethernet Card Business; and
(c) All sales information, files, records, data, plans, goodwill
and recorded knowledge of or relating to the Business or the
Assets, including, without limitation, the Statement of Work
No. 2 ("Novell SOW2") of that certain Master Task Agreement
between Seller and Novell, Inc. effective April 30, 1993 (the
"Novell MTA") including the remaining unused portion of
Seller's royalty prepayment thereunder, all business plans,
bids, quotations, proposals, instruments, computer programs,
information generated from databases, manuals and guidebooks,
price books, price lists, customer, vendor, distributor and
subscriber lists, sales, marketing and warranty files,
correspondence and other documents, books, records, papers and
data belonging to or licensed by Seller and used in or
constituting a part of the Business.
Section 3.2 Assignment of Rights and Obligations. Assuming
that assignment has been obtained or is otherwise permissible under the
applicable
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governing documents, the rights and obligations to be assigned to Purchaser at
the Closing shall consist of the following:
(a) All rights and obligations under any of Seller's
noncancellable purchase orders given to subcontract assembly
vendors for the Ethernet Cards, a list of which is attached
hereto as Schedule 3.2(a).
(b) All rights under any express or implied warranties given by
Seller's vendors and relating to the Assets;
(c) All rights and obligations under the Novell SOW2; and
(d) All rights and obligations under any OEM contracts or purchase
orders for the sale of Ethernet Cards. If such contracts or
purchase orders cannot be assigned or if Purchaser finds the
terms of the contracts or purchase orders commercially
unacceptable (as judged by a reasonable party), the servicing
of the contracts and purchase orders will be handled as
provided in Section 3.8 (g). A list of any such OEM contracts
or purchase orders will be delivered to Purchaser at the
Closing.
Section 3.3 Intellectual Property License. At the Closing,
Seller shall grant to Purchaser the nonexclusive, nontransferable (except in
connection with a sale or transfer of Purchaser's Ethernet Card business) right
and license to use Seller's patents, copyrights and trade secrets, whether
registered or unregistered, and any applications therefore used in or relating
to the Business or the Assets or embodied in the documentation package
delivered pursuant to Section 3.1(b), to make, have made, use, sell,
distribute, design, enhance, maintain and repair the Ethernet Cards. The
license granted herein shall include the right to reproduce and distribute
Seller's datasheets for the Ethernet Cards, provided Purchaser's name is
substituted for that of Seller. Provided Purchaser complies with the terms and
conditions of this Agreement, Seller will make no other grants of this license.
Section 3.4 Trademark License. At the Closing, Seller will
grant Purchaser the exclusive (except for use by Seller in or related to
anything other than Ethernet Cards) nontransferable (except in connection with
a sale or transfer of Purchaser's Ethernet Card business) right and license to
use and display the trademarks, service marks, tradenames and logos relating to
the Seller's InfoMover trademark (the "InfoMover Marks) in connection with the
Ethernet Cards for a period of five (5) years. Except as provided in Article
XIII, Purchaser shall have no right to use "National Semiconductor,"
"National," the National logo, or similar marks or names associated with Seller
except to the extent such marks are already on finished goods or
work-in-process, in which case Purchaser shall have the right to sell such
products marked with Seller's name and/or logo for a transition period not to
exceed six (6) months.
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Section 3.5 Software License. At the Closing, Seller will
grant Purchaser a nonexclusive license to use, distribute, reproduce and make
modifications to the source and object code of Seller's Ethernet Card driver
software in connection with Ethernet Cards running on integrated circuits
supplied by Seller. Provided Purchaser complies with the terms and conditions
of this Agreement, Seller will make no other grants of this license.
Section 3.6 Delivery of Assets. Except as provided in the
next sentence, the Assets, including Inventory, purchased under this Agreement
shall be packaged by Seller and shipped to Purchaser at its facility at San
Jose, California immediately following the Closing. Assets which are not
physically in Santa Clara, California at the time of Closing will be packaged
by Seller and shipped to Purchaser at its facility at San Jose, California as
soon as the physical count is complete. In both cases, Purchaser shall be
responsible for the costs of shipping and insurance for the shipping of the
Assets from Santa Clara, California to San Jose, California.
Section 3.7 Assumed Obligations. On and after the Closing
Date or on the date specified below, whichever is later, Purchaser shall assume
and agree to pay, discharge or perform, as appropriate, the following
liabilities and obligations of Seller relating to the Business to be performed
after the Closing (hereinafter collectively referred to as the "Assumed
Obligations")
(a) Upon completion of the Transition Period (as that term is
defined in Section 10.6), Purchaser will assume all claims
under the Product Warranties for breach or nonconformity with
the Product Warranties of the Ethernet Cards shipped by Seller
prior to the Closing.
(b) Except as provided in Section 10.8, Purchaser will accept
distributor stock rotation and product returns (in accordance
with Seller's standard policy) for Ethernet Cards shipped by
Seller prior to the Closing.
(c) Purchaser will assume all current Ethernet Card OEM contracts
in existence, and Purchaser will complete all negotiations for
such contracts, including, but not limited to those with IBM
and Intel.
(d) All of Seller's obligations to be performed after the date of
this Agreement pursuant to the Novell SOW2.
(e) All of Seller's obligations under the noncancellable purchase
orders given to subcontractor vendors for the Ethernet Cards.
(f) All of Seller's obligations under noncancellable purchase
orders for the sale by Seller of Ethernet Cards accepted by
Seller prior to Closing.
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(g) If Purchaser is not able to assume the obligations under
Sections 3.7(c) or 3.7(f) for the reasons set forth in Section
3.2(d), then the parties shall cooperate in good faith with
the customer to reach suitable contractual agreements with the
customer for the supply of Ethernet Cards. If such agreements
cannot be reached despite the reasonable commercial efforts of
the Parties, Purchaser will sell Ethernet Cards to Seller in
amounts sufficient for Seller to meet its outstanding
contractual obligations at reasonable prices to be agreed to
by the Parties.
Section 3.8 Excluded Liabilities. Notwithstanding anything
to the contrary set forth herein, in no event shall Purchaser assume or incur
any liability or obligation of any kind or nature, whether accrued, absolute,
contingent, known, unknown or otherwise, or otherwise become responsible in
respect of any liability or obligation of Seller, which is not an Assumed
Obligation.
ARTICLE IV
EXCLUDED ASSETS
Notwithstanding anything to the contrary set forth herein, the Assets
sold hereunder shall not include any of the following (hereinafter collectively
referred to as "Excluded Assets"):
(a) Any assets, properties or rights of the Seller used in the
operations and businesses currently conducted by Seller, other
than the Ethernet Card Business, which assets, properties or
rights are not being sold to Purchaser hereunder (the
"Excluded Business");
(b) Any defective, broken or unusable parts, any "down revved"
materials or parts or parts which have been superseded by a
new release or version and parts not currently used in the
manufacture of the Ethernet Cards;
(c) Any intellectual property right, or technical information
related to the manufacture of any integrated circuits
manufactured by or for Seller and used for the Ethernet Cards;
(d) Any liabilities, contracts, or other obligations of Seller
relating to the Business other than those expressly assumed in
accordance with Article III;
(e) Any accounts receivable of the Business;
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(f) Any other asset, property or right of Seller not otherwise
identified in Article III.
ARTICLE V
PURCHASE PRICE
Section 5.1 Purchase Price
(a) Purchaser shall pay a total of six million seven hundred
thirty six thousand dollars ($6,736,000.00) for the Business,
subject, however, to the following adjustments:
(i) If the NE 2000 Plus Inventory does not equal One
Million Nine Hundred Forty Thousand Two Hundred
Eighty Dollars ($1,940,280.00), based on Seller's
standard cost, then the purchase price shall be
adjusted up or down, to reflect the actual amount
delivered, using Seller's standard cost.
(ii) If the Raw Materials Inventory does not equal Two
Hundred Seventy Thousand Dollars ($270,000.00),
based on Seller's standard cost, then the
purchase price shall be adjusted, up or down, to
reflect the actual amount delivered, using the
Seller's standard cost.
(iii) If the 10/100 Inventory does not equal Two
Million Three Hundred Thousand Dollars
($2,300,000.00) based on Seller's standard cost,
then the amount shall be adjusted, up or down, to
reflect the actual amount delivered, using the
Seller's standard cost.
(iv) If the PCMCIA Inventory does not equal Four
Hundred and Two Thousand Dollars ($402,000.00)
based on Seller's standard cost, then the
purchase price shall be adjusted, up or down, to
reflect the actual amount delivered, using the
Seller's standard cost. The PCMCIA Inventory
shall be subject to the adjustment provided for
in Article VI.
(b) The remaining Assets, any goodwill of the Business and other
covenants and agreements of Seller under this Agreement shall
be deemed to constitute $1,836,000 of the purchase price and
shall not be subject to further adjustments.
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(c) The exact purchase price of the Business shall be determined
upon completion of the physical inventory described in Section
3.1(a). The purchase price for the Business shall be adjusted
to reflect any changes based upon the physical inventory.
Section 5.2 Payment of Purchase Price. At Closing, Purchaser
shall pay to Seller, by wire transfer of immediately available funds, a partial
payment of One Million Dollars ($1,000,000.00) toward the purchase price for
the Business. Purchaser shall pay to Seller the remaining balance of the
purchase price for the Business, as adjusted, in accordance with Schedule 5.2.
Upon full payment of the purchase price, the licenses granted in Sections 3.3,
3.4 and 3.5 shall be fully paid up and irrevocable.
Section 5.3 Allocation of Purchase Price. The Parties
shall agree on an appropriate allocation of the purchase price.
ARTICLE VI
ADJUSTMENTS FOR PCMCIA INVENTORY
Purchaser shall use reasonable commercial efforts to sell the PCMCIA
Inventory for a price exceeding Seller's standard cost; however, Purchaser
makes no guarantees that the PCMCIA Inventory may be sold for a price exceeding
Seller's standard cost. Purchaser and Seller hereby agree that both shall
share equally (50%) either (i) the amount by which the net price for which
Purchaser sells the PCMCIA Inventory exceeds Seller's standard cost or (ii) the
amount by which the net price for which Purchaser sells the PCMCIA Inventory is
less than Seller's standard cost. Within sixty (60) days of the end of each
calendar quarter, Purchaser shall pay to Seller such increases for sales that
occurred during the quarter, after deducting any decreases. If decreases
exceed increases, then Purchaser shall invoice Seller for same, who shall pay
such invoice within sixty (60) days thereafter.
ARTICLE VII
THE CLOSING
Section 7.1 Time and Place. The Closing will be held at the
offices of the Seller, 0000 Xxxxxxxxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx at
4:00 p.m. on Wednesday, September 13, 1995 or at such other time, day or place
as the Purchaser and Seller may mutually agree.
Section 7.2 Seller Deliverables. At the Closing, Seller will
deliver to Purchaser in form reasonably satisfactory to Purchaser the following
items:
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(a) A Xxxx of Sale covering the Assets; and
(b) Such other documents and instruments as are reasonably
necessary and/or appropriate to implement and complete the
sale and transfer of the Assets to Purchaser and the other
transactions as required by this Agreement.
Section 7.3 Purchaser Deliverables. At the Closing, Purchaser
will deliver to Seller in form reasonably satisfactory to Seller, the following
items:
(a) Confirmation of the wire transfer amount specified in Section
5.2; and
(b) Such other documents and instruments as are reasonably
necessary and/or appropriate to implement and complete the
purchase of the Assets by Purchaser and the other transactions
as required by this Agreement.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants at Closing:
Section 8.1 Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on the Business as is now being conducted.
Section 8.2 Authorization Seller has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller and the performance by
Seller of its obligations hereunder and the consummation of the transactions
provided for herein have been duly and validly authorized by all necessary
corporate action on the part of the Seller. Neither the corporation law of the
State of Delaware nor the certificate of incorporation or bylaws of Seller
require that the stockholders of Seller approve this Agreement or any of the
transactions contemplated hereunder. This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding agreement of Seller,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles and the discretion of
courts in granting equitable remedies.
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Section 8.3 Consent and Approvals. Except as set forth in
Schedule 8.3 there is no requirement applicable to Seller to make any filing
with, or to obtain any permit, authorization, consent or approval of any public
body as a condition to the lawful consummation of the transactions contemplated
by this Agreement.
Section 8.4 Non-Contravention. The execution and delivery by
Seller of this Agreement does not and the consummation of the transactions
contemplated hereby will not (i) violate or result in a breach of any provision
of the certificate of incorporation or bylaws of Seller, (ii) result in a
default (or give rise to any right of termination, cancellation or
acceleration) under the terms, conditions, or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other instrument or
obligation to which Seller is a party or by which Seller or any of the Assets
may be bound or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Seller or any of the Assets or the Business.
Section 8.5 Title to Assets. Seller has good title to all of
the personal property, tangible and intangible, which is a part of the Assets,
free and clear of any liens, charges, pledges, security interests or other
encumbrances.
Section 8.6 Ownership of Assets and Related Matters
(a) The finished goods and grey bag Inventory (i) is useable or
saleable in the ordinary course of business, (ii) is
sufficient but not excessive in kind or amount for the conduct
of the Business as it is presently being conducted and (iii)
is carried on the books of Seller at an amount which reflects
valuations not in excess of the cost as determined in
accordance with generally accepted accounting principles
applied on a consistent basis.
(b) The Novell SOW2 and any Ethernet Card OEM contracts are valid
and enforceable in accordance with their terms with respect to
Seller, and are valid and enforceable in accordance with their
terms with respect to the other party, in each case subject to
applicable bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally,
general equitable principles and the discretion of courts in
granting equitable remedies. There is not, under any of the
agreements referenced in Section 3.7, including without
limitation the Novell SOW2 or any Ethernet Card OEM contract,
any existing breach, default or event of default by Seller or
event that with notice or lapse of time or both would
constitute a breach, default or-event of default by Seller,
nor does Seller know of, and Seller has not received notice
of, or made a claim with respect to, any breach or default by
the other party thereto. All royalty and other payments
required to be paid by Seller, including the Prepayment under
the Novell SOW2, any Ethernet Card OEM contract,
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or any other agreement referenced in Section 3.7, have been
paid by Seller. Seller has received from Novell consent to the
assignment of the Novell SOW2 to Purchaser.
Section 8.7 Intellectual Property Schedule 8.7 sets forth a
summary list of the major components of intellectual property that Seller owns
or otherwise has the right to use, free and clear of any restrictions, that
Seller has identified is used by Seller in the Business. The intellectual
property used by Seller in the manufacture, sale, distribution of the Ethernet
Cards, or embodied in the Ethernet Cards, and licensed to Purchaser pursuant to
this Agreement, constitutes, to the best knowledge of Seller, all of the
intellectual property necessary in the Business, and to the best knowledge of
the Seller, no license or grants from any third parties are necessary and no
royalties, fees or other payments would be due to any third parties. There is
no claim, suit, action or proceeding, pending or to the knowledge of Seller
threatened, against Seller asserting that its use of such intellectual property
infringes upon the rights of any third party or otherwise contesting its rights
with respect to any of the Intellectual Property. All letters, patents,
registrations and certificates issued by any governmental agency relating to
such intellectual property so identified by Seller are valid and subsisting and
have been properly maintained.
Section 8.8 Warranty Policy Schedule 8.8 sets forth complete
copies and/or descriptions of all of Seller's express warranties which are in
effect with respect to the Inventory (the "Product Warranties"). To the best
of Seller's knowledge, Seller has disclaimed all implied warranties for the
Inventory.
Section 8.9 Conduct of Business Pending Closing. From the
date of execution of this Agreement until Closing, Seller will conduct the
Business in the ordinary usual course.
Section 8.10 Brokers, Finders and Investment Bankers. Neither
Seller nor any of its respective officers, directors or employees has employed
any broker, finder or investment banker or incurred any liability for
investment banking fees, financial advisory fees or finders' fees in connection
with the transactions contemplated hereby.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants at the Closing:
Section 9.1 Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland, and has all
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requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Section 9.2 Authorization. Purchaser has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
by Purchaser and the performance by Purchaser of its obligations hereunder and
the consummation of the transactions provided for herein have been duly and
validly authorized by all necessary corporate action on the part of the
Purchaser. Neither the corporation law of the State of Maryland nor the
certificate of incorporation or bylaws of Purchaser require that the
stockholders of Purchaser approve this Agreement or any of the transactions
contemplated hereunder. This Agreement has been duly executed and delivered by
Purchaser and constitutes the valid and binding agreement of Purchaser,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles and the discretion of
courts in granting equitable remedies.
Section 9.3 Consent and Approvals. Except as set forth in
Schedule 9.3 there is no requirement applicable to Purchaser to make any filing
with, or to obtain any permit, authorization, consent or approval of any public
body as a condition to the lawful consummation of the transactions contemplated
by this Agreement.
Section 9.4 Non-Contravention. The execution and delivery by
Purchaser of this Agreement does not and the consummation of the transactions
contemplated hereby will not (i) violate or result in a breach of any provision
of the certificate of incorporation or bylaws of Purchaser, (ii) result in a
default (or give rise to any right of termination, cancellation or
acceleration) under the terms, conditions, or provisions or any note, bond,
mortgage, indenture, license, agreement, lease or other instrument or
obligations to which Purchaser is a party or by which Purchaser may be bound or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser.
Section 9.5 Brokers, Finders and Investment Bankers. Neither
Purchaser nor any of its respective officers, directors or employees has
employed any broker, finder or investment banker or incurred any liability for
investment banking fees, financial advisory fees or finders' fees in connection
with the transactions contemplated hereby.
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ARTICLE X
CERTAIN COVENANTS AND AGREEMENTS
Section 10.1 Taxes. All personal property taxes relating to
the Assets, if any, shall be prorated as of the Closing and borne by Seller and
Purchaser in their respective shares.
Section 10.2 Risk of Loss. Risk of loss in connection with
the tangible Assets passes to Purchaser upon delivery to the carrier.
Section 10.3 Reliance on Representations and Warranties.
Notwithstanding any investigation at any time conducted by any of the Parties
hereto, each of the Parties shall be entitled to rely on the representations
and warranties of each of the other Parties set forth herein or in any
schedule, exhibit, or document inspected or delivered pursuant to this
Agreement.
Section 10.4 Purchase of 10/100 ISA Chip Set.
(a) For a period of two(2)years after Closing, Seller will sell
and Purchaser will purchase Purchaser's requirements for
Seller's 10/100 ISA Chip Set (the "Chip Set"),and any updates
thereto, consisting of the Media Process Controller Chip
("MAC"), Seller's part number DP83800; Phy Chip ("PHY"),
Seller's part number DP83840; and Twister Chip ("Twister"),
Seller's part number DP83223. During this period, Seller will
sell the Chip Set at Seller's lowest price made available to
Seller's other customers purchasing similar quantities under
similar terms and conditions. Initial pricing for the Chip Set
is provided in Schedule 10.4.
(b) For a period of two (2) years after Closing, Seller will sell
and Purchaser may purchase Seller's MAC, PHY and Twister Chips
individually and any updates thereto at Seller's lowest price
made available to Seller's other customers purchasing similar
quantities under similar terms and conditions. For the
purpose of computing volume discounts hereunder, purchases of
complete Chip Sets, as well as purchase of individual chips,
will count in computing the volume purchased. Initial pricing
of the PHY and Twister Chips is provided in Schedule 10.4.
(c) The obligation for Purchaser to purchase its requirements for
the 10/100 Chip Set is dependent on: (i) Seller offering each
Chip Set at commercially competitive pricing and on
commercially competitive terms; (ii) the Chip Set being
available from Seller in amounts and on delivery schedules
required by Purchaser to meet its requirements; (iii) there
being no change to the detriment in the quality and
specifications of the Chip Set manufactured by Seller; and
(iv) no other manufacturer is
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offering at a price less than the combined price of the MAC,
Phy and Twister Chips, any chip products that combines the
function of all three chips into one chip product.
(d) Provided Purchaser does in fact purchase its requirements for
Chip Sets and otherwise complies with the terms of this
Agreement, Seller will not sell the MAC chip to any other
customers for a period of nine (9) months after Closing unless
the customer has represented in writing to Seller that it
intends to use the MAC chip for something other than Ethernet
cards used in a PCI or ISA bus compatible with the Windows/DOS
environment.
(e) All purchases of chips from Seller shall be made pursuant to
Seller's standard terms and conditions of sale contained in
Schedule 10.4(e), and shall be subject to approval of Seller's
credit department which approval will not be unreasonably
withheld or delayed.
(f) In the event Seller determines that it shall discontinue
production of any or all of the MAC, PHY or Twister chips,
then not less than one year prior to such discontinuance it
shall provide Purchaser with notice of discontinuance and an
opportunity to make a lifetime buy during the one year notice
period. If Seller has been the sole source of the chip, at
the end of the one year notice period, Seller will provide to
Purchaser all designs, mask works, production, schedule,
information, and other materials used by Seller to produce
such chip, in formats and on media agreed to by the Parties.
Purchaser shall have a nonexclusive worldwide, fully paid up,
irrevocable, nontransferable (except in connection with a sale
or transfer of Purchaser's Ethernet Card business), license to
use all such information, (including a license under any
necessary patents or copyrights) for the manufacture of such
chip or chips to support Purchaser's Ethernet Card business.
Section 10.5 Non-Competition. Seller hereby covenants and
agrees that Seller and any entity that directly or indirectly, through one or
more intermediaries controls, or is controlled by or is under common control
with Seller, shall not, in any manner (other than as authorized by Purchaser in
Purchaser's sole discretion), for a period of four (4) years from Closing,
directly or indirectly engage in any business which engages in the manufacture,
sale or distribution of Ethernet Cards or products directly competitive with
Ethernet Cards such as 10/100 PCI adapters. The foregoing shall not limit
Seller's ability to sell local area network integrated circuits either by
themselves or on a awe or to participate in markets involving superset
implementations of Ethernet technology such as IsoEthernet or markets involving
derivative implementations of Ethernet technology such as an ATM to Ethernet
bridge adapter. The foregoing shall also not limit Seller's right to sell,
use, or otherwise
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dispose of the NE 2000 Plus Inventory located in Japan and excluded from this
Agreement pursuant to Section 3.1(a) (i) or the PCMCIA Inventory located in
Japan and excluded from this Agreement pursuant to Section 3.1(a) (iv).
Section 10.6 Transition Period. For a period of 45 days after
Closing (the "Transition Period"), Seller will provide the following transition
assistance at Seller's expense:
(a) Seller will be responsible for and handle all warranty returns
for Ethernet Cards;
(b) Seller will provide technical support to its customers for
Ethernet Cards;
(c) Seller will make no changes to its telemarketing and account
managers supporting the Ethernet Card Business and will pay
commissions to its sales representatives on sales of Ethernet
Cards by Purchaser during the Transition Period, which sales
commissions shall be reimbursed to Seller by Purchaser within
thirty (30) days of Seller's invoice therefore;
(d) Seller will make available appropriate personnel from its
sales and marketing organization to assist in the transition
of sales efforts, including participating in joint sales calls
to distribution accounts, during the Transition Period;
(e) Seller will make available Xxxx Xxxx or, if Xxxx Xxxx is not
available, one other engineer specified by Seller, to work
with Purchaser on the transfer of engineering issues during
the Transition Period; and
(f) Seller will make available Xxxxx Xxxx or, if Xxxxx Xxxx is not
available, one other manufacturing person specified by Seller,
to work with Purchaser on the transfer of manufacturing issues
during the Transition Period.
Each Party shall pay for the travel costs of its own personnel
incurred during the Transition Period.
Section 10.7 Post Closing Assistance. In addition to the
assistance provided by Seller in the Transition Period, Seller agrees,
following the Closing to:
(a) refer to the Purchaser any customers, distributors, original
equipment manufacturers, or other person requesting to
purchase the Ethernet Cards and the 10/100 adapter card
assemblies;
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(b) promptly deliver to Purchaser all mail and other
communications it receives relating to the Assumed Obligations
or to the Business which are appropriately provided to
Purchaser as owner of the Business, including, but not limited
to, misdirected payments;
(c) provide to Purchaser reasonable incidental engineering support
and assistance, including but not limited to the engineering
assistance detailed in Schedule 10.7(c) for Purchaser to
smoothly transition the Business to Purchaser; and
(d) provide to Purchaser the Ethernet Card documentation package
and related intellectual property in such formats as the
Parties shall mutually agree. Thereafter, should Purchaser
discover that any of the information is incomplete, unusable,
or in the wrong format, or that certain of the Intellectual
Property has not been provided, it shall notify Seller which
shall promptly replace or furnish the requested information
provided Seller has confirmed that the information is in fact
incomplete, unusable or in the wrong format.
(e) In the event that Seller is not able to assign any warranties
given by Seller's vendors that relate to the Assets, Seller
will process warranty returns from Purchaser for Assets
manufactured by Seller's subcontractors and will deal directly
with Seller's subcontractors to obtain the warranty service.
Section 10.8 Conduct of Distribution Business Post-Closing.
As provided by Section 3. 7 (b), after Closing, Purchaser will accept and
process stock returns from Seller's distributors. Seller will keep all
distributor accounts receivable. If a distributor wishes to return Ethernet
Card product to Seller for credit against distributor's account receivable,
Seller will accept the return of the product and sell it to Purchaser at
Seller's standard cost. Any sales to Purchaser under this section will be
subject to Seller's standard terms and conditions of sale and Seller's credit
department requirements.
Section 10.9 Assembly of 10/100 Ethernet Cards. Upon
Purchaser's placement of a purchase order therefore, Seller will arrange for
the assembly of the approximately 19,100 raw material kits of 10/100 adapter
card assemblies excluded from this Agreement pursuant to Section 3.1(a) (ii) .
Seller will sell the finished products to Purchaser once assembly is complete
at Seller's standard cost of $71.65. Purchaser shall pay for the 10/100
adapter cards within thirty (30) days of date of Seller's invoice or
Purchaser's receipt of the finished goods whichever is later.
Section 10.10 Financial Statements. Should it be determined
that it is necessary for Purchaser to file a Form 8-K with the Securities and
Exchange
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Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), Seller shall deliver to Purchaser, not later than seventy (70) days
after the date of this Agreement such audited financial statements and interim
unaudited financial statements for the Business as may be required by
Regulation S-X of the Securities and Exchange Commission S-X for the fiscal
periods required to be reported by Purchaser in its filings with the Securities
and Exchange Commission under the Exchange Act prepared by an independent
accounting firm of national recognition, that is reasonably acceptable to
Purchaser, all in accordance with generally acceptable accounting principles,
consistently applied. Seller shall pay the fees of the independent accounting
firm and Purchaser shall reimburse Seller for the first $12,500.00 of such fees
and one half of all fees in excess of $25,000.00. Purchaser shall make such
reimbursement to Seller within thirty (30) days of Seller's invoice for the
fees.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Indemnification Obligations of Seller. From and
after Closing, the Seller shall indemnify and hold harmless Purchaser and its
subsidiaries and affiliates, each of their respective officers, directors,
employees, agents and representatives and each of their heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Purchaser
Indemnified Parties") from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines, and other
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to:
(a) Any Excluded Liability or any and all other liabilities and
obligations of Seller of any nature whatsoever, except the
Assumed Obligations;
(b) Any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or
investigations against any Purchaser Indemnified Party that
relate to Seller, the Business or the Assets, to the extent
the principal event giving rise thereto occurred prior to the
Closing or which result from or arises out of any action or
inaction prior to the Closing of Seller or any affiliate,
officer, director, employee, agent, representative or
subcontractor of Seller, except to the extent such claim is
based on an Assumed Obligation; and
(c) Any material breach of any representation, warranty, covenant,
agreement or undertaking made by Seller in this Agreement or
in any agreement, schedule or other writing delivered by
Seller to Purchaser in connection with the matters
contemplated hereby or pursuant to the
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provisions hereof. For purposes of this section, any item in
excess of $100,000 shall be considered material.
Section 11.2 Indemnifications Obligations of Purchaser. From
and after the Closing, Purchaser shall indemnify and hold harmless Seller and
its subsidiaries and affiliates, each of their respective officers, directors,
employees, agents and representatives and each of their heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Seller
Indemnified Parties") from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines, and other
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to:
(a) Any Assumed Obligations; and
(b) Any and all actions, suits, claims, or legal and
administrative arbitration, government or other proceedings or
investigations against any Seller Indemnified Party that
relate to Purchaser, the Business or the Assets to the extent
the principal event giving rise thereto occurred after the
Closing or which result from or arise out of any action or
inaction after the Closing of Purchaser or any affiliate,
officer, director, employee, agent, representative or
subcontractor of Purchaser; and
(c) Any material breach of any representation, warranty, covenant,
agreement or undertaking made by Purchaser in this Agreement
or in any agreement, schedule or other writing delivered by
Purchaser to Seller in connection with the matters
contemplated hereby or pursuant to the provisions hereof. For
purposes of this section, any item in excess of $100,000 shall
be considered material.
ARTICLE XII
MARKETING EFFORTS
Seller and Purchaser shall cooperate in marketing efforts for the
10/100 ISA products, which cooperative efforts will be known as the 10/100
Alliance. Such cooperative efforts shall be as agreed to by the Parties, and
shall include the following:
(a) Seller and Purchaser shall use reasonable best efforts to
secure the cooperation and full equal participation of Novell
in the 10/100 Alliance.
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(b) Seller will plan, host and absorb the cost for a marketing
kickoff event in the form of a press conference to be held
either at a facility of Seller's choosing or at NetWorld +
Interop with the goal to maximize press exposure to the 10/100
Alliance. Purchaser shall ensure the appearance of the
appropriate Novell executives at the press conference. At
least two Senior executive of Seller chosen by Seller and two
senior executives of Purchaser chosen by Purchaser shall
attend the press conference.
(c) Seller will give Purchaser any credits due under Section 5.4
of the Novell SOW2 which credits will be used for a joint
10/100 Alliance ad campaign.
Provided Seller fulfills its obligations under (b) and (c) above,
Seller will not be required to pay any additional funds for joint marketing or
xx xxxxxxxxx.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Notices. All notices, communications and
deliveries hereunder shall be made in writing signed by the Party making the
same, shall specify the Section hereunder pursuant to which it is given or
being made, and shall be deemed given or made on the date delivered if
delivered in person, on the date initially received if delivered by facsimile
transmission followed by registered or certified mail confirmation, on the date
delivered if delivered by a nationally recognized overnight courier service or
on the third (3rd) business day after it is mailed by registered or certified
mail (return receipt requested) (with postage and other fees prepaid) as
follows:
To Purchaser: Microdyne Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxx
Facsimile No. (000) 000-0000
With a Copy to: McGuire, Woods, Battle & Xxxxxx, L.L.P.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxx Xxxxxxx
Facsimile No. (000) 000-0000
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To Seller: National Semiconductor Corporation
0000 Xxxxxxxxxxxxx Xxxxx M/S 00-000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
With a Copy to: National Semiconductor Corporation
0000 Xxxxxxxxxxxxx Xxxxx M/S 00-000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx XxXxxxxx
Facsimile: (000) 000-0000
or to such other representative or at such other address of a party as such
party hereto may furnish to the other Parties in writing.
Section 13.2 Assignment, Successors in Interest. No
assignment or transfer by Purchaser or Seller of their respective rights and
obligations shall be made except with the prior written consent of the other
party hereto. This Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their permitted successors and assigns and
any reference to a party hereto shall also be a reference to a permitted
successor or assign.
Section 13.3 Representations and Warranties. The
representations and warranties of Seller and Purchaser set forth in this
Agreement shall survive the Closing Date for three years. Notwithstanding
anything to the contrary set forth in this Section 13.3, the covenants and
agreements of Seller and Purchaser set forth herein shall remain in full force
and effect until duly satisfied or performed by the appropriate party hereto.
Section 13.4 Number; Gender. Whenever the context so
requires, the singular number shall include the plural and the plural shall
include the singular, and the gender of any pronoun shall include the other
genders.
Section 13.5 Captions. The titles and captions contained in
this Agreement are inserted herein only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
Section 13.6 Integration. This Agreement supersedes all
negotiations, agreements and understandings between the Parties with respect to
the subject matter hereof and constitutes the entire agreement between the
Parties hereto.
Section 13.7 Governing Law. This Agreement shall be deemed to
be made in, and in all respects shall be interpreted, construed and governed by
and in
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accordance with, the laws of the Commonwealth of Virginia, without regard to
its choice of law rules.
Section 13.8 Amendment. This Agreement may be amended,
modified or supplemented only upon written agreement executed by each of the
Parties hereto.
Section 13.9 Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforcability in any jurisdiction will not invalidate or render unenforceable
such provision in any other jurisdiction. To the extent permitted by law, the
Parties hereto waive any provision of law which renders any such provision
prohibited or unenforceable in any respect.
Section 13.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
MICRODYNE CORPORATION NATIONAL SEMICONDUCTOR CORPORATION
By: By:
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Title: Title:
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