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EXHIBIT 10.4
DISTRIBUTION AGREEMENT
between
STAC, INC.
and
HI/FN, INC.
dated as of
November __, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS.......................................................................................... 2
SECTION 1.01. GENERAL............................................................................................ 2
SECTION 1.02. TERMS DEFINED ELSEWHERE IN AGREEMENT............................................................... 10
ARTICLE II. ASSUMPTION AND SATISFACTION OF LIABILITIES.......................................................... 10
SECTION 2.01. ASSUMPTION AND SATISFACTION OF LIABILITIES......................................................... 10
ARTICLE III. THE DISTRIBUTION................................................................................... 11
SECTION 3.01. COOPERATION PRIOR TO THE DISTRIBUTION.............................................................. 11
SECTION 3.02. STAC BOARD ACTION; CONDITIONS PRECEDENT TO THE DISTRIBUTION........................................ 11
SECTION 3.03. THE DISTRIBUTION................................................................................... 12
SECTION 3.04. CASH IN LIEU OF FRACTIONAL SHARES.................................................................. 13
ARTICLE IV. INDEMNIFICATION..................................................................................... 13
SECTION 4.01. INDEMNIFICATION BY STAC............................................................................ 13
SECTION 4.02. INDEMNIFICATION BY HI/FN........................................................................... 14
SECTION 4.03. INSURANCE PROCEEDS................................................................................. 15
SECTION 4.04. PROCEDURE FOR INDEMNIFICATION...................................................................... 15
SECTION 4.05. REMEDIES CUMULATIVE................................................................................ 19
SECTION 4.06. SURVIVAL OF INDEMNITIES............................................................................ 19
ARTICLE V. CERTAIN ADDITIONAL MATTERS........................................................................... 19
SECTION 5.01. HI/FN BOARD........................................................................................ 19
SECTION 5.02. EMPLOYEE MATTERS................................................................................... 20
SECTION 5.03. CERTIFICATE AND BYLAWS............................................................................. 20
ARTICLE VI. ACCESS TO INFORMATION AND SERVICES.................................................................. 21
SECTION 6.01. PROVISION OF CORPORATE RECORDS..................................................................... 21
SECTION 6.02. ACCESS TO INFORMATION.............................................................................. 21
SECTION 6.03. PRODUCTION OF WITNESSES............................................................................ 22
SECTION 6.04. REIMBURSEMENT...................................................................................... 22
SECTION 6.05. RETENTION OF RECORDS............................................................................... 23
SECTION 6.06. CONFIDENTIALITY.................................................................................... 23
SECTION 6.07. PRIVILEGED MATTERS................................................................................. 24
ARTICLE VII. INSURANCE.......................................................................................... 27
SECTION 7.01. POLICIES AND RIGHTS INCLUDED WITHIN THE HI/FN ASSETS............................................... 27
SECTION 7.02. POST-DISTRIBUTION DATE CLAIMS...................................................................... 27
SECTION 7.03. ADMINISTRATION AND RESERVES........................................................................ 28
SECTION 7.04. AGREEMENT FOR WAIVER OF CONFLICT AND SHARED DEFENSE................................................ 29
ARTICLE VIII. MISCELLANEOUS...................................................................................... 29
SECTION 8.01. COMPLETE AGREEMENT; CONSTRUCTION................................................................... 29
SECTION 8.02. EXPENSES........................................................................................... 30
SECTION 8.03. GOVERNING LAW...................................................................................... 30
SECTION 8.04. NOTICES............................................................................................ 30
SECTION 8.05. AMENDMENTS......................................................................................... 31
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SECTION 8.06. SUCCESSORS AND ASSIGNS............................................................................. 31
SECTION 8.07. TERMINATION........................................................................................ 31
SECTION 8.08. SUBSIDIARIES....................................................................................... 31
SECTION 8.09. NO THIRD-PARTY BENEFICIARIES....................................................................... 31
SECTION 8.10. TITLES AND HEADINGS................................................................................ 32
SECTION 8.11. EXHIBITS AND SCHEDULES............................................................................. 32
SECTION 8.12. LEGAL ENFORCEABILITY............................................................................... 32
SECTION 8.13. ARBITRATION OF DISPUTES............................................................................ 32
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement") is made as of this ____
day of November, 1998 between Stac, Inc., a Delaware corporation ("Stac"), and
hi/fn, inc., a Delaware corporation and subsidiary of Stac ("Hi/fn").
RECITALS
WHEREAS, Stac (i) directly and through subsidiaries other than Hi/fn,
designs, develops, markets and supports high-performance distributed business
systems recovery software solutions for enterprise customers (as more
specifically defined herein, the "Retained Business") and (ii) through Hi/fn,
Stac's OEM networking products subsidiary, designs, develops and markets
semiconductor and software solutions to improve the efficiency, security and
manageability of networks and to enhance the storage capacity of
high-capacity/high-speed storage devices (the "Hi/fn Business");
WHEREAS, Stac previously assigned to Hi/fn, and Hi/fn previously
assumed, the assets and liabilities relating to the Hi/fn Business pursuant to
an Assignment, Assumption and License Agreement dated as of November 21, 1996
between Stac and Hi/fn (the "Assignment Agreement");
WHEREAS, Stac and Hi/fn previously entered into a Cross License
Agreement dated as of November 21, 1996 (the "Cross License Agreement"), which
provides for Hi/fn's licensing back to Stac certain intellectual property rights
in technologies transferred to Hi/fn under the Assignment Agreement and Stac's
licensing to Hi/fn certain additional technologies;
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WHEREAS, Stac previously purchased 6,000,000 shares of Preferred
Series A Stock, $.001 per share, of Hi/fn ("Hi/fn Preferred Stock") pursuant to
a Stock Purchase Agreement dated as of November 21, 1996 (the "Stock Purchase
Agreement");
WHEREAS, the Board of Directors of Stac has determined that it is in
the best interests of Stac and the stockholders of Stac to separate Hi/fn from
Stac and, in order to effect such separation, to convert all shares of Hi/fn
Preferred Stock into shares of common stock, $.001 par value per share, of Hi/fn
("Hi/fn Common Stock"), and thereafter to distribute all of the outstanding
shares of Hi/fn Common Stock held by Stac to the holders of Stac Common Stock
(the "Distribution") in the ratio of one share of Hi/fn Common Stock for every
____ shares of Stac Common Stock held by Stac stockholders on the Distribution
Record Date (the "Distribution Ratio"); and
WHEREAS, in connection with the Distribution, Stac and Hi/fn have
determined that it is necessary and desirable to set forth the principal
corporate transactions required to effect the Distribution, and to set forth the
agreements that will govern certain matters following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. General. As used in this Agreement, the following terms
shall have the following meanings:
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Action: Any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Affiliate: With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person. For purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
Notwithstanding the foregoing, (i) the Affiliates of Stac shall not include
Hi/fn, the Hi/fn Subsidiaries or any other Person which would be an Affiliate of
Stac by reason of Stac's ownership of the capital stock of Hi/fn prior to the
Distribution or the fact that any officer or director of Hi/fn or any of the
Hi/fn Subsidiaries shall also serve as an officer or director of Stac, and (ii)
the Affiliates of Hi/fn shall not include Stac or any other Person which would
be an Affiliate of Hi/fn by reason of Stac's ownership of capital stock of Hi/fn
prior to the Distribution or the fact that any officer or director of Hi/fn or
any of the Hi/fn Subsidiaries shall also serve as an officer or director of
Stac.
Agent: The distribution agent appointed by Stac to distribute the
Hi/fn Common Stock pursuant to the Distribution.
Commission: The Securities and Exchange Commission.
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Distribution Date: The date determined by the Stac Board as the date
on which the Distribution shall be effected, which Distribution Date is
contemplated by the Stac Board to occur on or about November 19, 1998.
Distribution Record Date: The date established by the Stac Board as
the date for taking a record of the Holders of Stac Common Stock entitled to
participate in the Distribution, which Distribution Record Date has been
established as November 1, 1998.
Employee Benefits Allocation Agreement: The Employee Benefits and
Other Employment Matters Allocation Agreement between Stac and Hi/fn, which
agreement shall be entered into on or prior to the Distribution Date in
substantially the form of Exhibit A attached hereto.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Hi/fn Assets: The assets of the Hi/fn Group, including without
limitation (i) assets relating to the Hi/fn Business, determined on a basis
consistent with the determination of assets included on the Hi/fn Pro Forma
Balance Sheet, (ii) all of the assets expressly allocated to Hi/fn or the Hi/fn
Subsidiaries under this Agreement or the Related Agreements and (iii) any other
assets of the Hi/fn Group relating to the Hi/fn Business.
Hi/fn Board: The Board of Directors of Hi/fn.
Hi/fn Books and Records: The books and records (including computerized
records) of Hi/fn and the Hi/fn Subsidiaries and all books and records owned by
Stac which relate to the Hi/fn Business or are necessary to operate the Hi/fn
Business, including, without limitation, all such books and records relating to
Hi/fn Employees, all files relating to any Action being assumed by Hi/fn as part
of the Hi/fn Liabilities, original corporate minute books, stock ledgers
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and certificates and corporate seals, and all licenses, leases, agreements and
filings, relating to Hi/fn, the Hi/fn Subsidiaries or the Hi/fn Business (but
not including the Stac Books and Records, provided that Hi/fn shall have access
to, and have the right to obtain duplicate copies of, the Stac Books and Records
in accordance with the provisions of Article VI).
Hi/fn Bylaws: The Bylaws of Hi/fn, substantially in the form of
Exhibit B, to be in effect at the Distribution Date.
Hi/fn Certificate: The Restated Certificate of Incorporation of Hi/fn,
substantially in the form of Exhibit C, to be in effect at the Distribution
Date.
Hi/fn Common Stock: The common stock, par value $.001 per share, of
Hi/fn.
Hi/fn Employees: All of the employees of Hi/fn at the time of the
Distribution.
Hi/fn Group: Hi/fn and the Hi/fn Subsidiaries, collectively.
Hi/fn Liabilities: (i) All of the Liabilities of the Hi/fn Group
under, or to be retained or assumed by Hi/fn or any of the Hi/fn Subsidiaries
pursuant to, this Agreement or any of the Related Agreements, (ii) all
Liabilities for payment of outstanding drafts of Stac attributable to the Hi/fn
Business existing as of the Distribution Date, (iii) all Liabilities arising out
of or in connection with any of the Hi/fn Assets or the Hi/fn Business,
determined on a basis consistent with the determination of the Liabilities of
Hi/fn included on the Hi/fn Pro Forma Balance Sheet, and (iv) all Liabilities
arising out of or in connection with any claims made by former Hi/fn officers
or employees, whether brought against Stac or Hi/fn.
Hi/fn Policies: All Policies, current or past, which are owned or
maintained by or on behalf of Stac or any of its Affiliates or predecessors,
which relate to the Hi/fn Business but do
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not relate to the Retained Business, and which Policies are either maintained by
the Hi/fn Group or assignable to the Hi/fn Group.
Hi/fn Projected Balance Sheet: The Projected Consolidated Balance
Sheet for Hi/fn as of November 19, 1998 attached hereto as Exhibit D.
Hi/fn Subsidiaries: All Subsidiaries of Hi/fn at the time of the
Distribution.
Holders: The holders of record of Stac Common Stock as of the
Distribution Record Date.
Insurance Proceeds: Those moneys (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of the insured,
in either case net of any applicable premium adjustment, retrospectively-rated
premium, deductible, retention, cost or reserve paid or held by or for the
benefit of such insured.
Insured Claims: Those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Policies,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively-rated premium adjustments, but only to the extent that such
Liabilities are within applicable Policy limits, including aggregates.
Liabilities: Any and all debts, liabilities and obligations, absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including, without limitation, those debts, liabilities
and obligations arising under any law, rule, regulation, Action, threatened
Action, order or consent decree of any governmental entity or any award of any
arbitrator of any kind, and those arising under any contract, commitment or
undertaking.
Nasdaq: The Nasdaq Stock Market's Nasdaq National Market.
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Person: Any individual, corporation, partnership, association, trust,
estate or other entity or organization, including any governmental entity or
authority.
Policies: Insurance policies and insurance contracts of any kind
relating to the Hi/fn Business or the Retained Business as conducted prior to
the Distribution Date, including without limitation primary and excess policies,
comprehensive general liability policies, automobile and workers' compensation
insurance policies, directors' and officers' insurance, employment practices
insurance and self-insurance and captive insurance company arrangements,
together with the rights, benefits and privileges thereunder.
Privileges: All privileges that may be asserted under applicable law,
including, without limitation, privileges arising under or relating to the
attorney-client relationship (including but not limited to the attorney-client
and work product privileges), the accountant-client privilege, and privileges
relating to internal evaluative processes.
Privileged Information: All Information as to which Stac, Hi/fn or any
of their Subsidiaries are entitled to assert the protection of a Privilege.
Related Agreements: All of the agreements, instruments,
understandings, assignments or other arrangements which are entered into in
connection with the transactions contemplated hereby and which are set forth in
a writing, including, without limitation, (i) the Employee Benefits Allocation
Agreement, (ii) the Tax Sharing Agreement and (iii) the Transitional Services
Agreement.
Retained Assets: The assets of Stac other than the Hi/fn Assets,
including without limitation (i) assets relating to the Retained Business,
determined on a basis consistent with the determination of assets included on
the Stac Projected Balance Sheet, (ii) all of the assets
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expressly allocated to Stac under this Agreement or the Related Agreements, and
(iii) any other assets of Stac and its Affiliates relating to the Retained
Business.
Retained Business: The businesses conducted by Stac pursuant to or
utilizing the Retained Assets, including without limitation the business of
designing, developing, marketing and supporting high-performance distributed
business systems recovery software solutions for enterprise customers, which
implement Stac's lossless data compression technologies.
Retained Employees: The individuals employed by Stac and not Hi/fn on
the Distribution Date.
Retained Liabilities: (i) All of the Liabilities arising out of or in
connection with the Retained Assets or the Retained Business, determined on a
basis consistent with the determination of the Liabilities of Stac included on
the Stac Projected Balance Sheet, (ii) all of the Liabilities of Stac under, or
to be retained or assumed by Stac pursuant to, this Agreement or any of the
Related Agreements, (iii) all Liabilities for the payment of outstanding
drafts of Stac attributable to the Retained Business existing as of the
Distribution Date, and (iv) all Liabilities arising out of or in connection
with any claims made by former Stac officers or employees, whether brought
against Stac or Hi/fn.
Retained Policies: All Policies, current or past, which are owned or
maintained by or on behalf of Stac (or any of its predecessors) which relate to
the Retained Business but do not relate to the Hi/fn Business.
Shared Policies: All Policies, current or past, which are owned or
maintained by or on behalf of Stac or its predecessors which relate to both the
Retained Business and the Hi/fn Business, and all other Policies not
constituting Hi/fn Policies or Retained Policies.
Stac Board: The Board of Directors of Stac.
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Stac Books and Records: The books and records (including computerized
records) of Stac and all books and records owned by Hi/fn which relate to the
Retained Business or are necessary to operate the Retained Business, including,
without limitation, all such books and records relating to Retained Employees,
all files relating to any Action pertaining to the Retained Liabilities,
original corporate minute books, stock ledgers and certificates and corporate
seals, and all licenses, leases, agreements and filings, relating to Stac or the
Retained Business (but not including the Hi/fn Books and Records, provided that
Stac shall have access to, and shall have the right to obtain duplicate copies
of, the Hi/fn Books and Records in accordance with the provisions of Article
VI).
Stac Common Stock: The common stock, par value $.001 per share, of
Stac.
Stac Projected Balance Sheet: The Projected Consolidated Balance Sheet
for Stac as of November 19, 1998 attached hereto as Exhibit E.
Stac Group: Stac and the Stac Subsidiaries, collectively.
Stac Subsidiaries: All Subsidiaries of Stac at the time of the
Distribution.
Subsidiary: With respect to any Person, (a) any corporation of which
at least a majority in interest of the outstanding voting stock (having by the
terms thereof voting power under ordinary circumstances to elect a majority of
the directors of such corporation, irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned or controlled by such Person, by one or more
Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries, or (b) any non-corporate entity in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of
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such Person, directly or indirectly, at the date of determination thereof, has
at least majority ownership interest.
Tax Sharing Agreement: The Tax Sharing Agreement between Hi/fn and
Stac, which agreement shall be entered into on or prior to the Distribution Date
in substantially the form of Exhibit F attached hereto.
Transitional Services Agreements: The Transitional Services Agreement
between Hi/fn and Stac, which agreement shall be entered into on or prior to the
Distribution Date in substantially the form of Exhibit G attached hereto.
Section 1.02. Terms Defined Elsewhere in Agreement.
Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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Assignment Agreement Recitals
Consents 3.01(c)
Cross License Agreement Recitals
Distribution Recitals
Distribution Ratio Recitals
Hi/fn Recitals
Hi/fn Business Recitals
Hi/fn Indemnitees 4.01
Indemnifiable Losses 4.02
Indemnifying Party 4.03
Indemnitee 4.03
Information 6.02
Stac Recitals
Stac Indemnitees 4.02
Stock Purchase Agreement Recitals
Third-Party Claim 4.04(a)
ARTICLE II.
ASSUMPTION AND SATISFACTION OF LIABILITIES
Section 2.01. Assumption and Satisfaction of Liabilities. Except as
set forth in
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the Employee Benefits Allocation Agreement, the Tax Sharing Agreement or the
other Related Agreements, effective as of and after the Distribution Date, (a)
Hi/fn shall, and/or shall cause the Hi/fn Subsidiaries to, assume, pay, perform
and discharge in due course all of the Hi/fn Liabilities and (b) Stac shall pay,
perform and discharge in due course all of the Retained Liabilities.
ARTICLE III.
THE DISTRIBUTION
Section 3.01. Cooperation Prior to the Distribution.
(a) Stac and Hi/fn shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are necessary to effect the Distribution or that may be
appropriate to reflect the establishment of, or amendments to, any employee
benefit plans and other plans contemplated by the Employee Benefits Allocation
Agreement.
(b) Stac and Hi/fn shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in connection with the transactions
contemplated by this Agreement and the Related Agreements.
(c) Stac and Hi/fn shall use all reasonable efforts to obtain any
third-party consents or approvals necessary or desirable in connection with the
transactions contemplated hereby ("Consents").
(d) Stac and Hi/fn will use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary
or desirable under applicable law, to consummate the transactions contemplated
under this Agreement and the Related Agreements.
Section 3.02. Stac Board Action; Conditions Precedent to the
Distribution. The
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Stac Board shall, in its discretion, establish any appropriate procedures in
connection with the Distribution. In no event shall the Distribution occur
unless the following conditions shall have been satisfied:
(a) the Hi/fn Board, comprised as contemplated by Section 5.01, shall
have been elected, and the Hi/fn Certificate and Hi/fn Bylaws shall have been
adopted and shall be in effect;
(b) Stac and Hi/fn shall have obtained all Consents, the failure of
which to obtain would, in the determination of the Stac Board, have a material
adverse effect on Stac or Hi/fn;
(c) the Registration Statement on Form 10 under the Exchange Act filed
by Hi/fn shall have been declared effective by the Commission;
(d) the Hi/fn Common Stock shall have been approved for quotation and
trading on Nasdaq subject to official notice of issuance;
(e) Hi/fn shall have obtained and delivered to 750 University, LLC,
the landlord under its headquarters lease, a letter of credit in an amount and
with such other terms that upon completion of the Distribution, the Lease
Guaranty dated as of November 17, 1997 made by Stac in favor or 750 University,
LLC will terminate in accordance with its terms; and
(f) Stac and Hi/fn shall have entered into the Related Agreements;
provided, however, that (i) any such condition may be waived by the Stac Board
in its sole discretion, and (ii) the satisfaction of such conditions shall not
create any obligation on the part of Stac or any other party hereto to effect
the Distribution or in any way limit Stac's power of termination set forth in
Section 8.07 or alter the consequences of any such termination from those
specified in such Section.
Section 3.03. The Distribution. On the Distribution Date, subject to
the conditions and rights of termination set forth in this Agreement, Stac shall
deliver to the Agent a share certificate representing all of the then
outstanding shares of Hi/fn Common Stock owned by
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Stac and shall instruct the Agent to distribute, on or as soon as practicable
following the Distribution Date, such Hi/fn Common Stock to the Holders in
accordance with the Distribution Ratio. Hi/fn agrees to provide all share
certificates that the Agent shall require in order to effect the Distribution.
Section 3.04. Cash in Lieu of Fractional Shares. No certificate or
scrip representing fractional shares of Hi/fn Common Stock shall be issued as
part of the Distribution, and in lieu thereof, each holder of Stac Common Stock
who would otherwise be entitled to receive a fractional share of Hi/fn Common
Stock will receive cash for such fractional share. Stac shall instruct the Agent
to determine the number of whole shares and fractional shares of Hi/fn Common
Stock allocable to each holder of record of Stac Common Stock as of the
Distribution Record Date. Stac shall instruct the Agent to aggregate all such
fractional shares into whole shares and sell the whole shares obtained thereby
in the open market as soon as practicable following the Distribution Date at
then prevailing prices on behalf of Holders who otherwise would be entitled to
receive fractional share interests and to distribute to each such Holder such
Holder's ratable share of the proceeds of such sale as soon as practicable after
the Distribution Date. Stac shall bear the costs of commissions incurred in
connection with such sales.
ARTICLE IV.
INDEMNIFICATION
Section 4.01. Indemnification by Stac. Except as otherwise expressly
set forth in a Related Agreement, Stac shall indemnify, defend and hold harmless
Hi/fn and each of the Hi/fn Subsidiaries, and each of their respective
directors, officers, employees, agents and Affiliates and each of the heirs,
executors, successors and assigns of any of the foregoing (the "Hi/fn
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Indemnitees") from and against the Retained Liabilities and any and all losses,
Liabilities, damages, including, without limitation, the costs and expenses of
any and all Actions, threatened Actions, demands, assessments, judgments,
settlements and compromises relating to the Retained Liabilities and attorneys'
fees and any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any such Actions or threatened Actions
(collectively, "Hi/fn Indemnifiable Losses" and, individually, a "Hi/fn
Indemnifiable Loss") of the Hi/fn Indemnitees arising out of or due to the
failure or alleged failure of Stac or any of its Affiliates prior to or after
the Distribution Date to pay, perform or otherwise discharge in due course any
of the Retained Liabilities.
Section 4.02. Indemnification by Hi/fn. Except as otherwise expressly
set forth in a Related Agreement, Hi/fn shall indemnify, defend and hold
harmless Stac and each of its directors, officers, employees, agents and
Affiliates and each of the heirs, executors, successors and assigns of any of
the foregoing (the "Stac Indemnitees") from and against the Hi/fn Liabilities
and any and all losses, Liabilities, damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating to the Hi/fn
Liabilities and attorneys' fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened Actions (collectively, "Stac Indemnifiable Losses" and, individually,
a "Stac Indemnifiable Loss") of the Stac Indemnitees arising out of or due to
the failure or alleged failure of Hi/fn or any of its Affiliates prior to or
after the Distribution Date to pay, perform or otherwise discharge in due course
any of the Hi/fn Liabilities. The "Hi/fn Indemnifiable Losses" and the "Stac
Indemnifiable Losses" are collectively referred to as the "Indemnifiable
Losses."
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Section 4.03. Insurance Proceeds. The amount which any party (an
"Indemnifying Party") is or may be required to pay to any other Person (an
"Indemnitee") pursuant to Section 4.01 or Section 4.02 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in reduction
of the related Indemnifiable Loss. If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds,
or other amounts in respect of such Indemnifiable Loss as specified above, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the greater
of (i) the amount of such Insurance Proceeds or other amounts actually received
and (ii) the amount of the payment previously made by the Indemnifying Party in
respect of the Indemnifiable Loss.
Section 4.04. Procedure for Indemnification.
(a) Except as may be set forth in a Related Agreement, if an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
(including, without limitation, any governmental entity) who is not a party to
this Agreement or to any of the Related Agreements of any claim or of the
commencement by any such Person of any Action (a "Third-Party Claim") with
respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third-Party Claim; provided that the failure of any Indemnitee to give notice as
required by this Section 4.04 shall not relieve the Indemnifying Party of its
obligations under this Article IV, except to the extent that such Indemnifying
Party is prejudiced by such failure to give notice. Such notice shall describe
the Third-Party Claim in
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reasonable detail, and shall indicate the amount (estimated if necessary) of the
Indemnifiable Loss that has been or may be sustained by such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third-Party Claim, provided that the Indemnifying Party
must confirm in writing that it agrees that the Indemnitee is entitled to
indemnification hereunder in respect of such Third-Party Claim. Within 30 days
of the receipt of notice from an Indemnitee in accordance with Section 4.04(a)
(or sooner, if the nature of such Third-Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether to assume
responsibility for such Third-Party Claim (provided that if the Indemnifying
Party does not so notify the Indemnitee of its election within 30 days after
receipt of such notice from the Indemnitee, the Indemnifying Party shall be
deemed to have elected not to assume responsibility for such Third-Party Claim),
and such Indemnitee shall cooperate in the defense or settlement or compromise
of such Third-Party Claim. After notice from an Indemnifying Party to an
Indemnitee of its election to assume responsibility for a Third-Party Claim,
such Indemnifying Party shall not be liable to such Indemnitee under this
Article IV for any legal or other expenses (except expenses approved in advance
by the Indemnifying Party) subsequently incurred by such Indemnitee in
connection with the defense thereof; provided that if the defendants in any such
claim include both the Indemnifying Party and one or more Indemnitees and in
such Indemnitees' reasonable judgment a conflict of interest between such
Indemnitees and such Indemnifying Party exists in respect of such claim, such
Indemnitees shall have the right to employ separate counsel and in that event
the reasonable fees and expenses of such separate counsel (but not more than one
separate counsel
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reasonably satisfactory to the Indemnifying Party) shall be paid by such
Indemnifying Party. If an Indemnifying Party elects not to assume responsibility
for a Third-Party Claim (which election may be made only in the event of a good
faith dispute that a claim was inappropriately tendered under Section 4.01 or
4.02, as the case may be), the Indemnitee may defend or (subject to the
following sentence) seek to compromise or settle such Third-Party Claim.
Notwithstanding the foregoing, an Indemnitee may not settle or compromise any
claim without prior written notice to the Indemnifying Party, which shall have
the option within ten days following the receipt of such notice (i) to
disapprove the settlement and assume all past and future responsibility for the
claim, including reimbursing the Indemnitee for prior expenditures in connection
with the claim, or (ii) to disapprove the settlement and continue to refrain
from participation in the defense of the claim, in which event the Indemnifying
Party shall have no further right to contest the amount or reasonableness of the
settlement if the Indemnitee elects to proceed therewith, or (iii) to approve
the amount of the settlement, reserving the Indemnifying Party's right to
contest the Indemnitee's right to indemnity, or (iv) to approve and agree to pay
the settlement. In the event the Indemnifying Party makes no response to such
written notice from the Indemnitee, the Indemnifying Party shall be deemed to
have elected option (ii).
(c) If an Indemnifying Party chooses to defend or to seek to
compromise any Third-Party Claim, the Indemnitee shall make available to such
Indemnifying Party any personnel and any books, records or other documents
within its control or which it otherwise has the ability to make available that
are necessary or appropriate for such defense.
(d) Notwithstanding anything else in this Section 4.04 to the
contrary, an Indemnifying Party shall not settle or compromise any Third-Party
Claim unless such settlement
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or compromise contemplates as an unconditional term thereof the giving by such
claimant or plaintiff to the Indemnitee of a written release from all liability
in respect of such Third-Party Claim (and provided further that such settlement
may not provide for any non-monetary relief by Indemnitee without the written
consent of Indemnitee). In the event the Indemnitee shall notify the
Indemnifying Party in writing that such Indemnitee declines to accept any such
settlement or compromise, such Indemnitee may continue to contest such
Third-Party Claim, free of any participation by such Indemnifying Party, at such
Indemnitee's sole expense. In such event, the obligation of such Indemnifying
Party to such Indemnitee with respect to such Third-Party Claim shall be equal
to (i) the costs and expenses of such Indemnitee prior to the date such
Indemnifying Party notifies such Indemnitee of the offer to settle or compromise
(to the extent such costs and expenses are otherwise indemnifiable hereunder)
plus (ii) the lesser of (A) the amount of any offer of settlement or compromise
which such Indemnitee declined to accept and (B) the actual out-of-pocket amount
such Indemnitee is obligated to pay subsequent to such date as a result of such
Indemnitee's continuing to pursue such Third-Party Claim.
(e) Any claim on account of an Indemnifiable Loss which does not
result from a Third-Party Claim shall be asserted by written notice given by the
Indemnitee to the applicable Indemnifying Party. Such Indemnifying Party shall
have a period of 15 days after the receipt of such notice within which to
respond thereto. If such Indemnifying Party does not respond within such 15-day
period, such Indemnifying Party shall be deemed to have refused to accept
responsibility to make payment. If such Indemnifying Party does not respond
within such 15-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
party under applicable law or under this Agreement.
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(f) In addition to any adjustments required pursuant to Section 4.03,
if the amount of any Indemnifiable Loss shall, at any time subsequent to the
payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any Indemnitee
in connection with any Third-Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third-Party Claim against any claimant or plaintiff asserting
such Third-Party Claim. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
Section 4.05. Remedies Cumulative. The remedies provided in this
Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 4.06. Survival of Indemnities. The obligations of each of
Hi/fn and Stac under this Article IV shall survive the sale or other transfer by
it of any assets or businesses or the assignment by it of any Liabilities with
respect to any Indemnifiable Loss of the other related to such assets,
businesses or Liabilities.
ARTICLE V.
CERTAIN ADDITIONAL MATTERS
Section 5.01. Hi/fn Board. Hi/fn and Stac shall take all actions which
may be
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required to constitute, effective as of the Distribution Date, the board of
directors of Hi/fn with the persons listed on Schedule 1.01(a).
Section 5.02. Employee Matters.
(a) On the Distribution Date, except to the extent retained or assumed
by Stac under this Agreement, the Employee Benefits Allocation Agreement or any
other agreement relating to the Distribution, Hi/fn shall retain or assume, as
the case may be, responsibility as employer for the Hi/fn Employees. On the
Distribution Date, except to the extent retained or assumed by Hi/fn under this
Agreement, the Employee Benefits Allocation Agreement or any other agreement
relating to the Distribution, Stac shall retain or assume, as the case may be,
responsibility as employer for the Retained Employees.
(b) Hi/fn shall cause all of the Hi/fn Employees to resign, effective
as of the Distribution Date, from all positions as officers or employees of Stac
in which they serve. Stac shall cause all of the Retained Employees to resign,
effective as of the Distribution Date, from all positions as officers or
employees of Hi/fn or any of its Subsidiaries in which they serve.
Section 5.03. Certificate and Bylaws. On or prior to the Distribution
Date, Hi/fn shall adopt the Hi/fn Certificate and the Hi/fn Bylaws, and shall
file the Hi/fn Certificate with the Secretary of State of the State of Delaware.
Section 5.04. Termination of Lease Guaranty. Hi/fn shall take all
actions necessary, including without limitation delivering a letter of credit
in the amount of $1,956,456 to 750 University, LLC, to satisfy the condition
set forth at Section 3.02(e).
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ARTICLE VI.
ACCESS TO INFORMATION AND SERVICES
Section 6.01. Provision of Corporate Records.
(a) Except as may otherwise be provided in a Related Agreement, Stac
shall arrange as soon as practicable following the Distribution Date for the
transportation (at Hi/fn's cost) to Hi/fn of the Hi/fn Books and Records in its
possession, except to the extent such items are already in the possession of
Hi/fn or a Hi/fn Subsidiary. The Hi/fn Books and Records shall be the property
of Hi/fn, but shall be available to Stac for review and duplication until Stac
shall notify Hi/fn in writing that such records are no longer of use to Stac.
(b) Except as otherwise provided in a Related Agreement, Hi/fn shall
arrange as soon as practicable following the Distribution Date for the
transportation (at Stac's cost) to Stac of the Stac Books and Records in its
possession, except to the extent such items are already in the possession of
Stac. The Stac Books and Records shall be the property of Stac, but shall be
available to Hi/fn for review and duplication until Hi/fn shall notify Stac in
writing that such records are no longer of use to Hi/fn.
Section 6.02. Access to Information. Except as otherwise provided in a
Related Agreement, from and after the Distribution Date, Stac shall afford to
Hi/fn and its authorized accountants, counsel and other designated
representatives reasonable access (including using reasonable efforts to give
access to persons or firms possessing information) and duplicating rights during
normal business hours to all records, books, contracts, instruments, computer
data and other data and information relating to pre-Distribution operations
(collectively, "Information") within Stac's possession insofar as such access is
reasonably required by Hi/fn for
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the conduct of its business, subject to appropriate restrictions for classified
or Privileged Information. Similarly, except as otherwise provided in a Related
Agreement, Hi/fn shall afford to Stac and its authorized accountants, counsel
and other designated representatives reasonable access (including using
reasonable efforts to give access to persons or firms possessing information)
and duplicating rights during normal business hours to Information within
Hi/fn's possession, insofar as such access is reasonably required by Stac for
the conduct of its business, subject to appropriate restrictions for classified
or Privileged Information. Information may be requested under this Article VI
for the legitimate business purposes of either party, including, without
limitation, audit, accounting, claims (including claims for indemnification
hereunder), litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing this Agreement and the
transactions contemplated hereby.
Section 6.03. Production of Witnesses. At all times from and after the
Distribution Date, each of Hi/fn and Stac shall use reasonable efforts to make
available to the other, upon written request, its and its Subsidiaries'
officers, directors, employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any Action.
Section 6.04. Reimbursement. Except to the extent otherwise
contemplated in any Related Agreement, a party providing Information or witness
services to the other party under this Article VI shall be entitled to receive
from the recipient, upon the presentation of invoices therefor, payments of such
amounts, relating to supplies, disbursements and other out-of-pocket expenses
(at cost) and direct and indirect expenses of employees who are witnesses or
otherwise furnish assistance (at cost), as may be reasonably incurred in
providing such
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Information or witness services.
Section 6.05. Retention of Records. Except as otherwise required by
law or agreed to in a Related Agreement or otherwise in writing, each of Stac
and Hi/fn may destroy or otherwise dispose of any of the Information, which is
material Information and is not contained in other Information retained by Stac
or Hi/fn, as the case may be, at any time after the seventh anniversary of this
Agreement, provided that, prior to such destruction or disposal, (a) it shall
provide no less than 90 or more than 120 days prior written notice to the other,
specifying in reasonable detail the Information proposed to be destroyed or
disposed of and (b) if a recipient of such notice shall request in writing prior
to the scheduled date for such destruction or disposal that any of the
Information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of such of the Information as was requested at the
expense of the party requesting such Information.
Section 6.06. Confidentiality. Each of Stac and its Subsidiaries on
the one hand, and Hi/fn and its Subsidiaries on the other hand, shall hold, and
shall cause its consultants and advisors to hold, in strict confidence, all
Information concerning the other in its possession or furnished by the other or
the other's representatives pursuant to this Agreement (except to the extent
that such Information has been (i) in the public domain through no fault of such
party or (ii) later lawfully acquired from other sources by such party), and
each party shall not release or disclose such Information to any other person,
except its auditors, attorneys, financial advisors, rating agencies, bankers and
other consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as reasonably advised by its counsel or by other
requirements
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of law, or unless such Information is reasonably required to be disclosed in
connection with (x) any litigation with any third-parties or litigation between
Stac and the Hi/fn Group, (y) any contractual agreement to which Stac or the
Hi/fn Group are currently parties, or (z) in exercise of either party's rights
hereunder.
Section 6.07. Privileged Matters. Stac and Hi/fn recognize that legal
and other professional services that have been and will be provided prior to the
Distribution Date have been and will be rendered for the benefit of both the
Stac Group and the Hi/fn Group and that both the Stac Group and the Hi/fn Group
should be deemed to be the client for the purposes of asserting all Privileges.
To allocate the interests of each party in the Privileged Information, the
parties agree as follows:
(a) Stac shall be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Privileged Information which relates
solely to the Retained Business, whether or not the Privileged Information is in
the possession of or under the control of Stac or Hi/fn. Stac shall also be
entitled, in perpetuity, to control the assertion or waiver of all Privileges in
connection with Privileged Information that relates solely to the subject matter
of any claims constituting Retained Liabilities, now pending or which may be
asserted in the future, in any lawsuits or other proceedings initiated against
or by Stac, whether or not the Privileged Information is in the possession of or
under the control of Stac or Hi/fn.
(b) Hi/fn shall be entitled, in perpetuity, to control the assertion
or waiver of all Privileges in connection with Privileged Information which
relates solely to the Hi/fn Business, whether or not the Privileged Information
is in the possession of or under the control of Stac or Hi/fn. Hi/fn shall also
be entitled, in perpetuity, to control the assertion or waiver of all Privileges
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in connection with Privileged Information which relates solely to the subject
matter of any claims constituting Hi/fn Liabilities, now pending or which may be
asserted in the future, in any lawsuits or other proceedings initiated against
or by Hi/fn, whether or not the Privileged Information is in the possession of
Hi/fn or under the control of Stac or Hi/fn.
(c) Stac and Hi/fn agree that they shall have a shared Privilege, with
equal right to assert or waive, subject to the restrictions in this Section
6.07, with respect to all Privileges not allocated pursuant to the terms of
Sections 6.07(a) and (b). All Privileges relating to any claims, proceedings,
litigation, disputes or other matters which involve both Stac and Hi/fn in
respect of which Stac and Hi/fn retain any responsibility or liability under
this Agreement shall be subject to a shared Privilege.
(d) No party may waive any Privilege which could be asserted under any
applicable law, and in which the other party has a shared Privilege, without the
consent of the other party, except to the extent reasonably required in
connection with any litigation with third-parties or as provided in subsection
(e) below. Consent shall be in writing, or shall be deemed to be granted unless
written objection is made within 20 days after notice upon the other party
requesting such consent.
(e) In the event of any litigation or dispute between a member of the
Stac Group and a member of the Hi/fn Group, either party may waive a Privilege
in which the other party has a shared Privilege, without obtaining the consent
of the other party, provided that such waiver of a shared Privilege shall be
effective only as to the use of Information with respect to the litigation or
dispute between the Stac Group and the Hi/fn Group, and shall not operate as a
waiver of the shared Privilege with respect to third-parties.
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(f) If a dispute arises between the parties regarding whether a
Privilege should be waived to protect or advance the interest of either party,
each party agrees that it shall negotiate in good faith, shall endeavor to
minimize any prejudice to the rights of the other party, and shall not
unreasonably withhold consent to any request for waiver by the other party. Each
party specifically agrees that it will not withhold consent to waiver for any
purpose except to protect its own legitimate interests.
(g) Upon receipt by any party of any subpoena, discovery or other
request which arguably calls for the production or disclosure of Information
subject to a shared Privilege or as to which the other party has the sole right
hereunder to assert a Privilege, or if any party obtains knowledge that any of
its current or former directors, officers, agents or employees have received any
subpoena, discovery or other requests which arguably calls for the production or
disclosure of such Privileged Information, such party shall promptly notify the
other party of the existence of the request and shall provide the other party a
reasonable opportunity to review the Information and to assert any rights it may
have under this Section 6.07 or otherwise to prevent the production or
disclosure of such Privileged Information.
(h) The transfer of the Hi/fn Books and Records and the Stac Books and
Records and other Information between the Stac Group and the Hi/fn Group is made
in reliance on the agreement of Stac and Hi/fn, as set forth in Sections 6.06
and 6.07, to maintain the confidentiality of Privileged Information and to
assert and maintain all applicable Privileges. The access to information being
granted pursuant to Sections 6.01 and 6.02, the agreement to provide witnesses
and individuals pursuant to Section 6.03 and the transfer of Privileged
Information between the Stac Group and the Hi/fn Group pursuant to this
Agreement shall not be deemed a
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waiver of any Privilege that has been or may be asserted under this Agreement or
otherwise.
ARTICLE VII.
INSURANCE
Section 7.01. Policies and Rights Included Within the Hi/fn Assets.
Without limiting the generality of the definition of the Hi/fn Assets, the Hi/fn
Assets shall include (a) any and all rights of an insured party under each of
the Shared Policies, specifically including rights of indemnity and the right to
be defended by or at the expense of the insurer, with respect to all injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred on or prior to the Distribution Date by any party in or in connection
with the conduct of the Hi/fn Business or, to the extent any claim is made
against Hi/fn or any of its Subsidiaries, the Retained Business, and which
injuries, losses, liabilities, damages and expenses may arise out of insured or
insurable occurrences or events under one or more of the Shared Policies;
provided, however, that nothing in this Section 7.01 shall be deemed to
constitute (or to reflect) the assignment of the Shared Policies, or any of
them, to Hi/fn, and (b) the Hi/fn Policies.
Section 7.02. Post-Distribution Date Claims. If, subsequent to the
Distribution Date, any person, corporation, firm or entity shall assert a claim
against Hi/fn or any Hi/fn Subsidiary with respect to any injury, loss,
liability, damage or expense incurred or claimed to have been incurred on or
prior to the Distribution Date in or in connection with the Distribution or the
conduct of the Hi/fn Business or, to the extent any claim is made against Hi/fn
or any of its Subsidiaries, the Retained Business, and which injury, loss,
liability, damage or expense may arise out of insured or insurable occurrences
or events under one or more of the Shared Policies, Stac shall at the time such
claim is asserted be deemed to assign, without need of further
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documentation, to Hi/fn any and all rights of an insured party under the
applicable Shared Policy with respect to such asserted claim, specifically
including rights of indemnity and the right to be defended by or at the expense
of the insurer; provided, however, that nothing in this Section 7.02 shall be
deemed to constitute (or to reflect) the assignment of the Shared Policies, or
any of them, to Hi/fn.
Section 7.03. Administration and Reserves.
(a) Notwithstanding the provisions of Article II, but subject to any
contrary provisions of any Related Agreement, from and after the Distribution
Date:
(i) Hi/fn shall be entitled to any reserves established by Stac,
or the benefit of reserves held by any insurance carrier, with respect to the
Hi/fn Liabilities; and
(ii) Stac shall be entitled to any reserves established by Stac,
or the benefit of reserves held by any insurance carrier, with respect to the
Retained Liabilities.
(b) Insurance Premiums. [Hi/fn shall have the right but not the
obligation to pay the premiums, to the extent that Stac does not pay premiums
with respect to Retained Liabilities (retrospectively-rated or otherwise), with
respect to Shared Policies and the Hi/fn Policies, as required under the terms
and conditions of the respective Policies, whereupon Stac shall forthwith
reimburse Hi/fn for that portion of such premiums paid by Hi/fn as are
attributable to the Retained Liabilities. Stac shall provide continued coverage
under its director and officer liability insurance policy for a period of not
less than three years, with a policy limit of not less than Five Million Dollars
($5,000,000), for acts which took place or were alleged to have taken place
prior to the Distribution Date covering persons who were directors and officers
of Stac prior to the Distribution Date. Fifty percent of the additional
premiums, if any, for such coverage
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shall be reimbursed by Hi/fn within 15 days of the Distribution Date.]
(c) Allocation of Insurance Proceeds. Insurance Proceeds received with
respect to claims, costs and expenses under the Policies shall be paid to Hi/fn
with respect to the Hi/fn Liabilities and to Stac with respect to the Retained
Liabilities. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from the liability policies will be made to the appropriate
party upon receipt from the insurance carrier. In the event that the aggregate
limits on any Shared Policies are exceeded, the parties agree to provide an
equitable allocation of Insurance Proceeds received after the Distribution Date
based upon their respective bona fide claims. The parties agree to use their
best efforts to cooperate with respect to insurance matters.
Section 7.04. Agreement for Waiver of Conflict and Shared Defense. In
the event that Insured Claims of both Hi/fn and Stac exist relating to the same
occurrence, Hi/fn and Stac agree to jointly defend and to waive any conflict of
interest necessary to the conduct of that joint defense. Nothing in this Section
7.04 shall be construed to limit or otherwise alter in any way the indemnity
obligations of the parties to this Agreement, including those created by this
Agreement, by operation of law or otherwise.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Complete Agreement; Construction. This Agreement,
including the Schedules and Exhibits and the Related Agreements and other
agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and shall supersede all previous negotiations, commitments and writings
with respect to such subject matter. Notwithstanding any other provisions in
this
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Agreement to the contrary, in the event and to the extent that there shall be a
conflict between the provisions of this Agreement and the provisions of the
Related Agreements, the Related Agreements shall control.
Section 8.02. Expenses. Except as otherwise set forth in this
Agreement or any Related Agreement, all costs and expenses in connection with
the preparation, execution, delivery and implementation of this Agreement, the
Distribution and with the consummation of the transactions contemplated by this
Agreement shall be charged to the party for whose benefit the expenses are
incurred, with any expenses which cannot be allocated on such basis to be split
equally between the parties.
Section 8.03. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to the principles of conflicts of laws thereof.
Section 8.04. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered by hand, mailed by registered or
certified mail (return receipt requested) to the parties at the addresses below
(or at such other addresses for a party as shall be specified by like notice) or
sent by facsimile to the numbers listed below with confirmation of transmission,
and shall be deemed given on the date on which such notice is received:
To Hi/fn:
Hi/fn, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
(000) 000-0000 (fax)
Attention: Xxxxxxx Xxxxxx
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To Stac:
Stac, Inc.
00000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
(000) 000-0000
Attention: Xxxx Xxxxxx
Section 8.05. Amendments. This Agreement may not be modified or
amended except by an agreement in writing signed by the parties.
Section 8.06. Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns. The parties acknowledge
and agree that any party into which Stac or Hi/fn merges or which acquires all
or substantially all of Stac's or Hi/fn's assets in a sale transaction would
constitute a permitted assign for purposes of this Section 8.06.
Section 8.07. Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in the
sole discretion of the Stac Board without the approval of Hi/fn or of Stac's
stockholders. In the event of such termination, no party shall have any
liability to any other party pursuant to this Agreement.
Section 8.08. Subsidiaries. Each of the parties hereto shall cause to
be performed, and hereby guarantees the performance of, all actions, agreements
and obligations set forth herein to be performed by any Subsidiary of such party
which is contemplated to be a Subsidiary of such party on and after the
Distribution Date.
Section 8.09. No Third-Party Beneficiaries. Except for the provisions
of Article IV relating to Indemnitees, this Agreement is solely for the benefit
of the parties hereto and their respective Subsidiaries and Affiliates and
should not be deemed to confer upon third-parties any
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remedy, claim, Liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
Section 8.10. Titles and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
Section 8.11. Exhibits and Schedules. The Exhibits and Schedules shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
Section 8.12. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
Section 8.13. Arbitration of Disputes.
(a) Any controversy or claim arising out of this Agreement, or any
breach of this Agreement, including any controversy relating to a determination
of whether specific assets constitute Hi/fn Assets or Retained Assets or whether
specific Liabilities constitute Hi/fn Liabilities or Retained Liabilities, shall
be settled by arbitration in accordance with the Rules of the American
Arbitration Association then in effect, as modified by this Section 8.13 or by
the further
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agreement of the parties.
(b) Such arbitration shall be conducted in San Diego, California.
(c) Any judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrators shall have the
authority to award to the prevailing party its attorneys' fees and costs
incurred in such arbitration. The arbitrators shall not, under any
circumstances, have any authority to award punitive, exemplary or similar
damages, and may not, in any event, make any ruling, finding or award that does
not conform to the terms and conditions of this Agreement.
(d) Nothing contained in this Section 8.13 shall limit or restrict in
any way the right or power of a party at any time to seek injunctive relief in
any court and to litigate the issues relevant to such request for injunctive
relief before such court (i) to restrain the other party from breaching this
Agreement or (ii) for specific enforcement of this Section 8.13. The parties
agree that any legal remedy available to a party with respect to a breach of
this Section 8.13 will not be adequate and that, in addition to all other legal
remedies, each party is entitled to an order specifically enforcing this Section
8.13.
(e) The parties hereby consent to the jurisdiction of the federal
courts located in San Diego, California for all purposes under this Agreement.
(f) Neither party nor the arbitrators may disclose the existence or
results of any arbitration under this Agreement or any evidence presented during
the course of the arbitration without the prior written consent of both parties,
except as required to fulfill applicable disclosure and reporting obligations,
or as otherwise required by law.
(g) Except as provided in Section 8.13(c), each party shall bear its
own costs
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incurred in the arbitration. If either party refuses to submit to arbitration
any dispute required to be submitted to arbitration pursuant to this Section
8.13, and instead commences any other proceeding, including, without limitation,
litigation, then the party who seeks enforcement of the obligation to arbitrate
shall be entitled to its attorneys' fees and costs incurred in any such
proceeding.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
STAC, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
HI/FN, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
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