Exhibit 10.67
MERGER AGREEMENT
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dated as of April 19, 2002
by and among
JDSU ACQUISITION FOUR, INC.,
a Delaware corporation,
JDS UNIPHASE CORPORATION,
a Delaware corporation,
SCION PHOTONICS, INC.,
a Delaware corporation,
AND
Certain shareholders thereof
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is made as of April 19, 2002,
by and among JDSU Acquisition Four, Inc., a Delaware corporation ("Merger
Subsidiary"), JDS Uniphase Corporation, a Delaware corporation ("Purchaser"),
Scion Photonics, Inc., a Delaware corporation (the "Company"), Read-Rite
Corporation, a Delaware corporation ("Read-Rite"), and each of the corporate and
partnership investors executing this Agreement (each, an "Investor", and,
collectively, the "Investors").
RECITALS
A. The Company is in the business of developing, manufacturing and
selling, among other things, planar optical components (the "Business").
B. Purchaser and the Company desire to merge (the "Merger") Merger
Subsidiary with and into the Company with the Company being the surviving
corporation (the "Surviving Corporation") of the Merger.
NOW, THEREFORE, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE 1
MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as hereinafter defined), Merger Subsidiary will
be merged with and into the Company, with the Company being the Surviving
Corporation of the Merger and becoming a wholly-owned subsidiary of Purchaser
and the separate corporate existence of Merger Subsidiary shall cease.
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the consummation of the Merger and the other transactions
contemplated hereby (the "Closing") shall take place after the satisfaction or
waiver of all conditions to the Merger set forth in this Agreement, but, in any
event, no later than two (2) business days after such satisfaction or waiver
(unless otherwise agreed to in writing by the parties), at the offices of the
Company's counsel, Xxxxxx & Xxxxxxx, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000, or such other place and time as the parties may otherwise
agree, and the date of the Closing is referred to herein as the "Closing Date."
1.3 Filing of Merger Certificate; Effective Time. At the Closing,
the parties shall cause the Merger to be consummated by filing a duly executed
Certificate of Merger (the "Merger Certificate") with respect to the Merger with
the Secretary of State of the State of Delaware, in such form as Purchaser
reasonably determines is required by and in accordance with the relevant
provisions of the DGCL. The time upon which such filing becomes effective in
accordance with the DGCL is referred to herein as the "Effective Time."
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1.4 Effect of Merger. At the Effective Time, the effect of the
Merger shall be as provided in the DGCL. Without limiting the generality of the
foregoing, at the Effective Time:
(a) All property, rights, privileges, policies and franchises of
the Company and the Merger Subsidiary shall vest in the Surviving Corporation
and all debts, liabilities and duties of the Merger Subsidiary and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
(b) The Certificate of Incorporation and the Bylaws of the
Company, as in effect immediately prior to the Closing Date, shall remain the
Certificate of Incorporation and Bylaws of the Surviving Corporation, unless and
until amended in accordance with their terms and as provided by law.
(c) The directors of the Merger Subsidiary shall become the
directors of the Surviving Corporation, each to hold a directorship in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until his successor is duly elected and qualified, and the officers
of the Merger Subsidiary shall be the respective officers of the Surviving
Corporation.
1.5 Tax and Accounting Treatment. The parties hereto acknowledge and
agree that the Merger contemplated hereby shall be treated for accounting
purposes as a purchase transaction. For Federal income tax purposes, the Merger
is intended to constitute a taxable purchase transaction.
ARTICLE 2
CONVERSION OF STOCK
2.1 Consideration; Conversion of Stock.
2.1.1 The aggregate consideration payable by Purchaser in
connection with the merger (the "Consideration") shall consist of $43,920,400.50
in cash, or, with respect to shares of the Company's Class A Common Stock, in
cash or forgiveness of indebtedness owed to the Company. The Consideration shall
be allocated among the holders of the Company's capital stock in accordance with
Section 2.1.3 below.
2.1.2 At the Effective Time, by virtue of the Merger, and
without further action by any person or entity, all shares of the Company's (a)
Series A Preferred Stock, par value $0.001 per share (the "Series A Preferred"),
(b) Series B Preferred Stock, par value $0.001 per share (the "Series B
Preferred"), (c) Class A Common Stock, par value $0.001 per share (the "Class A
Common"), and (d) Class B Common Stock, par value $0.001 per share (the "Class B
Common"), in each case issued and outstanding immediately prior to the Effective
Time, shall automatically be converted into and become the right to receive the
portion of the Consideration, if any, allocated to such shares in accordance
with Section Error! Reference source not found. hereof. All shares of the
Company's Class C Common Stock, par value $0.001 per share ("Class C Common"),
and all shares of the Company's Series A-1 Preferred Stock, par value $0.001 per
share ("Series A-1 Preferred"), in each case held by the Company as treasury
stock, if any, at the Effective Time shall be canceled and no payment shall be
made with respect thereto. Each issued and outstanding share of capital stock of
Merger Subsidiary shall, at the Effective Time, be
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automatically converted into one share of Class A Common. Each share of
Company Stock that is owned by Purchaser, Merger Subsidiary or any other
wholly-owned subsidiary of Purchaser, including the 20,000,000 shares of Series
B Preferred held by Purchaser, shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor. For the purposes hereof, the term "Common Stock" shall mean all issued
and outstanding shares of Class A Common and Class B Common, immediately prior
to the Effective Time; and the term "Company Stock" shall mean, collectively,
the Common Stock and the shares of Series A Preferred and Series B Preferred
issued and outstanding immediately prior to the Effective Time.
2.1.3 Subject to Section 2.2, the Consideration shall be payable
at the Closing to each of the holders of Company Stock (the "Shareholders"),
other than Dissenting Holders (as defined below), in the amounts, if any,
allocated to such Shareholders pursuant to Schedule 2.1.3 attached hereto. The
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Consideration shall be payable to each Shareholder in cash (by wire transfer of
immediately available funds) or by the cancellation of indebtedness, in each
case as set forth on Schedule 2.1.3.
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2.1.4 The per share allocation of Consideration pursuant to
Section 2.1.3 shall be adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend, reorganization, recapitalization or other like
change with respect to the Company Stock occurring after the date hereof and
prior to the Effective Time.
2.1.5 At the Effective Time, the warrant to purchase shares of
Series B Preferred issued by the Company to Read-Rite on March 12, 2002, shall
be canceled in exchange for the consideration set forth on Schedule 2.1.3
attached hereto.
2.2 Payment of Consideration. On the Closing Date:
2.2.1 The Company shall cause each Shareholder (other than
Dissenting Holders) to deliver to Purchaser original certificates representing
all of the shares of Company Stock held by such Shareholder, which certificates
shall be duly endorsed to Purchaser or in blank, pursuant to stock powers in
form acceptable to Purchaser.
2.2.2 Subject to Sections 2.2.3 and the performance by the
Company of its obligations pursuant to Section 2.2.1, Purchaser shall deliver
the Consideration allocated to the Shareholders in accordance with Section
2.1.3.
2.2.3 Notwithstanding Section 2.2.2, at the Closing, Purchaser
shall retain from the portion of the Consideration payable to Read-Rite an
amount equal to $2,000,000 (the "Retained Consideration"), to be held and
disbursed in accordance with Section 8.7 below.
2.3 Stock Options. Purchaser shall not assume any Employee Options
(as hereinafter defined) at the Closing. Instead, the Company shall cause all
Employee Options outstanding immediately prior to the Effective Time to be
accelerated and terminated, such that as of the Effective Time, all Employee
Options shall be terminated and of no further force or effect.
2.4 Dissenters' Rights. Notwithstanding anything to the contrary
set forth in Section 2.1 or 2.2 hereof, at the Effective Time, no Shareholder
who properly and timely exercises its
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rights pursuant to applicable law to dissent from the Merger and the other
transactions contemplated hereby (each such Shareholder, a "Dissenting Holder"),
shall receive any portion of the Consideration. Instead each Dissenting
Shareholder shall have all rights available under the DGCL.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF The Company
The Company hereby represents and warrants to Purchaser and Merger
Subsidiary that the following facts and circumstances are true and correct, as
of the date of this Agreement, subject to the limitations and exceptions set
forth, by reference to the applicable section of this Article 3, on Schedule 3
attached hereto (the "Company Disclosure Schedule"). Whenever the term "to the
Company's knowledge" or similar expression appears in any representation or
warranty in this Article 3, it means to the actual knowledge of the Company's
directors, officers and the person listed on Section 3.0 of the Company
Disclosure Schedule. Whenever the term "the Company has received no notice" or
like expression appears in any representation or warranty in this Article 3, it
means that none of the foregoing persons has received actual oral or written
notice of the matter to which such term is applied, after having made reasonable
inquiry as to whether notice has been received.
3.1 Organization. The Company: (i) is a corporation duly organized,
validly existing and in corporate good standing under the laws of the State of
Delaware; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement and all of the other documents and agreements
contemplated hereby to which it is a party; and (iii) is qualified to do
business in all jurisdictions in which the failure to so qualify would have a
material adverse effect on the business, operations or financial condition of
the Company. Except as set forth in Section 3.1 of the Company Disclosure
Schedule, the Company has no Subsidiaries (as hereinafter defined) and holds no
right, title or interest in or to any other corporation, company, partnership,
trust, limited liability company or other entity.
3.2 Authority and Consents. The execution and performance of this
Agreement and the other documents to be executed by the Company pursuant to the
terms hereof will not result in a violation of the Company's Certificate of
Incorporation or Bylaws. The Company has full power and authority (corporate and
otherwise) to enter into this Agreement and the other documents to be executed
by the Company pursuant to the terms hereof and, subject to the receipt of
consent of the Shareholders pursuant to Section 6.2 below, to carry out the
transactions contemplated by this Agreement and such other documents. This
Agreement and the other documents to be executed by the Company pursuant to the
terms hereof and their execution and delivery to Merger Subsidiary and Purchaser
have been duly authorized by the Board of Directors of the Company, and no
further corporate action prior to the Closing shall be necessary on the part of
the Company (other than obtaining the consent of the Shareholders pursuant to
Section 6.2 below) to effect the Merger or to make this Agreement and the other
documents to be executed by the Company pursuant to the terms hereof and the
transactions contemplated by this Agreement and such other documents valid and
binding upon the Company. Upon the filing of the Merger Certificate with the
Secretary of State for the State of Delaware, the Merger shall be
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immediately and automatically effective without further action by any person
or entity. This Agreement and the other documents to be executed by the Company
pursuant to the terms hereof do and will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject as to enforcement only: (i) to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally; and
(ii) to general principles of equity.
The Company has delivered to Purchaser true, complete and correct
copies of (i) its Certificate of Incorporation, as amended to date (ii) its
Bylaws, as amended to date, and (iii) its stock ledger, in each case, certified
by the Company's corporate Secretary. The Certificate of Incorporation and
Bylaws of the Company are in full force and effect and the Company is in full
compliance with the provisions thereof.
3.3 Capitalization and Title to Shares.
3.3.1 The authorized capital stock of the Company consists of
(a) 548,449,308 shares of Common Stock, $0.001 par value per share, 418,449,308
of which have been designated Class A Common, 28,408,000 of which are issued and
outstanding, 65,000,000 of which have been designated Class B Common, all of
which are issued and outstanding, and 65,000,000 of which have been designated
Class C Common, none of which are issued and outstanding; and (b) 276,250,000
shares of Preferred Stock, $0.001 par value per share, 25,000,000 of which have
been designated Series A Preferred, 25,000,000 of which are issued and
outstanding, 6,250,000 of which have been designated Series A-1 Preferred, none
of which are issued and outstanding, and 245,000,000 of which have been
designated Series B Preferred, 124,169,913 of which are issued and outstanding.
All of such shares are owned of record by the Shareholders in the amounts set
forth on Section Error! Reference source not found. of the Company Disclosure
Schedule. No other class of capital stock of the Company is authorized or
outstanding. The Shareholders are the sole shareholders of the Company. All of
the issued and outstanding shares of the Company's capital stock have been duly
authorized, were validly issued and are fully paid, nonassessable and free of
pre-emptive rights. None of the issued and outstanding shares of the Company
have been issued in violation of any federal or state law or any preemptive
rights or rights to subscribe for or purchase securities.
3.3.2 Neither the Company nor any Subsidiary has any
outstanding rights, subscriptions, warrants, convertible debt instruments,
calls, preemptive rights, options or other agreements of any kind to purchase or
otherwise receive from the Company or any Subsidiary any shares of the capital
stock or any other security of the Company or any Subsidiary, and or any
outstanding securities of any kind convertible into or exchangeable for such
securities, other than options ("Employee Options") to purchase shares of Class
A Common, issued pursuant to the Company's 2000 Stock Option Plan (the "Stock
Option Plan"), a copy of which has been previously provided to Purchaser. A list
of all holders of Current Employee Options, including the applicable number of
shares of Class A Common subject to each option and the exercise price and
vesting schedule with respect to each such option, is included on Section 3.3.2
of the Company Disclosure Schedule. There are no shareholder agreements, voting
trusts, proxies or other agreements or understandings with respect to the
outstanding shares of capital stock of the
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Company to which the Company or, to the Company's knowledge, any
Shareholder is a party. The Company does not own beneficially any shares of
capital stock of Purchaser.
3.4 Assets. Section 3.4 of the Company Disclosure Schedule lists all
of the Company's material tangible Assets (the "Assets"). The Company has good
and marketable title to, or a valid leasehold interest in, the Assets, all of
which are free and clear of all liens, charges, security interests,
encumbrances, security interests and rights and interests of others
(collectively, "Liens"). The Assets are in good working order and in a state of
reasonable maintenance and repair. The Assets include all tangible assets
necessary to permit the conduct of the business of the Company in the same
manner and to the same extent as it is conducted on, and has been conducted
prior to, the date of this Agreement.
3.5 Properties. The Company does not own any real property and does
not have any options or contractual obligations to purchase or acquire any
interest in real property. Section 3.5 of the Company Disclosure Schedule lists
all properties the Company currently occupies (the "Properties"). The Company
has a valid, binding and enforceable leasehold estate and interest, free and
clear of all Liens (other than the terms of the applicable lease) to the
Properties. The Business as conducted on the Closing does not violate any
covenant or restriction affecting the Properties. The Properties include all
properties necessary to permit the conduct of the business of the Company in the
same manner and to the same extent as it is conducted on, and has been conducted
prior to, the date of this Agreement.
3.6 No Required Consents and Approvals. Except for the filing of the
Merger Documents and the consent of the Shareholders pursuant to Section 6.2, no
consent, approval or authorization of, or declaration, filing, notice or
registration with, any governmental agency, regulatory authority or other Person
is required in connection with the execution, delivery and performance of this
Agreement or any of the other documents contemplated hereby or the consummation
of the transactions contemplated herein and therein.
3.7 Accounts Receivable. All accounts receivable reflected on the
Current Balance Sheet (as hereinafter defined) and all accounts receivable
arising subsequent thereto through the date of this Agreement, have arisen in
the ordinary course of business of the Company, represent valid and enforceable
obligations due to the Company, have been and are subject to no set-off,
counterclaim or future performance obligation on the part of the Company.
3.8 Inventory. The inventory of the Company is and at the Effective
Time will be in good and merchantable condition and saleable or useable in the
manufacture of saleable finished goods in the ordinary course of business,
subject to any reserves therefor included on the Current Balance Sheet.
3.9 Contracts and Other Agreements. Section 3.9 of the Company
Disclosure Schedule sets forth a list of the following contracts and other
agreements to which the Company is a party or by or to which the Company or the
Company's assets or properties are bound or subject:
(a) any agreement or series of related agreements requiring
aggregate payments after the date hereof by or to the Company of more than
$20,000;
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(b) any agreement not terminable (without penalty) at any time
upon ninety (90) days' prior notice;
(c) any agreement with any labor union or association
representing any employee of the Company;
(d) any agreement for the purchase or sale of materials,
supplies, equipment, merchandise or services that contains an escalation,
renegotiation or redetermination clause or that obligates the Company to
purchase all or substantially all of its requirements of a particular product
from a supplier, or for periodic minimum purchases of a particular product from
a supplier; or which obligates the Company to supply all or substantially all of
a customer's requirements;
(e) any agreement for the distribution of the Company's
products, including but not limited to any agreement appointing any Person as a
sales representative for the Company's products or services;
(f) any agreement (i) for sale of any of the assets or
properties of the Company, other than sales of inventory in the ordinary course
of business, or (ii) for the grant to any person of any options, rights of first
refusal, or preferential or similar rights to purchase any such assets or
properties;
(g) any partnership, joint venture or similar agreement;
(h) any agreement of surety, guarantee or indemnification;
(i) any agreement containing covenants of the Company not to
compete in any line of business, in any geographic area or with any person or
covenants of any other person not to compete with the Company or in any line of
business of the Company;
(j) any license relating to Intellectual Property (as
hereinafter defined) and any other agreement granting or restricting the right
of the Company to use any Intellectual Property (other than licenses for
off-the- shelf software and other customary enterprise and systems software
licenses used in the Company's information technology systems);
(k) any agreement with customers or suppliers for the sharing of
fees, the rebating of charges or other similar arrangements;
(l) any agreement obligating the Company to deliver services or
product enhancements or containing a "most favored nation" pricing clause;
(m) any agreement relating to the acquisition by the Company of
any operating business or the capital stock of any other person;
(n) any agreement requiring the payment to any person of a
brokerage or sales commission or a finder's or referral fee (other than
arrangements to pay commission or fees to employees in the ordinary course of
business);
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(o) any agreement or note relating to or evidencing outstanding
indebtedness for borrowed money;
(p) any lease, sublease or other agreement under which the
Company is lessor or lessee of any real property or equipment or other tangible
property with respect to obligations remaining after the date hereof in excess
of $20,000; and
(q) any other agreement material to the Company, whether or not
made in the ordinary course of business.
True and complete copies of all the contracts and other
agreements (and all amendments, waivers or other modifications thereto) set
forth on Section 3.9 of the Company Disclosure Schedule have been furnished to
Purchaser. Each of such contracts is valid, subsisting, in full force and
effect, binding upon the Company, and, to the knowledge of the Company, binding
upon the other parties thereto in accordance with their terms, and the Company
is not in material breach under any of them, nor, to the knowledge of the
Company, is any other party to any such contract or other agreement in material
breach thereunder, nor does any condition exist that with notice or lapse of
time or both, would constitute a material breach thereunder.
3.10 Compliance with Laws.
3.10.1 The Company has all licenses, permits, authorizations,
franchises, orders or approvals of any federal, state, local or foreign
governmental or regulatory body required for the conduct of the business of the
Company as the same is currently conducted (collectively, "Permits"); such
Permits are in full force and effect; and no proceeding is pending or, to the
knowledge of the Company, threatened to revoke or limit any Permit. True and
complete copies of all Permits have been delivered to Purchaser.
3.10.2 The Company is not in violation of any applicable law,
rule, ordinance or regulation or any order, judgment, injunction, decree or
other requirement of any court, arbitrator or governmental or regulatory body,
the violation of which would or could reasonably be expected to have a material
adverse effect on the business, operations or finances of the Company. The
Company has not received notice of, and there has not been any citation, fine or
penalty imposed against the Company for, any such violation or alleged
violation.
3.11 Bank Accounts and Powers of Attorney. Section 3.11 of the
Company Disclosure Schedule identifies all bank and brokerage accounts of the
Company, whether or not such accounts are held in the name of the Company, lists
the respective signatories therefor and lists the names of all persons holding a
power of attorney from the Company and a summary of the terms thereof.
3.12 Agreement Will Not Cause Breach or Violation. Neither the
execution nor delivery by the Company of this Agreement or the other documents
contemplated hereby, nor performance by the Company of the terms and provisions
of this Agreement or such other documents, nor the change in control of the
Company effected at the Closing will (a) conflict with or result in a breach or
violation of (i) any of the terms, conditions or provisions of (w) the Company's
Certificate of Incorporation or Bylaws, (x) any Permit, (y) any material
statute, law,
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regulation, ordinance or rule or any governmental authority having
jurisdiction over the Company or its assets, or (z) any judgment, order,
injunction, decree or ruling of any court, tribunal, administrative body or
arbitration having jurisdiction over the Company or its assets, or (ii) any
agreement, contract, or commitment to which the Company is a party or by which
it or its assets are bound, or (b) give any Person the right to terminate or
modify any material agreement or contract to which the Company is a party or by
which it or its assets are bound, or accelerate any obligation or indebtedness
of the Company thereunder.
3.13 Financial Statements. The Company has delivered to Purchaser the
unaudited balance sheets of the Company as at March 31, 2002 (the "Current
Balance Sheet"), together with unaudited statements of income and cash flows for
the year and quarter ended March 31, 2002 (all such balance sheets and financial
statements, collectively, the "Financial Statements"). The Financial Statements
were prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied in accordance with past practices of the Business,
except for footnotes and any year-end adjustments that will not be material in
amount, and are true, complete and accurate in all material respects and present
fairly the financial position and results of operations of the Company as at
such dates and for the periods the ended. All reserves (including, without
limitation, all inventory-related reserves) set forth on the balance sheets
included in the Financial Statements are or were, as applicable, reasonable,
appropriate and adequate for the purposes for which they were established.
3.14 No Undisclosed Liabilities. The Company has no liabilities or
obligations of any nature except (a) liabilities which are fully reflected or
reserved against on the Current Balance Sheet, (b) liabilities incurred in the
ordinary course of operation of the Business since the date of the Current
Balance Sheet, which, in the aggregate are not material, and (c) liabilities or
obligations accruing prior to the date of the Current Balance Sheet which,
pursuant to GAAP consistently applied in accordance with past practices of the
Business, are not required to be set forth in the Current Balance Sheet.
3.15 Transactions with Management and Affiliates. Neither Read-Rite,
nor any officer, director or employee of the Company has (whether directly or
indirectly through another entity in which such person has an interest, other
than as the holder of less than 1% of a class of securities of a publicly traded
company) any interest in (a) any agreements, contracts, property or assets of
the Company (except as an employee, optionholder or shareholder) or (b) to the
Company's knowledge, any current competitor, customer or supplier of the Company
or (c) to the Company's knowledge, any person which is currently a party to any
contract with the Company involving any amount in excess of $20,000.
3.16 Absence of Certain Changes. Except as set forth on Schedule 3.17
of the Company Disclosure Schedule, since the date of the Current Balance Sheet,
there have been no material adverse changes in the condition, financial or
otherwise, of any of the Assets or any of the liabilities, business or
operations of the Company or the Business. Without limiting the foregoing, since
such date:
(a) the Company has not altered the nature of the Business as
carried on or made any material change in the products and services it supplies;
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(b) the Company has not borrowed or agreed to borrow any funds
or incurred, or assumed or become subject to, whether directly or by way of
guarantee or otherwise, any obligation or liability, except trade payables
incurred in the ordinary course of business and consistent with past practice;
(c) the Company has not paid, discharged or satisfied any claim,
liability or obligation other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities or
obligations reflected or reserved against in the Current Balance Sheet or trade
payables incurred in the ordinary course of business since the date of the
Current Balance Sheet and consistent with past practice;
(d) the Company has not permitted or allowed any of its property
or assets (real, personal or mixed, tangible or intangible) to be subjected to
any Lien of any kind, except Permitted Liens;
(e) the Company has not written down the value of any inventory
or written off as uncollectible any notes or accounts receivable, except for
write-downs and write-offs in the ordinary course of business and consistent
with past practice, none of which is material;
(f) the Company has not cancelled any debts or waived any claims
or rights of substantial value, waived any statute of limitation or sold,
transferred, or otherwise disposed of any of its properties or assets (real,
personal or mixed, tangible or intangible), except sales of inventory in the
ordinary course of business and consistent with past practice;
(g) the Company has not licensed or disposed of or permitted to
lapse any rights to the use of any the Company Intellectual Property;
(h) the Company has not granted any increase in the compensation
of officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee, other than
in the ordinary course of business;
(i) the Company has not made any capital expenditure or
commitment therefor in excess of $20,000 individually or in the aggregate;
(j) the Company has not paid, loaned or advanced any amount to,
or sold, transferred or leased any properties or assets (real, personal or
mixed, tangible or intangible) to, or entered into any agreement or arrangement
with, any of its officers, directors or any Affiliate or associate of any of its
officers, directors or shareholders;
(k) the Company has not made any change in the accounting
policies or practices of the Company (including, without limitation, its
practices with respect to the accounting of inventory);
(l) except with respect to this Agreement and the transactions
contemplated hereby, the Company has not entered into any other material
transaction, other than in the ordinary course of business;
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(m) the Company has not (i) issued any shares of its capital
stock or any other securities (other than pursuant to the exercise, in the
ordinary course, of options or warrants outstanding as at the date of the
Current Balance Sheet), or issued any options or warrants or other securities or
rights exercisable for or convertible into the Company's capital stock or other
securities, (ii) made any redemption or other acquisition of any capital stock
of the Company, or (iii) made any declaration, setting aside, or payment of any
dividend or distribution of any kind with respect to any shares of capital stock
of the Company;
(n) there have been no losses or damage to any of the Company's
assets due to fire or other casualty, whether or not insured, amounting to more
than $20,000, in the aggregate; and
(o) the Company has not agreed, whether in writing or otherwise,
to do any of the foregoing.
3.17 Intellectual Property.
3.17.1 Section 3.17.1 of the Company Disclosure Schedule lists
all United States and foreign (i) patent and patent applications, (ii)
registered trademarks and trademark applications, (iii) registered copyrights
and applications for copyright registration, (iv) mask work registrations and
applications to register mask works, and (v) any other Intellectual Property
that is the subject of an application to, or certificate or registration issued
by, any state, government or other legal body or authority, in each case owned
by the Company. To the knowledge of the Company, the registrations of the
Company Intellectual Property listed on Section 3.17.1 of the Company Disclosure
Schedule are valid and subsisting. All necessary registration and renewal fees
in connection with the registration of the Company Intellectual Property listed
on Section 3.17.1 have been paid to the relevant patent, copyright and trademark
authorities, United States or foreign, for the purposes of maintaining such
registrations. To the Company's knowledge, the Company has complied with all
applicable disclosure requirements in connection with the application for and
prosecution of any such Company Intellectual Property. Neither the Company nor
any named inventor or assignee has committed any fraudulent act in the
application for or maintenance of any patent, trademark or copyright of the
Company. For the purposes hereof, the term "Company Intellectual Property" shall
mean all Intellectual Property owned or licensed by the Company. Without
limitation of the foregoing, the Company Intellectual Property shall be deemed
to further include any drawings, documentation, schematics, manuals or other
materials, whether in written, electronic, magnetic or other form that describe,
disclose or otherwise set forth any of the Company Intellectual Property.
3.17.2 The Company owns the Company Intellectual Property
listed on Section 3.17.1 of the Company Disclosure Schedule, free and clear of
any Liens. The Company owns, or has the binding and enforceable right to use or
operate under, to the full extent used in the Business as currently conducted ,
all the Company Intellectual Property not listed on Section 3.17.1 of the
Company Disclosure Schedule, free and clear of any Liens (other than solely as
provided in any licenses relating to such the Company Intellectual Property). No
Company Intellectual Property or product and/or technology of the Company is
subject to any
11
outstanding decree, order, judgment, stipulation, license or agreement
restricting in any material manner the use or licensing thereof by the Company.
3.17.3 To the knowledge of the Company, the operation of the
Business as it currently is conducted, including its design, development,
manufacture, use and sale of its products and/or technology, including products
and/or technology currently under development, and provision of services, does
not infringe or misappropriate the Intellectual Property of any other Person. To
the knowledge of the Company, no officer, director, employee or consultant of
the Company is infringing or misappropriating the Intellectual Property of any
other Person in the course of performing his or her duties for the Company.
Without limiting the first sentence of this Section 3.18.3, the Company has not
received notice from any Person that the operation of the Business, including
its design, development, manufacture and sale of its products and/or technology
(including with respect to products and/or technology currently under
development) and provision of services, infringes or misappropriates the
Intellectual Property of any Person.
3.17.4 To the knowledge of the Company, no Person is infringing
or misappropriating any of the Company Intellectual Property.
3.17.5 Neither the consummation of the Merger nor the change in
control of the Company effected thereby will limit, impair or otherwise affect,
in any adverse manner, any of the Company's right, title or interest in or to
any of the Company Intellectual Property.
3.17.6 The Company Intellectual Property includes all
Intellectual Property necessary to conduct the Business as currently conducted.
3.17.7 To the knowledge of the Company, no employee of the
Company is personally subject to any secrecy or noncompetition agreement or any
agreement or restriction of any kind that would impede in any material way the
ability of such employee to carry out fully all activities of such employee in
furtherance of the business of the Company as currently operated. To the
Company's knowledge, no third party has claimed that any person employed by the
Company has violated or may be violating any of the terms or conditions of his
past employment, noncompetition or nondisclosure agreement with such third
party, or disclosed or may be disclosing or utilized or may be utilizing any
trade secret or proprietary information or documentation of such third party.
Each employee, officer and consultant of the Company has executed a proprietary
information and inventions agreement in the form provided to Purchaser. The
Company has no knowledge that any of its employees are in violation of any such
agreement.
3.18 Product Warranties and Returns. Except as set forth in Section
3.19 of the Company Disclosure Schedule, the Company has not made any warranties
or guarantees relating to its products that will be in effect as of the Closing
Date, other than the standard written warranty offered with the Company's
products, a copy of which has been provided to Purchaser. During the twelve (12)
month period ended on the date of the Current Balance Sheet, the Company has
received no material customer complaints pursuant to which the Company gave
material credit or accepted a material product return.
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3.19 Litigation. None of the Company, or any officer or director of
the Company (in their capacity as such), or any asset or property of the
Company, is a party to any pending or, to the knowledge of the Company,
threatened, action, suit, arbitration, mediation, proceeding or investigation,
at law or in equity or otherwise in, for or by any court or other governmental
body or any arbitration, mediation or similar forum (collectively,
"Litigation"). The Company is not subject to any decree, judgment, order, or, to
the Company's knowledge, any law or regulation of any court or other
governmental body which has had or could reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, of any of the
Company's assets or the Business or which would prevent the transactions
contemplated by this Agreement.
3.20 Personnel.
3.20.1 Section 3.20.1 of the Company Disclosure Schedule lists:
(i) all contracts or agreements with directors, officers, employees or unions,
or consulting agreements, to which the Company is a party or it or its assets
are subject as of the date of this Agreement; (ii) the names, current salary
rates, bonuses paid during the last fiscal year, and accrued vacation and sick
leave for all the employees of the Company; and (iii) all group insurance
programs in effect for employees of the Company. The Company is not in default
with respect to any of the obligations so listed. The Company has delivered to
the Purchaser true, complete and correct copies of all such written obligations
and complete summaries of all such oral obligations. The Company has no union
contracts or collective bargaining agreements with, or any other obligations to,
employee organizations or groups, nor is the Company currently engaged in any
labor negotiations except in minor grievances not involving any employee
organization or group, nor, to the knowledge of the Company, is the Company
subject of any union organization. There is no pending or, to the Company's
knowledge, threatened labor dispute, strike or work stoppage affecting the
Business.
3.20.2 Section 3.20.2 of the Company Disclosure Schedule lists
(i) all "employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii)
all other employee benefit, bonus or other incentive compensation, stock option,
stock purchase, stock appreciation, severance pay, lay-off or reduction in
force, change in control, sick pay, vacation pay, salary continuation, retainer,
leave of absence, educational assistance, service award, employee discount,
fringe benefit plans, arrangements, policies or practices, whether legally
binding or not, to which the Company contributes to or has any obligation to or
liability for (collectively, the "Employee Plans"). Each Employee Plan may and
provides that it may be amended or terminated at any time and, except for
benefits protected under Section 411(d) of the Code, all benefits payable to
current or terminated employees or any beneficiary may be amended or terminated
by the Company at any time without liability.
3.20.3 None of the Employee Plans is a Defined Benefit Plan or a
Multiemployer Plan and the Company has never (i) sponsored, maintained or
contributed to, or been obligated to contribute to, a Defined Benefit Plan or
(ii) contributed to, or been obligated to contribute to, a Multiemployer Plan.
3.20.4 The Company does not maintain or contribute to any
welfare benefit plan that provides health benefits to an employee after the
employee's termination of employment or
13
retirement except as required under Section 4980B of the Code and Sections 601
through 608 of ERISA.
3.20.5 True, correct and complete copies of (i) all documents
creating or evidencing any Employee Plan listed in Section 3.20.2 of the Company
Disclosure Schedule, (ii) all reports, forms and other documents required to be
filed with any governmental entity (including, without limitation, summary plan
descriptions, Forms 5500 and summary annual reports for all plans subject to
ERISA), and (iii) the most recent favorable letters of determination from the
Internal Revenue Service with respect to the Employee Plans that are intended to
qualify under Section 401(a) of the Code have been delivered to the Purchaser.
3.20.6 All expenses and liabilities relating to all of the
Employee Plans described in Section 3.20.2 of the Company Disclosure Schedule
have been, and will on the Closing Date be, fully and properly accrued on the
Company's books and records and are disclosed on the Current Balance Sheet and
such Employee Plans have no unfunded liabilities not reflected on the Current
Balance Sheet.
3.20.7 Without limiting any other representation or warranty of
the Company set forth herein, the termination of the employment of any and all
officers and employees of the Company prior to the date hereof was effected in
material compliance with all applicable laws and the employment arrangements
between the Company and such officers and employees and the Company has no
liability or obligation (including, without limitation, any liability for
severance payments), absolute or contingent, to any former officer or employee
of the Company. No former officer or employee of the Company will, at the
Closing, have any debt, liability or other obligation, absolute or contingent,
owing to the Company.
3.21 OSHA. The Company and the Business have at all times been in
compliance with and have not violated any federal, state or local statutes,
laws, regulations or rules relating to occupational health or safety, including,
without limitation, the rules and regulations of the Occupational Safety and
Health Administration ("OSHA"), the noncompliance with which has had or could
reasonably be expected to have a material adverse effect on the business,
operations results or financial condition of the Company. To the Company's
knowledge, no investigation or claim has at any time been commenced or pending
against the Company or the Business by OSHA or any similar state or local agency
and, to the Company's knowledge, no valid basis exists for any such claim. To
the Company's knowledge, no claim has at any time been made by any current or
former employee of the Company relating to occupational health or safety.
3.22 Taxes. All returns with respect to any Taxes ("Tax Returns")
required to be filed prior to the date hereof with respect to the Company and
the Business have been timely filed or appropriate extensions have been
obtained, each such filed Tax Return has been prepared in compliance in all
material respects with all applicable laws and regulations, and all such filed
Tax Returns are true and accurate in all material respects. The Company is not
delinquent in the payment of any income, sales, use or other taxes, assessments,
levies, fees or charges imposed by any governmental authority ("Taxes"). All
Taxes due and payable by or with respect to the Company or the Business for the
periods prior to the Closing Date have been or will be paid by the Company prior
to the Closing or have been reserved for on the Current Balance Sheet. With
respect to each taxable period of the Company, (i) no deficiency or proposed
adjustment which
14
has not been settled or otherwise resolved for any amount of Taxes has been
asserted or assessed by any taxing authority against the Company; (ii) the
Company has no pending consent to extend the time in which any Taxes may be
assessed or collected by any taxing authority; (iii) the Company has not
requested or been granted an extension of the time for filing any Tax Return to
a date later than the Closing; (iv) there is no action, suit, taxing authority
proceeding, or audit or claim for refund now in progress, pending or, to the
knowledge of the Company threatened against or with respect to Taxes; (v) there
are no Liens for Taxes (other than for current taxes not yet due and payable)
upon any of the Company's assets; and (vi) true, correct and complete copies of
all income and sales Tax Returns filed by or with respect to the Company for the
past three years have been furnished or made available to Purchaser. The Company
has not agreed to, nor is it required to, make any adjustments under Section
481(a) of the Code by reason of a change in accounting method or otherwise.
3.23 Insurance. The Company has obtained and maintains in full force
and effect all insurance policies and bonds with respect to the Company and the
Business adequate for the Business as presently conducted and in accordance with
good business practices.
3.24 Environmental Liability. Without limiting Section 3.10.1, at all
times the Company has complied, in all material respects, with all applicable
environmental and hazardous waste laws, orders, regulations, rules and
ordinances adopted, imposed or promulgated by any governmental or regulatory
entity having jurisdiction over any property owned, leased or occupied by the
Company. The Company has not, and, to the knowledge of the Company, no other
person or entity has, spilled, released or discharged any Hazardous Materials
(as defined below) on, under or about any property owned, leased or occupied by
the Company. No current use of any property owned, leased or occupied by the
Company constitutes a public or private nuisance. Without limiting Section
3.10.2, all environmental licenses, permits, clearances, covenants and
authorizations required for the Business have been obtained by the Company and
are in full force and effect. Any handling, generation, transportation, storage,
disposition, treatment or use of Hazardous Material by the Company has been in
compliance with all applicable statutes, laws, regulations and orders. As used
herein, the term "Hazardous Materials" means any hazardous or toxic substance,
material or waste which is or becomes regulated by any local government
authority, the State of California, any other state or the United States
Government. To the knowledge of the Company, no Hazardous Materials are present
in the soil or groundwater at or under any property at any time owned, leased or
occupied by the Company. No notification of release of Hazardous Materials
pursuant to applicable law has been received by the Company as to any of such
property. No wastes generated by the Company have ever been sent directly or, to
the Company's knowledge, indirectly, to any site listed or formally proposed for
listing federal or state list of hazardous substances sites requiring
investigation or clean-up. The Company has not received from any governmental
authority or third party any requests for information, notices of claim, demand
letters, or other notification that they or it are or is or may be potentially
responsible with respect to any investigation or clean-up of Hazardous
Materials. The Company has no knowledge of any fact or circumstance that could
involve the Company or Purchaser in any environmental litigation or proceeding
or impose any environmental liability upon the Company or Purchaser. Section
3.24 of the Company Disclosure Schedule contains a true and complete list of all
environmental surveys, tests and reports performed by or on behalf of the
Company or, to the Company's knowledge, Read-Rite
15
with respect to the property owned or leased by the Company (including,
without limitation, all soil and groundwater surveys, tests and reports).
3.25 Products.
3.25.1 Each of the products sold by the Company is, and at all
times up to and including the sale thereof by the Company has been (a) in
compliance in all material respects with all applicable federal, state, and
local laws and regulations and (b) conforms in all material respects to any
promises or affirmations of fact made on the container or label for such product
or in connection with its sale, subject to returns, repairs, defects and
allowances consistent with past practice.
3.25.2 To the knowledge of the Company, there is no design
defect materially adverse to the functionality of any of such products and, to
the knowledge of the Company, each of such products contains adequate warnings,
presented in a reasonably prominent manner, in accordance with applicable laws,
rules and regulations and current industry practice with respect to its contents
and use.
3.26 Representations Complete. There is no fact known to the
Company that has not been disclosed to Purchaser in this Agreement that is
reasonably likely to have a material adverse effect on the Company's business,
operations or financial condition.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF READ-RITE AND THE INVESTORS
Each of Read-Rite and each Investor, severally and not jointly,
represents and warrants, to Purchaser and Merger Subsidiary that the following
facts and circumstances are true and correct (other than with respect to the
matters set forth in Section 4.3 below, which representations and warranties
shall be made solely by Read-Rite), as of the date of this Agreement.
4.1 Ownership of Shares. Such Shareholder owns, beneficially and of
record, the shares of Company Stock indicated adjacent to the such Shareholder's
name on Section 3.3.1 of the Company Disclosure Schedule, free and clear of all
Liens.
4.2 Authority and Consents. The execution and performance of this
Agreement and the other documents to be executed by such Shareholder pursuant to
the terms hereof will not result in a violation of such Shareholder's corporate
or partnership formation documents or other governing documents, and such
Shareholder has full power and authority (corporate, partnership and otherwise)
to enter into this Agreement and the other documents to be executed by such
Shareholder pursuant to the terms hereof and to carry out the transactions
contemplated by this Agreement and such other documents. This Agreement and the
other documents to be executed by such Shareholder pursuant to the terms hereof
and each of their execution and delivery have been duly authorized by all
required corporate, company or partnership resolutions and other actions, and no
further corporate, company, partnership or other action prior to the Closing
shall be necessary on the part of such Shareholder to make this Agreement and
the other documents to
16
be executed by such Shareholder pursuant to the terms hereof and the
transactions contemplated by this Agreement and such other documents valid and
binding upon such Shareholder. This Agreement and the other documents to be
executed by such Shareholder pursuant to the terms hereof do and will, when so
executed, constitute legal, valid and binding obligations of such Shareholder,
enforceable against such Shareholder in accordance with their respective terms,
subject as to enforcement only: (i) to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors' rights generally; and (ii) to general principles of
equity.
4.3 Representations and Warranties of the Company. Read-Rite
represents and warrants to Purchaser and Merger Subsidiary that, to the actual
knowledge of each of the Read-Rite employees who are members of the Scion Board
of Directors and the person listed on Section 3.0 of the Company Disclosure
Schedule, none of the representations and warranties of the Company set forth in
Article 3 of this Agreement is false or untrue in any material respect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUBSIDIARY
Purchaser and Merger Subsidiary hereby, jointly and severally,
represent and warrant to the Company, Read-Rite and each Investor that the
following facts and circumstances are true and correct:
5.1 Authorization; Etc. Each of Purchaser and Merger Subsidiary: (i)
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (ii) has all necessary corporate power to own and
lease its properties, to carry on its business as now being conducted and to
enter into and perform this Agreement and all of the other documents and
agreements contemplated hereby; and (iii) is qualified to do business in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on the business, operations or financial condition of Purchaser. Each of
Purchaser and Merger Subsidiary has full power and authority (corporate and
otherwise) to enter into this Agreement and the other documents contemplated
hereby and to carry out the transactions contemplated hereby and thereby. Each
of Purchaser and Merger Subsidiary has taken all required action by law to
authorize the execution and delivery of this Agreement and the other documents
contemplated hereby and the transactions contemplated hereby and thereby, and
this Agreement and the other documents contemplated hereby is valid and binding
obligations of Purchaser and Merger Subsidiary, as applicable, enforceable
against it in accordance with its terms, subject as to enforcement only: (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
generally; and (ii) to general principles of equity.
5.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the Certificate of Incorporation or Bylaws of
Purchaser or Merger Subsidiary or violate, or be in conflict with, or constitute
a default under or cause the acceleration of the maturity of any debt or
obligation pursuant to, any agreement or commitment to which Purchaser or Merger
Subsidiary
17
is a party or by which Purchaser or Merger Subsidiary is bound, or violate
any statute or law or any judgment, decree, order, regulation, or rule of any
court or governmental authority.
5.3 Consents and Approvals. Except for the filing of the Merger
Documents, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or any other Person
is required in connection with the execution, delivery and performance of this
Agreement or the other documents contemplated hereby by Purchaser or Merger
Subsidiary and the consummation of the transactions contemplated hereby or
thereby.
ARTICLE 6
COVENANTS
6.1 Company Performance. Each of Read-Rite and each of the Investors
shall use its commercially reasonable efforts to cause the Company to perform
all of its obligations under this Agreement, including using its commercially
reasonable efforts to cause the Company's Board of Directors (a) to adopt and
approve any and all resolutions necessary to cause the Company to perform its
obligations hereunder, and (b) to refrain from taking any action to delay,
hinder or oppose the Merger or the performance by the Company of its obligations
hereunder.
6.2 Shareholder Approval. As promptly as practicable after the
execution of this Agreement and at such time as is permitted by applicable law,
the Company shall submit this Agreement and the transactions contemplated hereby
to its shareholders for approval and adoption as provided by the DGCL and its
Certificate of Incorporation and Bylaws. The Company shall use its best efforts
to solicit and obtain the consent of its shareholders sufficient to approve the
Merger and this Agreement and to enable the Closing to occur as promptly as
practicable. The materials submitted to the Company's shareholders shall be
subject to review and approval by Purchaser and include information regarding
the Company, the terms of the Merger and this Agreement and the unanimous
recommendation of the Board of Directors of the Company in favor of the Merger
and this Agreement.
6.3 Amendment to Lease. Prior to the Closing, Read-Rite shall use
its best efforts to cause the lease for the property located at 000 Xxx Xxxxxx
Xxxxxx to be restructured as a sublease to the Company for the portion of the
property currently occupies by the Company in a manner reasonably satisfactory
to Read-Rite and Purchaser.
6.4 Operational Covenants. 6.4.1 Access. Until the Closing, the
Company shall give Purchaser, its attorneys, accountants and other authorized
representatives reasonable access to its offices, properties, customers,
suppliers, employees, products, technology, business and financial records,
contracts, business plans, budgets and projections, agreements, commitments and
other documents and information concerning the Company and persons employed by
or doing business with the Company.
6.4.2 Insurance. Until the Closing, the Company shall maintain
with financially sound and reputable insurers, insurance against such casualties
and contingencies and of such types and in such amounts as is customary for
companies similarly situated.
18
6.4.3 Compliance with Laws. Until the Closing, the Company shall
conduct its business in material compliance with all applicable laws, rules,
regulations and orders.
6.4.4 Keeping of Books and Records. Until the Closing, the
Company shall keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions and in which all proper reserves for depreciation,
depletion, obsolescence, amortization, taxes, bad debts and other purposes in
connection with its business shall be made.
6.4.5 Actions Prior to Closing. The Company shall conduct its
business pending the Closing only in the ordinary and usual course of business
consistent with past practice. Without limiting the foregoing, except as
expressly contemplated by this Agreement or as consented to in writing by
Purchaser, which consent shall not be unreasonably withheld or delayed, during
the period from the date of this Agreement to the Closing Date, the Company
shall not take any actions or permit to occur any transactions, circumstances or
events, which, if taken or permitted to occur prior to the date of this
Agreement, would constitute a breach of any of the Company's representations and
warranties in Article 3 (including, without limitation, Section 3.16) of this
Agreement.
6.4.6 Notice of Changes. Until the Closing, the Company shall
notify Purchaser of any material change in the business of the Company as soon
as it becomes apparent to the Company that any such change has occurred or is
reasonably likely to occur.
6.4.7 Preservation of Business. Until the Closing, the Company
will use its reasonable best efforts to preserve its business organization
intact, and to preserve its goodwill. Without limiting the generality of the
foregoing, the Company will timely perform all material obligations required of
the Company under the contracts and permits listed on the Schedules to this
Agreement.
6.4.8 Litigation. Until the Closing, the Company will promptly
notify Purchaser of any lawsuits, claims, proceedings or investigations which
are threatened or commenced against or by the Company, or against any employee,
consultant or director of the Company.
6.4.9 Continued Effectiveness of Representations and Warranties.
From the date hereof up to and including the Closing Date, (i) the Company will
conduct its business in a manner such that the representations and warranties
contained herein shall continue to be true and correct at all times pending the
Closing (including, without limitation, the representations and warranties set
forth in Section 3.14 hereof) as if made on and as of such times, and (ii) the
Company will advise Purchaser promptly in writing of any condition or
circumstance occurring from the date hereof up to and including the Closing Date
which could cause any representation or warranty of the Company to become
untrue. No such notice shall modify, limit or impair, in any manner, (a) any
representation or warranty of the Company or Read-Rite made hereunder or in
connection herewith, or (b) any rights or remedies of Purchaser with respect to
the breach thereof.
19
6.5 No Negotiations. Except as specifically agreed by Purchaser with
respect to the divestiture of Optical Systems Corporation,, until the
termination of this Agreement in accordance with its terms, neither the Company,
Read-Rite any Investor or any of their respective shareholders, officers,
directors, employees, affiliates, advisors, agents or investment bankers shall,
directly or indirectly, initiate discussions with, engage in negotiations with,
enter into any agreement with, or provide any information to, any corporation,
partnership, person or other entity or group involving the possible sale,
directly or indirectly, transfer or joint venture of the Company or a material
portion of its business, assets, or capital stock to any person or entity other
than Purchaser. The Company shall immediately notify Purchaser of any
solicitation or inquiry made by any third party with respect to any such sale.
6.6 Consent of Read-Rite and the Investors. By their execution of
this Agreement, each of Read-Rite and each of the Investors hereby (a) consents
to the Merger, and (b) agrees to execute any and all documents and to take any
and all actions reasonably required, under the DGCL or otherwise, to approve the
Merger and the other transactions contemplated hereby, as stockholders of the
Company.
6.7 Prompt Closing. All parties hereto shall use their commercially
reasonable efforts to complete the Merger and the other transactions
contemplated hereunder as promptly as possible, subject to the terms and
conditions hereof.
6.8 Promissory Notes. At the Effective Time, Purchaser shall forgive
all of the accrued and unpaid interest due under all promissory notes issued in
favor of the Company in connection with the exercise of options to purchase
Class A Common.
6.9 Series A-1 Warrants. The Investors and the Company hereby agree
to cause, as of the Effective Time, all issued and outstanding warrants to
purchase shares of Series A-1 Preferred to be terminated and of no further force
or effect, without further liability or obligation of the Company.
6.10 Investor Rights and Shareholders Agreements. The Company,
Read-Rite, Purchaser and the Investors hereby agree that, as of the Effective
Time, that certain (a) Amended and Restated Investors Rights Agreement dated
January 4, 2002, among the Company, Purchaser, Read-Rite and the Investors, and
(b) Amended and Restated Stockholder Agreement dated January 4, 2002, among the
foregoing parties, in each case, shall be terminated and of no further force or
effect, without further liability or obligation of the Company.
6.11 Employees. Prior to and effective upon the Closing, Purchaser
shall offer continued employment to each of the Company's employees, with salary
and benefits that are, in the aggregate, no less favorable than those currently
provided to each such employee by the Company. Purchaser shall not affirmatively
discourage any employees of the Company from remaining employed by the Company
at the Closing such that the condition in Section 7.11.1 would fail to be
satisfied.
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ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Purchaser's Obligation to Close. Purchaser's
obligations to consummate the transactions contemplated by this Agreement shall
be subject to the full satisfaction of the following conditions, each of which
conditions may be waived in writing by Purchaser:
7.1.1 Instruments. The Company, Read-Rite and the Investors, as
applicable, shall have executed and delivered to Purchaser the Merger
Certificate, and any and all other documents reasonably required by Purchaser to
effect the transactions contemplated hereby.
7.1.2 Representations and Warranties True. The representations
and warranties of the Company, Read-Rite and the Investors contained in this
Agreement shall be true in all material respects at the Closing as though made
at such time, provided that any such representations and warranties that are
qualified by the term "material" or otherwise qualified as to materiality shall
be true at the Closing in accordance with the terms thereof.
7.1.3 Performance of Covenants. The Company, Read-Rite and the
Investors shall have performed, in all material respects, all obligations and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
7.1.4 Shareholder Approval. The Merger shall have been approved
by the Shareholders as required by the DGCL.
7.1.5 Certificates. The Company shall have delivered to
Purchaser a certificate executed by its chief executive officer certifying as to
the Company's satisfaction of the conditions set forth in Sections 7.1.2, 7.1.3
and 7.1.4 above and 7.1.8 below. Read-Rite shall have delivered a certificate
executed by an executive officer certifying as to Read-Rite's satisfaction of
the condition set forth in Section 7.1.2.
7.1.6 Consents. All consents or approvals required for the
consummation of the transactions contemplated hereby, including any required
consents of the parties to any contract to which the Company is a party, shall
have been obtained.
7.1.7 Opinion. The Company shall have delivered to Purchaser an
opinion of its counsel in form and content reasonably acceptable to Purchaser.
7.1.8 No Material Adverse Change. There shall not have occurred
any material adverse change between the date hereof and the Closing Date in the
business, operations or financial condition of the Company.
7.1.9 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending before any court or
governmental body (i) to restrain, prohibit, restrict or delay, or to obtain
damages or a discovery order with respect to this Agreement or the consummation
of the transactions contemplated hereby, or (ii) which has had or may have a
21
materially adverse effect on the business, operations or finances of the
Company. No order, decree or judgment of any court or governmental body shall
have been issued restraining, prohibiting, restricting or delaying, the
consummation of the transactions contemplated by this Agreement. No insolvency
proceeding of any character including, without limitation, bankruptcy,
receivership, reorganization, dissolution or arrangement with creditors,
voluntary or involuntary, directly affecting the Company, Read-Rite or any
Investor shall be pending, and neither the Company nor any of Read-Rite or any
Investor shall have taken any action in contemplation of, or which would
constitute the basis for, the institution of any such proceedings.
7.1.10 Good Standing Certificates. The Company shall have
delivered to Purchaser certificates of good standing from the Secretaries of the
State of Delaware and all other States in which the Company is qualified to do
business dated no earlier than five (5) business days prior to the Closing Date.
7.1.11 Employee Notices. None of the Employees, or applicable
percentages thereof, as the case may be, identified on Schedule 7.1.11 attached
hereto shall have (a) terminated his or her employment by the Company or (b)
notified the Company or otherwise indicated that he or she intends to so
terminate such employment at any time after the Closing.
7.2 Conditions to the Company's Obligations at the Closing. The
Company's obligations to consummate the transactions contemplated by this
Agreement shall be subject to the full satisfaction of the following conditions,
each of which conditions may be waived in writing by the Company:
7.2.1 Representations and Warranties True. The representations
and warranties of Purchaser and Merger Subsidiary contained in this Agreement
shall be true in all material respects at the Closing as though made at such
time, provided that any such representations and warranties that are qualified
by the term "material" or otherwise qualified as to materiality shall be true at
the Closing in accordance with the terms thereof.
7.2.2 Performance of Covenants. Purchaser and Merger Subsidiary
shall have performed, in all material respects, all obligations and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by them at or prior to the Closing Date.
7.2.3 Certificate. Purchaser shall have delivered to the Company
a certificate executed by an officer of Purchaser certifying as to Purchaser's
and Merger Subsidiary's satisfaction of the conditions set forth in Sections
7.2.1 and 7.2.2.
7.2.4 Shareholder Approval. The Merger shall have been approved
by the Shareholders as required by the DGCL.
7.2.5 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending before any court or
governmental body to restrain, prohibit, restrict or delay, or to obtain damages
or a discovery order with respect to this Agreement or the consummation of the
transactions contemplated hereby. No order, decree or judgment of any
22
court or governmental body shall have been issued restraining,
prohibiting, restricting or delaying, the consummation of the transactions
contemplated by this Agreement.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival. The representations and warranties of the Company,
Read-Rite and the Investors contained in this Agreement or in any document,
certificate or schedule or instrument contemplated hereby or delivered pursuant
hereto shall survive for a period of one (1) year after the Closing Date (the
"Expiration Date"), provided that the representations and warranties set forth
in Sections 3.3 and 4.1 shall survive forever, and the representations and
warranties set forth in Sections 3.19, 3.20 (other than subsections 3.20.1 and
3.20.7), 3.22 and 3.24 shall survive until the expiration of the applicable
statute of limitations. The representations and warranties of Purchaser and
Merger Subsidiary contained in this Agreement or in any document, certificate or
instrument contemplated hereby or delivered pursuant hereto shall survive the
Closing Date.
8.2 The Company's, Read-Rite's and the Investors' Indemnities.
8.2.1 The Company and Read-Rite shall, jointly and severally,
indemnify, defend, protect and hold harmless Purchaser (and Purchaser's
Subsidiaries (including, without limitation, the Company after the Closing) and
Affiliates and their respective officers, directors, shareholders, employees and
agents) from and against any and all losses, costs, expenses, liabilities,
obligations, claims, demands, causes of action, suits, settlements and judgments
of every nature, including the costs and expenses associated therewith and
reasonable attorneys', consultants' and witness fees incurred in connection
therewith ("Purchaser Damages"), which arise out of or are due to: (i) the
breach of any representation or warranty made by the Company under Article 3 of
this Agreement or the certificate delivered by the Company under Section 7.1.5;
or (ii) the breach of any covenant prior to the Closing made by the Company
pursuant to this Agreement. Notwithstanding the foregoing, Read-Rite shall have
no indemnification obligations under this Section 8.2.1 prior to the Effective
Time; provided, that the foregoing shall not limit any party's rights or
remedies, at law or in equity, if the Effective Time does not occur or this
Agreement is terminated prior to the Effective Time, for any reason.
8.2.2 Each of Read-Rite and each Investor shall, severally but
not jointly, indemnify, defend, protect and hold harmless Purchaser (and
Purchaser's Subsidiaries and Affiliates and their respective officers,
directors, shareholders, employees and agents) from and against any and all
Purchaser's Damages which arise out of or are due to: (i) the breach of any
representation or warranty made by such Shareholder (and only such Shareholder)
in Article 4 of this Agreement, or, with respect to Read-Rite, in the
certificate delivered by Read-Rite to Purchaser pursuant to Section 7.1.5 of
this Agreement; or (ii) the breach of any covenant made by such Shareholder (and
only such Shareholder) pursuant to this Agreement.
8.3 Purchaser's Indemnity. Purchaser and Merger Subsidiary shall,
jointly and severally, indemnify, defend, protect and hold harmless the Company
and each Shareholder (and their respective Affiliates, officers, directors,
shareholders, employees and agents) from and against any and all losses, costs,
expenses, liabilities, obligations, claims, demands, causes of
23
action, suits, settlements and judgments of every nature, including the
costs and expenses associated therewith and reasonable attorneys', consultants'
and witness fees incurred in connection therewith ("the Company's Damages"; and
when used together with or in the alternative to Purchaser Damages, "Damages"),
which arise out of or are due to: (i) the breach by Purchaser or Merger
Subsidiary of any representation or warranty made by Purchaser or Merger
Subsidiary pursuant to this Agreement; or (ii) the breach of any covenant made
by Purchaser or Merger Subsidiary pursuant to this Agreement.
8.4 Indemnity Procedures.
8.4.1 Claim and Dispute Procedures.
(a) In the event that at any time or from time to time after the
Closing Date a person or entity entitled to indemnification pursuant to Section
8.2 or Section 8.3 (any such person or entity, an "Indemnitee") shall sustain
Damages against which such Indemnitee is indemnified under this Agreement, such
Indemnitee shall promptly provide written notice (a "Claim Notice") to each
party required to provide such indemnification (each such party, the
"Indemnitor") describing in reasonable detail the facts giving rise to any
claims for indemnification hereunder and shall include in such Claim Notice (if
then known) the amount or the method of computation of the amount of such claim
for indemnification; provided, that a Claim Notice in respect of any action at
law or suit in equity by or against a third party as to which indemnification
will be sought shall be given promptly after the Indemnitee receives written
notice of the commencement of such action or suit, but the failure so to notify
the Indemnitor shall not relieve it of any liability that it may have to any
Indemnitee, except to the extent the Indemnitor demonstrates that the defense of
such action is or has been prejudiced thereby.
(b) If applicable, the Indemnitor shall have thirty days after
the receipt of any Claim Notice pursuant hereto to (i) agree to the amount or
method of determination set forth in the Claim Notice and to pay such amount to
such Indemnitee in immediately available funds or (ii) provide such Indemnitee
with notice that it disagrees with the amount or method of determination set
forth in the Claim Notice (the "Dispute Notice"). Within fifteen days after the
giving of the Dispute Notice, a representative of Indemnitor and such Indemnitee
shall negotiate in a bona fide attempt to resolve the matter. In the event that
the controversy is not resolved within thirty days of the giving of the Dispute
Notice, the controversy shall be resolved by a single arbitrator pursuant to
binding arbitration in San Francisco County, California, pursuant to the rules
and procedures of the Judicial Arbitration and Mediation Services ("JAMS"), San
Francisco, California.
8.4.2 Third Party Claims. In case any proceeding shall be
brought against an Indemnitee and it shall give notice to the Indemnitor of the
commencement thereof in accordance with Section 8.4.1(a) above, the Indemnitor
shall be entitled to participate therein and, to the extent that it shall wish
(unless the Indemnitor is also a party to such proceeding and the Indemnitee
determines in good faith that joint representation would be inappropriate) to
assume the defense thereof with counsel which is reasonably satisfactory to such
Indemnitee and, after notice from the Indemnitor to such Indemnitee of its
election so to assume the defense thereof, the Indemnitor shall not be liable to
such Indemnitee under such Section for any fees of such
24
counsel or any other expenses with respect to the defense of such
proceeding, in each case, subsequently incurred by such Indemnitee in connection
with the defense thereof. If an Indemnitor assumes the defense of such
proceeding, (a) no compromise or settlement thereof may be effected by the
Indemnitor without the Indemnitee's reasonable consent unless (i) there is no
finding or admission of any violation by the Indemnitee of law or any violation
by the Indemnitee of the rights of any person or entity and no effect on any
other claims that may be made by the Indemnitee against the Indemnitee, and (ii)
the sole relief provided is monetary damages that are paid in full by the
Indemnitor; and (b) the Indemnitor shall have no liability with respect to any
compromise or settlement thereof effected without its consent (which shall not
be unreasonably withheld). If notice is given to an Indemnitor of the
commencement of any proceeding and it does not, within twenty (20) business days
after the Indemnitee's notice is given, give notice to the Indemnitee of its
election to assume the defense thereof, the Indemnitor shall be bound by any
determination made in such action or any compromise or settlement thereof
effected by the Indemenitee; provided, however, that any such determination,
compromise or settlement is made or taken in good faith, based upon the relevant
facts and circumstances. Notwithstanding the foregoing, if an Indemnitee
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its Affiliates, other than as a result of
monetary damages, such Indemnitee may, by notice to the Indemnitor, assume the
exclusive right to defend, compromise or settle such proceeding, but the
Indemnitor shall not be bound by any determination of a proceeding so defended
or any compromise or settlement thereof effected without its consent (which
shall not be unreasonably withheld.
8.5 Exclusive Remedy. Subject to Section 8.6.4, conditioned upon
the occurrence of, and from and after, the Effective Time, the indemnification
obligations under this Agreement shall be the exclusive and sole remedy
available to the parties and shall be in lieu of any other remedies or rights
available to the parties, at law or in equity, with respect to any claims,
disputes, conflicts, damages or otherwise arising out of or related to this
Agreement and the Merger contemplated hereby. Nothing in this Section 8.5 or
elsewhere in this Agreement shall limit any party's rights or remedies, at law
or in equity, if the Effective Time does not occur or this Agreement is
terminated prior to the Effective Time, for any reason.
8.6 Limitations on Indemnification.
8.6.1 Except as set forth in Section 8.6.4, no indemnification
shall be payable pursuant to Section 8.2 or Section 8.3 after the Expiration
Date, except with respect to (i) claims made prior to the Expiration Date, but
not resolved by the Expiration Date and (ii) claims not subject to the
Expiration Date.
8.6.2 Except as set forth in the next sentence and Section
8.6.4, Purchaser and its Affiliates shall not be entitled to recover Purchaser
Damages hereunder unless and until the aggregate Purchaser Damages exceed
$250,000 (the "Threshold Amount"), whereupon Purchaser shall be entitled to
recovery of all Purchaser Damages suffered or incurred by Purchaser and its
affiliates, including, without limitation, all such Purchaser Damages below the
Threshold Amount.
8.6.3 Except as set forth in Section 8.6.4, (a) the aggregate
liability of the Company and Read-Rite for Purchaser Damages under Section 8.2.1
shall not exceed
25
$10,000,000, and (b) neither Read-Rite nor any Investor shall have any
liability for Purchaser Damages under Section 8.2.2 in excess of the portion of
the Consideration received by such Shareholder.
8.6.4 Nothing in this Article 8 or elsewhere in this Agreement
shall limit, in any manner (whether by time, amount, procedure or otherwise),
any party's liability or responsibility, at law or in equity, due to or arising
from any intentional misrepresentation or fraud by such party. For the avoidance
of doubt, no party shall have any liability or responsibility for the fraud or
intentional misrepresentation of any other party.
8.7 Application of Retained Consideration. From and after the
Effective Time, without limiting Read-Rite's liability for any Purchaser Damages
(or Purchaser's recourse therefore) for which Read-Rite is responsible under
Section 8.2.1 or Section 8.2.2, Purchaser may apply all or any portion of the
Retained Consideration in satisfaction of such Purchaser Damages. Purchaser and
Read-Rite agree that, as and when claims for such Purchaser Damages are resolved
in accordance with Section 8.4 above, such Purchaser Damages shall be satisfied
first from the Retained Consideration, if and to the extent the Retained
Consideration (or any portion thereof) continues to be (a) held by Purchaser in
accordance with the next sentence, and (b) not applied to other indemnification
obligations for Purchaser Damages. One (1) year after the Closing Date,
Purchaser shall pay to Read-Rite the Retained Consideration minus any portion
thereof then reasonably estimated by Purchaser to satisfy any then-outstanding
claims for Purchaser Damages. Any Retained Consideration retained by Purchaser
more than one (1) year after the Closing date (in accordance with the preceding
sentence), and not ultimately applied in satisfaction of Purchaser Damages shall
be promptly paid to Read-Rite.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
9.1.1 By mutual written consent duly authorized by the
Boards of Directors of Purchaser and the Company.
9.1.2 By Purchaser or the Company if
(a) there shall be a final nonappealable order of a federal or
state court in effect that would prevent consummation of the Merger;
(b) the Closing has not occurred on or prior to April 29, 2002,
for any reason other than the breach of any provision of this Agreement by (i)
the Purchaser, in the event of a termination by the Purchaser, or (ii) the
Company, Read-Rite or any Investor, in the event of a termination by the
Company; or
26
(c) in the case of a termination by Purchaser, the Company,
Read-Rite or any Investor breaches any of its representations, warranties or
covenants set forth herein and such breach is not promptly cured, and, in the
case of a termination by the Company, Purchaser breaches any of its
representations, warranties or covenants set forth herein and such breach is not
promptly cured.
If any party shall elect to terminate this Agreement pursuant to this Section
9.1 (other than paragraph (a) hereof), written notice of such event shall
forthwith be given by the terminating party to the other parties to this
Agreement, whereupon this Agreement shall terminate.
9.2 Effect of Termination.
9.2.1 In the event of the termination and abandonment of
this Agreement pursuant to Section 9.1, this Agreement, except for the
provisions of Articles 8, 9 and 10 shall forthwith become void and be of no
effect, without any liability on the part of any party or its directors,
officers or stockholders. Notwithstanding the foregoing, nothing in this Section
9.2 shall relieve any party to this Agreement of liability for breach of this
Agreement.
9.2.2 In the event of termination of this Agreement by the
Company pursuant to Section 9.1.2(c), but for no other reason, at the Company's
option, all principal and interest outstanding under the Loan (as defined in
that certain Loan Agreement dated as of April 10, 2002, between the Company and
the Purchaser), shall be converted into shares of Series B Preferred, at the
conversion rate of $0.25 per share. The Purchaser shall have all rights with
respect to such shares (including, without limitation, registration rights) as
it currently holds with respect to its current shares of Series B Preferred.
Without limiting the foregoing, the Company, Read-Rite and each Investor hereby
acknowledge and agree that any and all shares of Common Stock issuable upon
conversion of the shares of Series B Preferred contemplated hereby shall be
deemed "Registrable Securities" (as defined in that certain Amended and Restated
Investor Rights Agreement dated as of January 4, 2002 by and among the Company,
Purchaser, the Investors and Read-Rite). Each party shall execute and deliver
any and all documents and take such other actions as the other party shall
reasonably require to consummate the conversion contemplated hereby.
ARTICLE 10
MISCELLANEOUS
10.1 Announcements. All parties will consult with each other and will
mutually agree upon any press release or other public statements with respect to
the transactions contemplated by this Agreement, and shall not issue any press
release or make any public statement prior to such consultation and agreement.
10.2 Confidentiality. Each of the Parties agrees that it shall
exercise, and shall cause their respective Representatives and their respective
Affiliates to exercise, the same degree of care to prevent disclosure of
Information (as hereinafter defined) received by or disclosed to such Party
pursuant to this Agreement as it takes to preserve and safeguard its own
confidential information, data, technology or know-how but, in any event, no
less than a reasonable degree of care. As used herein, "Information" means all
documents and information concerning any other
27
Party and the Affiliates thereof furnished to a Party, its Affiliates or
Representatives (in any case, a "Recipient" by such other Party or its
Representatives (in any case, the "Disclosing Party") in connection with the
transactions contemplated by this Agreement. Each Recipient shall not use any of
such Information except as permitted by this Agreement or release or disclose
such Information to any other Person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in connection with this
Agreement. If this Agreement shall be terminated pursuant to Article 9 any
documentary Information (including all copies thereof) shall be returned to the
Disclosing Party promptly at its request. In any event, Information shall be
safeguarded by the Recipient for not less than five (5) years from the date
hereof. The restrictions of this Article 10 shall not apply to any Information
received by a Recipient (a) which such Recipient already possessed at the time
of receipt as shown by written records; (b) which was at the time of receipt or
subsequently becomes, publicly available though no fault of such Recipient or
any of its Affiliates or Representatives; (c) which such Recipient rightfully
received from a third party which the Recipient neither knows nor has reason to
know is prohibited from disclosing such information by a contractual, legal or
fiduciary obligation; (d) which is furnished by the Disclosing Party to a third
party without a similar restriction of the third party's rights; or (e) which is
as required to be disclosed pursuant to Law; provided that, if practicable, the
Recipient shall notify the Disclosing Party prior to disclosing any Information
pursuant to this clause (e) and shall cooperate with the Disclosing Party in
making reasonable efforts to resist such disclosure, if the Disclosing Party so
requestsIn the event of a breach of any of the obligations stated above in this
Article 10, the Disclosing Party may proceed against the breaching Recipient in
Law or in equity for such damages or other relief as a court may deem
appropriate. Nothing herein contained shall be construed as prohibiting the
Disclosing Party from pursuing, in addition, any other remedy for such breach or
threatened breach.
10.3 Finders and Brokers. Each party hereby represents and warrants
to the others that neither it nor its representatives have taken, nor will they
take, any action that would cause the other parties hereto to have any
obligation or liability to any person for or made any arrangements for the
payment of any finders' fees, brokerage fees, agents' commissions, or like
payments in connection with the transactions contemplated hereby. Each party
shall indemnify and hold harmless the others from any claim that is asserted by
any person for a finder's fee or like payment with respect to this Agreement
arising from any act, representation or promise of the indemnifying party or its
representative.
10.4 Amendment. Subject to applicable law, this Agreement may only
be amended or supplemented by written agreement of the parties hereto.
10.5 Waiver of Compliance. Any failure of the Company, Read-Rite or
any of the Investors, on the one hand, or Purchaser, on the other, to comply
with any provision of this Agreement may be expressly waived in writing by (a)
Purchaser or (b) the Company, Read-Rite and the Investors, respectively, but
such waiver or failure to insist upon strict compliance with such provision
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy, or
power provided herein or by law or in equity. The waiver by any party of
28
the time for performance of any act or condition hereunder does not constitute a
waiver of the act or condition itself.
10.6 Expenses. Each of the parties hereto shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated, and Read-Rite and the Investors shall pay (on a pro rata basis)
all such third-party fees and expenses incurred by the Company, provided that
the Company shall be responsible for and shall pay the fees and expenses of
Xxxxxx & Xxxxxxx incurred in connection with the transactions contemplated
hereby, up to a maximum amount equal to $100,000.
10.7 Representations and Warranties. The respective representations
and warranties of each party contained herein shall not be deemed waived or
otherwise affected by any investigation made by or on behalf of the other party.
10.8 Notices. All notices, demands, and other communications required
or permitted hereunder shall be made in writing and shall be deemed to have been
duly given (i) upon delivery, if delivered in person, (ii) five (5) business
days after mailing if sent registered mail, return receipt requested, or (iii)
the next business day after sending, if sent by commercial overnight courier
(unless returned undelivered or the courier reports a later delivery) and
addressed as follows:
To the Company, Read-Rite and the Investors at:
Scion Photonics, Inc.
000 Xxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xx Xxxxxxxx
Read-Rite Corporation
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
Tyco Sigma VenturesLimited
The Zurich Center, 2nd Floor
00 Xxxxx Xxx Xxxx
Xxxxxxxx XX 00, Xxxxxxx
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx
Tyco International Finance Alpha GmbH
Xxxxxxxxxxxxxx 0, XX-0000
Xxxxxxxxxxxx, Xxxxxxxxxxx
Fax: 00 (00) 000-0000
29
Attention: Xxxxxx Xxxxxxx
Integral Capital Partners
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxx and Xxx Xxxxxxx
with copies to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxx Xxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
One Market
Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxx
Milbank, Tweed, Xxxxxx & XxXxxx
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Tyco International (US) Inc.
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
To Purchaser or Merger Subsidiary at:
JDS Uniphase Corporation
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
-----------------------------------------------------
30
Notice of change of address shall be effective only when done in
accordance with this Section. All notices complying with this Section shall be
deemed to have been received on the date of delivery or on the third business
day after mailing.
10.9 Assignment; Successors and Assigns. Except as otherwise provided
herein, each party agrees that it will not assign, sell, transfer, delegate, or
otherwise dispose of, whether voluntarily or involuntarily, or by operation of
law, any right or obligation under this Agreement. Any purported assignment,
transfer, or delegation in violation of this Section shall be null and void.
Subject to the foregoing limits on assignment and delegation, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns. This Agreement does not create, and shall not
be construed as creating, any rights or claims enforceable by any person or
entity not a party to this Agreement.
10.10 Governing Law. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in accordance
with the law of the State of Delaware.
10.11 Jurisdiction. The parties to this Agreement agree that any suit,
action or proceeding arising out of, or with respect to, this Agreement (or any
of the agreements or documents executed in connection herewith) or any judgment
entered by any court in respect thereof shall be brought in the courts of the
County of San Francisco, State of California or in the U.S. District Court for
the Northern District of California and the parties hereto hereby irrevocably
accept the exclusive personal jurisdiction of those courts for the purpose of
any suit, action or proceeding. In addition, the parties hereto each hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
he or it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement (or any of the
agreements or documents executed in connection herewith) or any judgment entered
in respect thereof brought in any court located in the County of San Francisco,
State of California or the U.S. District Court for the Northern District of
California, and hereby further irrevocably waives any claim that any suit,
action or proceedings brought in any such court has been brought in an
inconvenient forum.
10.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.13 Headings. The headings of the Sections and Articles of this
Agreement and Table of Contents are for reference purposes only and shall not
constitute a part hereof or affect the meaning or interpretation of this
Agreement.
10.14 Entire Agreement. The parties intend that the terms of this
Agreement, including the Disclosure Schedule and other documents referred to
herein, shall be the final expression of their agreement with respect to the
subject matter hereof and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
31
10.15 The Company Disclosure Schedule. The Company Disclosure Schedule
shall be divided into sections corresponding to the sections of this Agreement.
Disclosure in any section of the Company Disclosure Schedule shall only
constitute disclosure for purposes of the corresponding section of the Agreement
and not for any other purpose, unless it is reasonably apparent on the face of
the disclosure that it is applicable to another section of the Agreement.
10.16 Performance by Merger Subsidiary. Purchaser shall cause Merger
Subsidiary to perform all of its covenants and obligations hereunder.
10.17 Severability. If any provision of this Agreement, or the
application thereof to any Person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places, and circumstances shall remain in full force and effect.
10.18 Rules of Construction. The parties acknowledge that each party
has read and negotiated the language used in this Agreement. The parties agree
that, because all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
ambiguous language in favor of or against any party by reason of that party's
role in drafting this Agreement.
10.19 Additional Documents. Each of the parties agree, without further
consideration, to execute and deliver such other documents and take such further
action as may be reasonably required to effectuate the provisions of this
Agreement.
10.20 Exhibits. All Exhibits attached hereto shall be deemed to be a
part of this Agreement and are fully incorporated in this Agreement by this
reference.
10.21 Certain Definitions.
"Affiliate" or "Associate" shall have the meaning assigned thereto in
--------- ---------
Rule 405, as presently promulgated under the Securities Act of 1933, as amended.
"Defined Benefit Plan" shall mean an Employee Plan that is subject to
--------------------
Title IV of ERISA.
"Intellectual Property" shall mean all patents, patent applications,
---------------------
software, trademarks, trademark applications, service marks, service xxxx
applications, trade and other marks and names (either registered, common law or
registration applied for), copyrights, copyright applications, mask works,
inventions, trade secrets, proprietary information, know-how, processes,
manufacturing or marketing procedures, recipes, formulae, drawings, schematics
and patterns, and all documentation and other media relating to the foregoing.
"Multiemployer Plan" shall have the meaning ascribed to such term in
------------------
Section 3(37) of ERISA.
"Person" shall include any individual, partnership, limited liability
------
company, joint venture, corporation, trust, unincorporated organization, any
other entity and any government or any department or agency thereof, whether
acting in an individual, fiduciary, or other capacity.
32
"Subsidiary" meaning any partnership, joint venture, corporation,
----------
trust, limited liability company or other entity in which the specified Person
holds, directly or indirectly, any equity interest.
33
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Reorganization as of the date first written above.
THE COMPANY:
Scion Photonics, Inc.
By
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Title
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READ-RITE
Read-Rite Corporation
By :
---------------------------------------------
Title:
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INVESTORS:
Tyco International Finance Alpha GmbH
By :
---------------------------------------------
Title:
-------------------------------------------
Tyco Sigma Limited
By :
---------------------------------------------
Title:
-------------------------------------------
Integral Capital Partners V, L.P.
By: Integral Capital Management V, LLC,
General Partner
By :
--------------------------------------
Title:
-----------------------------------
Integral Capital Partners V Side Fund, L.P.
By: ICP Management V, LLC
By :
--------------------------------------
Title:
-----------------------------------
Integral Capital Partners V SLP Side Fund, LLC
By: ICP Management V, LLC
By :
--------------------------------------
Title:
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[Signatures Continue on the Next Page]
PURCHASER:
JDS Uniphase Corporation
By:
----------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President
MERGER SUBSIDIARY:
JDSU Acquisition Four, Inc.
By:
----------------------------
Xxxxxxx X. Xxxxxxxx
President
LIST OF SCHEDULES AND EXHIBITS
Schedule Name
-------- ----
Schedule 2.1.3 Consideration Allocation
Schedule 3 Company Disclosure Schedule
Schedule 7.1.11 Employees
Exhibit Name
------- ----
Schedule 2.1.3
Allocation of Consideration
