Exhibit 2.1
ASSET ACQUISITION AGREEMENT
CONFIDENTIAL
_________________________________________________
ASSET ACQUISITION AGREEMENT
__________________________________________________
dated as of January 18, 2001
among
STMicroelectronics, Inc.,
STMicroelectronics, NV,
and
Ravisent Technologies Inc.
Ravisent I.P., Inc.
Ravisent Operating Company, Inc.
This ASSET ACQUISITION AGREEMENT (this "Agreement") is made and entered
into as of January 18, 2001 (the "Effective Date"), by and among
STMicroelectronics NV, a Dutch corporation having its principal place of
business at Strawinskylaan 1725, Xxxxx X 00xx xxxxx, 0000 Xxxxxxxxx, Xxx
Xxxxxxxxxxx, acting for the purpose of this Agreement through its Swiss branch,
ICC Bloc A, Route de Pre-bois 20, 1215 Xxxxxx 00, Xxxxxxxxxxx ("ST NV"),
STMicroelectronics, Inc., a Delaware corporation and wholly-owned subsidiary of
ST NV, having its principal place of business at 0000 Xxxxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxx ("ST, Inc."), (ST NV and ST, Inc. referred to collectively
herein as "Purchaser"), Ravisent Technologies Inc., a Delaware corporation
("Ravisent"), Ravisent I.P., Inc. a Nevada corporation ("RIP") and Ravisent
Operating Company, Inc. a Delaware corporation ("ROCI"), (Ravisent, RIP, and
ROCI referred to collectively herein as "Seller").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and assign to Purchaser, and Purchaser
desires to purchase and acquire from Seller, certain assets associated with
Seller's Consumer Electronics Business (as defined below), all upon the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, in connection with the sale of assets described above, Seller will
permit Purchaser to make offers of employment and hire employees of Seller who
have worked in the Consumer Electronics Business;
NOW, THEREFORE, in consideration of the facts stated in the above recitals
and of the mutual agreements and covenants hereinafter set forth, and for good
and valuable consideration, the receipt, sufficiency and adequacy of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"Affiliate" or "Associate" shall have those meanings ascribed to such terms
by Rule 405 promulgated under the 1933 Act.
"Ancillary Agreements" means, collectively, the Xxxx of Sale, the
Assignment and Assumption Agreement, the Browser License Agreement, the
Exclusive License Agreement, the Purchaser License Agreement, and the Seller
License Agreement.
"Assignment and Assumption Agreement" means the Assignment and Assumption
Agreement substantially in the form of Exhibit A.
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"Assumed Liabilities" means (i) any and all liabilities of Seller under the
Seller Contracts to the extent that such liabilities arise, are incurred or
require performance of an action on or subsequent to the Closing Date, and (ii)
the liabilities and obligations listed on Schedule 1 hereto but (iii)
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specifically excluding any taxes relating to Seller's operations prior to
Closing or associated with this Agreement or any of the Ancillary Agreements.
"Xxxx of Sale" means the Xxxx of Sale substantially in the form of Exhibit
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B.
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"Browser License Agreement" means that certain Internet Browser License
Agreement between Seller and Purchaser substantially in the form of Exhibit C-1
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hereto.
"Business Assets" means the Purchased Assets and the Seller Licensed
Assets.
"Bundeskartellamt" means the German administrative agency responsible for
providing antitrust clearance.
"Consumer Electronics Business" means Seller's business of designing,
developing, manufacturing, testing, marketing, licensing, distributing, using,
modifying, operating, installing, servicing, supporting, maintaining, or
otherwise using or commercially exploiting one or more of the Products.
"Consumer Electronics Market" means the market for electronic products,
regardless of hardware structure, that are primarily intended to be directly
connected to an analog or digital TV set (as defined below) and that are capable
of compressing and/or decompressing digital video signals. For the avoidance of
doubt the Consumer Electronics Market shall include, but not be limited to, the
following products: DVD players in all form factors (fixed, portable, in cars,
etc.), Recordable DVD players, Personal Video Recorders, Set-top boxes (whether
cable, satellite, terrestrial or xDSL), Digital TV's, High-definition TVs, and
game consoles, whether or not such products permit or provide the capability for
browsing the Internet, including but not limited to Internet browsers and
products that may be capable of decompressing streaming video standards (e.g.
Real Networks, Apple Quicktime, Windows Media Formats, MPEG-1, MPEG-4, etc.)
only on the Internet.
"Encumbrance" means any pledge, lien, collateral assignment, security
interest, mortgage, deed of trust, title retention, conditional sale or other
security arrangement, or adverse claim of title or ownership, other than those,
which do not materially detract from or interfere with the ownership of the
properties subject thereto.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations promulgated thereunder.
"Excluded Assets" means all assets of Seller other than the Purchased
Assets and the Licensed Assets, including, without limitation, (i) all Seller's
cash, bank accounts and securities; (ii) all insurance policies of Seller and
all rights of Seller of every nature and description under or arising out of
such insurance policies (except those insurance policies set forth on Schedule
5); (iii) claims for refunds of Taxes paid by Seller prior to the Closing Date;
(iv) all assets of, or held by or with respect to, any employee benefit plan
(whether or not governed by ERISA) or any trust, fund or account that is related
to any such employee benefit plan or that is similar in purpose or function
thereto; (v) except as otherwise provided herein, Seller's right, title and
interest in the name "Ravisent" or any variation or combination thereof, or
Seller's other trademarks trade dress, monograms or logos and the goodwill
associated therewith; and (vi) the assets listed on Schedule 12.
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"Exclusive License Agreement" means that certain Exclusive Software License
Agreement between Seller and Purchaser substantially in the form of Exhibit C-2
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hereto.
"Executive Officers" means the Chief Executive Officer/President, the
Senior Vice President, Corporate Services and Chief Financial Officer, the Chief
Technology Officer, the Senior Vice President and General Manager, Digital Media
Division, the Senior Vice President and General Manager, Internet Appliance
Division, and the Chief Legal Officer, Senior Vice President and General Counsel
of Seller as of the Effective Date.
"General Employees" means those employees listed as such Schedule 10
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hereto.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Important Employees" means those employees listed as such Schedule 10
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hereof.
"Intangible Assets" means, collectively, the intangible assets, properties
and rights of Seller, including those works in progress, as listed on Schedule 2
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hereto.
"Intellectual Property Rights" means any and all existing or future patent
rights (including patent applications and disclosures), rights of priority,
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industrial design rights, copyrights, moral rights, rights of Seller in trade
secrets, know-how and any other intellectual property rights recognized in any
country or jurisdiction of the world.
"Internet Appliance Market" means the market for wired electronic products
that are (i) capable of browsing the Internet, (ii) may be capable of
decompressing streaming video standards (e.g. Real Networks, Apple Quicktime,
Windows Media Formats, MPEG-1, MPEG-4, etc.) only on the Internet, but (iii)
otherwise incapable of decompressing MPEG digital signals.
"Internal Revenue Code" means the U.S. Internal Revenue Code of 1986, as
amended, and the Treasury regulations (final and temporary) promulgated
thereunder and the administrative pronouncements issued by the Internal Revenue
Service relating thereto.
"Joint Intangible Assets" means those assets jointly owned by Purchaser and
Seller, and identified as listed on Schedule 2 hereto.
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"Key Employee" means those employees listed as such Schedule 10 hereto.
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"Person" means any individual, partnership, limited liability company,
firm, corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Personal Computer Market" means general-purpose electronic devices
primarily intended to be used with, or accommodate, a monitor (other than a TV)
which are programmable by the user and whose main functions are the processing,
storage and formatting of data. For the avoidance of doubt the PC Market shall
include, but not be limited to, the following products; personal computers
(desktop or mobile) based on the Intel x86 architecture and running Microsoft
Windows, Linux or any other general-purpose operating system and Apple
Computer's Macintosh (iMac, iBook) devices, including such devices with video
encoding and/or decoding functionality.
"Products" means the software products and products under development in
the Consumer Electronics Business of Seller listed in Schedule 7 hereto.
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"Purchased Accounts Receivable" means Seller's accounts receivable,
unbilled receivables, notes and other amounts receivable from third parties in
respect of Products sold by Seller, determined as of the date two business days
prior to the Closing Date.
"Purchaser's Disclosure Letter" means Purchaser's Disclosure Letter dated
as of the Effective Date, which is being delivered to Seller concurrently with
the execution of this Agreement.
"Purchaser License Agreement" means that certain software license agreement
between Purchaser and Seller substantially in the form of Exhibit C-3.
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"Purchaser Licensed Assets" means the assets licensed by Purchaser to
Seller in the Purchaser License Agreement.
"Seller" means Ravisent, RIP and ROCI collectively, or any subsequent
corporate entity or merged entity owning the remainder of Seller's business,
other than the Consumer Electronics Business.
"Seller Contracts" means those leases, licenses, agreements, contracts,
understandings, arrangements, commitments and purchase orders listed on Schedule
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5 hereto.
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"Seller License Agreement" means that certain software license agreement
between Seller and Purchaser substantially in the form of Exhibit C-4 hereto.
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"Seller Licensed Assets" means the assets licensed by Seller to Purchaser
in the Browser License Agreement, Seller License Agreement and the Exclusive
License Agreement.
"Seller's Disclosure Letter" means Seller's Disclosure Letter dated as of
the Effective Date, which is being delivered to Purchaser concurrently with the
execution of this Agreement, and set forth in Schedule 3.
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"Seller's or Purchaser's knowledge" or "Knowledge of Purchaser or Seller":
A particular fact or other matter shall be deemed to be within "Seller's
knowledge" or "Purchaser's knowledge", as the case may be, if any officer of
Seller or Purchaser (as applicable) is aware of such fact or other matter;
provided, however, that for purposes of Section 3.8(b) only, "Seller's
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knowledge" shall include the awareness of all of Seller's officers, Executive
Officers, and all technical division heads and managers within Seller's
organization of such facts and matters stated in Section 3.8(b) hereof.
"Tangible Assets" means, the tangible personal property assets listed on
Schedule 7 hereto, subject to revision based upon a fixed assets inventory to be
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conducted within ten business days after the Effective Date,
"Tax" or "Taxes" means all taxes or similar governmental charge or levy of
any kind whatsoever (whether payable directly or by withholding), including
without limitation, income taxes, gross receipts taxes, franchise taxes,
transfer taxes or fees, stamp taxes, sales taxes, use taxes, excise taxes, ad
valorem taxes, value added taxes, documentary taxes, intangible personal
property taxes, withholding taxes, real or personal property taxes, employee
withholding taxes, worker's compensation, payroll taxes, unemployment insurance,
social security, minimum taxes or windfall profits taxes, together with any
related liabilities, penalties, fines, additions to tax or interest, imposed by
any governmental agency.
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"Third Party Assets" means (i) the personal property assets, tangible and
intangible, licensed or leased to Seller by third parties under certain Seller
Contracts and (ii) Seller's license or other rights to such third-party assets
under such Seller Contracts.
"TV" or "TV set" means a video monitor with an integrated tuner the primary
purpose of which is the reception and display of broadcast television.
ARTICLE II
ACQUISITION OF ASSETS
SECTION 2.1. Assets to Be Acquired and Licensed.
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(a) Purchased Assets. Subject to the terms and conditions of this
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Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Purchaser (or cause to be sold, assigned, transferred, conveyed and
delivered to Purchaser) and Purchaser shall purchase and acquire from Seller,
free and clear of all Encumbrances, all right, title and interest in and to all
of the following (collectively, the "Purchased Assets"):
(i) the Intangible Assets (including all Intellectual Property Rights
therein and thereto);
(ii) the Tangible Assets;
(iii) the right to enforce confidentiality, non-disclosure, employee
invention assignment and other proprietary rights agreements between Seller and
Hired Employees (as defined in Article VI below) with respect to the Consumer
Electronics Business;
(iv) all of Seller's rights under the Seller Contracts, including Third
Party Assets;
(v) the Purchased Accounts Receivable;
(vi) copies of Seller's marketing and sales information, pricing,
marketing plans, business plans, financial and business projections and other
files and records which pertain exclusively to the Consumer Electronic Business;
(vii) An undivided one half interest in the Joint Intangible Assets; and
(viii) the goodwill associated with the foregoing.
(b) Seller Licensed Assets. The parties acknowledge that, in addition to
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the Purchased Assets, certain assets related to the Consumer Electronics
Business also are essential to other businesses conducted by Seller or licensed
by Seller to third parties. Accordingly, with respect to the Seller Licensed
Assets, at the Closing, Seller shall grant to Purchaser licenses to and deliver
the Seller Licensed Assets on the terms and conditions set forth in the
Technology License Agreement, and the Internet Browser License Agreement.
(c) Excluded Assets. The parties agree that Seller is not selling or
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assigning to Purchaser, and the Purchased Assets do not include, any of the
Seller Licensed Assets or the Excluded Assets.
SECTION 2.2. Liabilities Assumed and Excluded.
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(a) At the Closing, Purchaser shall assume, pay, perform and discharge the
Assumed Liabilities.
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(b) Except for the Assumed Liabilities, Purchaser shall not assume or
otherwise become obligated to pay, perform or discharge any liabilities, debts
or obligations of Seller and Seller shall retain, and shall be solely
responsible and liable for paying, performing and discharging when due, all of
Seller's liabilities other than the Assumed Liabilities.
SECTION 2.3. Purchase Price; Allocation.
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(a) Purchase Price. In consideration of the sale, transfer and
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assignment of the Purchased Assets to Purchaser and the license of the Licensed
Assets to Purchaser, Purchaser agrees to pay to Seller at the Closing the sum of
(w) Fifty Five Million U.S Dollars ($55,000,000), plus (x)_Ninety Percent (90%)
of the value of the total amount of the Purchased Accounts Receivable, plus (y)
the pro-rata portion of any prepaid lease obligations for any of the leases
listed on Schedule 5, minus (z) the amount of any Assumed Liabilities listed on
Schedule 1 (as adjusted at Closing) (collectively, the "Purchase Price") in
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cash. Of the Purchase Price Eight Hundred Thousand U.S. Dollars ($800,000) the
("Escrow Amount") shall be deposited with a mutually acceptable escrow agent on
the Closing Date to be held by such escrow agent for a period of eighteen (18)
months in accordance with the terms and conditions of an escrow agreement to be
executed at Closing (the "Escrow Agreement") substantially in the form of
Exhibit K; provided, however, that such Escrow Amount shall be increased to One
Million U.S. Dollars ($1,000,000) if Purchaser and Seller agree at Closing that
the terms of the Purchase Price Allocation Agreement (as defined below) allocate
a minimum of Thirty Eight Million U.S. Dollars ($38,000,000) to Intangible
Assets and Purchaser's interest in the Joint Intangible Assets.
(b) Allocation.
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(i) Purchase Price. As soon as practicable following the Closing
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Date, Purchaser and Seller shall use all commercially reasonable efforts to
agree upon an allocation of the Purchase Price among the Business Assets, in
accordance with the allocation requirements of Section 1060 of the Internal
Revenue Code. The allocation of the Purchase Price agreed upon by the parties
pursuant to this Section shall be reduced to a writing executed and delivered by
Seller and Purchaser to each other (the "Purchase Price Allocation Agreement").
Any subsequent adjustments to the allocable Purchase Price shall be reflected in
the Purchase Price Allocation Agreement in a manner consistent with Treasury
Regulation (S)1.1060-lT(e).
(ii) Consistent Treatment and Characterization of Amounts. For all Tax
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purposes, Purchaser and Seller agree to report the transactions contemplated in
this Agreement in a manner consistent with the Purchase Price Allocation
Agreement, and will not take any position inconsistent therewith in any Tax
return, in any refund claim, in any litigation or otherwise, unless required to
do so by a governmental authority. Seller and Purchaser shall each be
responsible for the preparation of their own Section 1060 statements and forms
in accordance with applicable Tax laws, and each shall execute and deliver to
each other such statements and forms as are reasonably requested by the other
party to accomplish the foregoing.
SECTION 2.4. Closing. Subject to the terms and conditions of this
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Agreement, the sale, purchase, license and transfer of the Business Assets and
the assumption of the Assumed Liabilities shall take place at a closing (the
"Closing") at the offices of Seller in Malvern, Pennsylvania at 10:00 a.m.,
local time, on the Fifth (5/th/) business day after the satisfaction or waiver
of the conditions to Closing set forth in Article VIII or at such other time or
on such other date or at such other place as Seller and Purchaser may mutually
agree in writing (the day on which the Closing takes place being the "Closing
Date").
SECTION 2.5. Closing Deliveries by Seller. At the Closing, Seller shall
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deliver or cause to be delivered to Purchaser:
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(i) executed counterparts of each Ancillary Agreement to which Seller is
a party;
(ii) (x) assignments substantially in the forms of Exhibit E (the "Patent
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Assignments"), by which Seller shall assign to Purchaser the patents included in
the Purchased Assets, executed on Seller's behalf by an officer of Seller with
his or her execution notarized, in a form acceptable for recording with the
United States Patent and Trademark Office; and (y) assignments from Seller to
Purchaser of all software and registered copyrights included in the Purchased
Assets, duly executed on behalf of Seller by an officer and notarized, and in a
form acceptable for recording with the United States Copyright Office (with
respect to the registered copyrights) in substantially the forms of Exhibit F
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attached hereto (the "Copyright Assignments");
(iii) an undivided one half interest in the Joint Intangible Assets; and
(iv) all other items required to be delivered by Seller at the Closing
pursuant to Section 8.2 of this Agreement or any other provision hereof or any
Ancillary Agreement.
SECTION 2.6. Closing Deliveries by Purchaser. At the Closing, Purchaser
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shall deliver or cause to be delivered to Seller:
(i) payment of the Purchase Price, less the Escrow Amount, by wire
transfer of immediately available funds to an account of Seller designated to
Purchaser;
(ii) executed counterparts of the Escrow Agreement and each Ancillary
Agreement to which Purchaser is a party; and
(iii) all other items required to be delivered by Purchaser at the Closing
pursuant to Section 8.1 of this Agreement or any other provision hereof or any
Ancillary Agreement.
SECTION 2.7. Delivery of the Business Assets; Assumption of Premises. On
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the Closing Date, Seller shall ensure that all of the Business Assets are
located at the premises of Seller that will be assumed by Purchaser pursuant to
this Agreement (the "Assumed Premises"). Seller shall make the Assumed Premises
available for occupancy by Purchaser on the Closing Date.
SECTION 2.8. Unassignable Assets. Notwithstanding any other provision of
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this Agreement or any of the Ancillary Agreements, to the extent that any of the
Seller Contracts or any other assets constituting part of the Purchased Assets
are not assignable or otherwise transferable to Purchaser or if any of the
Seller Licensed Assets may not be licensed to Purchaser without the consent,
approval or waiver of another party thereto or any third party (including any
governmental agency), or if such assignment, transfer or license would
constitute a breach thereof or a violation of any applicable law or agreement
with any third party, then neither this Agreement nor such Ancillary Agreements
shall constitute an assignment or transfer (or an attempted assignment or
transfer) thereof until such consent, approval or waiver of such party or
parties has been duly obtained. With respect to each Seller Contract or Seller
Licensed Asset whose assignment, transfer or license to Purchaser requires the
consent, approval or waiver of another party thereto or any third party, Seller
shall use its best reasonable efforts to obtain such consent, approval or waiver
of such other party or parties or such third party to such assignment or
transfer as promptly as practicable. Purchaser agrees to cooperate with Seller
and supply relevant information to such party or parties or such third party in
order to assist Seller in its obligations under this Section.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that, except as
expressly set forth in the Seller's Disclosure Letter, all of the following
statements, representations and warranties are true and correct:
SECTION 3.1. Organization and Good Standing of Seller. Seller is a
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corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes qualification necessary, except for such failures to be so
qualified and, if applicable, in good standing that would not prevent or
materially delay the consummation of the transactions contemplated in this
Agreement or the Ancillary Agreements, or otherwise prevent or materially delay
Seller from performing its obligations under this Agreement or the Ancillary
Agreements. Seller has all requisite corporate power and authority to carry on
the Consumer Electronics Business as now conducted and to enter into this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby.
SECTION 3.2. Authorization and Validity. The execution and delivery of
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this Agreement and the Ancillary Agreements and the performance of all
obligations of Seller hereunder and thereunder, has been duly and validly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been, and at the Closing the other Ancillary Agreements will be,
duly executed and delivered by Seller. This Agreement constitutes, and, upon
Seller's execution of each of the other Ancillary Agreements, each of the other
Ancillary Agreements will constitute, assuming the due authorization, execution
and delivery by Purchaser, a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws
of general application, now or hereafter in effect, affecting enforcement of
creditors' rights generally; and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
SECTION 3.3. No Conflict. The execution, delivery and performance of this
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Agreement and the Ancillary Agreements by Seller and the consummation of the
transactions contemplated hereby and thereby, subject to compliance with the
consents required in Schedule 8, do not and will not (a) result in a violation
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or default in any material respect of any provision of Seller's charter
documents or any judgment, order, writ or decree applicable to Seller, (b)
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a breach, violation or default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any of
the Seller Contracts or (c) result in the creation of any Encumbrance on any of
the Business Assets.
SECTION 3.4. Consents. No consent, approval, order or authorization of or
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registration, qualification, designation, declaration or filing with, any
governmental entity on the part of Seller is required in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, except for (i) compliance with the requirements of the HSR
Act and the Bundeskartellamt and (ii) where the failure to obtain such
consents, approvals, orders or authorizations or to make such registrations,
qualifications, designations, declarations or filings would not prevent or
materially delay consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements. Schedule 8 sets forth a true and complete list of
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each and every instrument pursuant to which the consent or approval of any third
party or governmental authority is required in order for Seller to assign,
transfer or license to Purchaser any of the Business Assets or any rights or
obligations under Seller Contracts.
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SECTION 3.5. Title to Purchased Assets and Third Party Assets.
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(a) Purchased Assets. Seller and its wholly owned subsidiaries own all of
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the Business Assets (other than Third Party Assets) and has good and marketable
title in and to all of the Business Assets (other than Third Party Assets), free
and clear of all Encumbrances whatsoever. Title to all of the Purchased Assets
(other than Third Party Assets) is freely transferable from Seller and its
wholly owned subsidiaries to Purchaser free and clear of all Encumbrances.
(b) Third Party Assets. Except as set forth in Seller's Disclosure Letter,
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Seller and its wholly owned subsidiaries have the right to transfer the Third
Party Assets without restriction.
(c) Sufficiency of Assets. The Business Assets include all the assets and
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rights that are necessary and sufficient to conduct the Consumer Electronics
Business as conducted by the Seller as of the Effective Date.
SECTION 3.6. Seller Contracts. Seller Contracts are valid, in full force
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and effect, and enforceable in accordance with their respective terms (except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies). Neither Seller
nor, to Seller's knowledge, any other party to any Seller Contract, is in breach
or default in performance of any of their respective obligations thereunder, and
no event exists which, with the giving of notice or lapse of time or both, would
constitute a breach, default or event of default on the part of Seller or, to
Seller's knowledge, on the part of any other party.
SECTION 3.7. Litigation. There is no claim, action, suit, arbitration,
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mediation, investigation or other proceeding of any nature pending or, to
Seller's knowledge, threatened, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency that
could adversely affect the Business Assets, or contests or challenges Seller's
authority, right or ability to sell or convey or license any of the Business
Assets to Purchaser hereunder or otherwise perform Seller's obligations under
this Agreement or any of the Ancillary Agreements. There are no judgments,
decrees, injunctions or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator pending or binding against
Seller, which adversely affect any of the Business Assets.
SECTION 3.8. Intellectual Property Rights.
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(a) Ownership. Seller and its wholly owned subsidiaries are the sole
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owner, or in the case of the Seller Licensed Assets, have the right to use
pursuant to license, sublicense, agreement, or other valid permission, all
Intellectual Property Rights, in the Intangible Assets, to be transferred to
Purchaser as set forth herein. Seller has taken reasonable steps to maintain
and protect all Intellectual Property Rights in the Intangible Assets.
(b) Non-Infringement. To Seller's knowledge, the Business Assets (other
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than Third Party Assets) have not infringed or violated and currently do not
infringe, violate, or misappropriate any Intellectual Property Rights of any
third party, and, to Seller's knowledge, no third party has asserted or
threatened to assert against Seller any claim of infringement or
misappropriation of any such rights. To Seller's knowledge, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any of the Intellectual Property Rights in and to the Business
Assets (other than Third Party Assets).
(c) Licenses. Schedule 9 sets forth each material license Seller has
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granted to any third party with respect to any Business Asset. Schedule 9 sets
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forth each Intellectual Property
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Right in connection with the development, use or sale of the Products that a
third party owns and that Seller uses pursuant to a license, sublicense,
agreement or other permission.
SECTION 3.9. Compliance with Laws. Seller has complied in all respects
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with and has not received any notices of violation with respect to, any federal,
state or local statute, law or regulation applicable to any of the Business
Assets, except for such violations and failures to comply that would not prevent
or materially delay the consummation of the transactions contemplated in this
Agreement or the Ancillary Agreements, or otherwise prevent or materially delay
Seller from performing its obligations under this Agreement or the Ancillary
Agreements.
SECTION 3.10. Tax Matters.
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(a) Tax Assessments. There is no claim or assessment pending or, to
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Seller's knowledge, threatened for any alleged deficiency in Tax attributable to
Seller or the affiliated group of which Seller is a member (the "Seller Group"),
relating to the Business Assets, and to Seller's knowledge, there is no audit or
investigation with respect to any liability of Seller or the Seller Group for
Taxes relating to the Business Assets.
(b) No Tax Liens. There are (and as of immediately following the Closing
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there will be) no Encumbrances on any of the Business Assets relating to or
attributable to Taxes, other than liens for Taxes not yet due and payable.
(c) Filings. Seller has (and as of the Closing Date will have) duly filed
-------
all federal, state, local, and foreign tax returns required (in material
compliance with applicable tax laws and regulations) by it with the Internal
Revenue Service or other applicable taxing authority, no extensions with respect
to such tax returns (or as of the Closing Date will have) being requested or
granted and (iii) and all taxes required to be paid by Seller as set forth
therein having been paid in full.
SECTION 3.11. Employees.
---------
(a) Schedule 10 sets forth a list of certain employees working in the
-----------
Consumer Electronics Business (each, an "Employee" and collectively, the
"Employees") and, for each Employee, the annual base salary of such Employee
effective as of February 1, 2001, their current status as exempt or non-exempt,
all bonuses, profit sharing, or commissions accrued or payable, any special
compensatory or reimbursement arrangements, comp time or other arrangements with
such Employees and any other compensatory agreements between such Employee and
Seller. The list of Employees set forth on Schedule 10 shall be subdivided into
-----------
three categories, "Key Employees," "Important Employees" and "General Employees"
which shall be identified at the Effective Date.
(b) No collective bargaining agent or employee association represents
Employees with respect for Seller's employment of Employee.
(c) There has not been for a period of twelve (12) consecutive months
prior to the Effective Date, nor is there existing or threatened, any strike,
slowdown, picketing, or work stoppage with respect to the Consumer Electronics
Business.
(d) Seller is in compliance in all material respects with all laws
relating to employment that are applicable to the Employees;
(e) Set forth in Schedule 10 is a complete and accurate list of all
-----------
Employees currently on leave and in receipt of short-term disability ("STD")
benefits along with their STD commencement date and expected date of return to
work;
11
(f) Set forth in Schedule 10 is a complete and accurate list of all
-----------
Employees currently on leave and in receipt of long-term disability ("LTD")
benefits along with their LTD commencement date and expected date of return to
work;
(g) Set forth in Schedule 10 is a complete and accurate list of all
-----------
Employees currently on leave and in receipt of applicable workers' compensation
legislation benefits along with, if applicable, their leave commencement date
and expected date of return to work; and
(h) There are no outstanding assessments, penalties, fines, levies,
charges, surcharges or other amounts due or owing pursuant to any applicable
workers' safety and insurance laws in respect of the Consumer Electronics
Business or Employees and no audit is currently being performed pursuant to any
applicable workers' safety and insurance law.
SECTION 3.12. Pension and Employee Benefit Matters.
------------------------------------
(a) Neither Seller nor any entity which, within the last 5 years, has been
under common control of or affiliated with Seller (an "ERISA Affiliate") within
the meaning of Section 414(b), (c) or (m) of the Internal Revenue Code, has ever
been obligated to contribute to any "multi-employer plan" as such term is
defined in Section 3(37) of ERISA. No material liability to the Pension Benefit
Guaranty Corporation is expected to be incurred in connection with the
transactions contemplated hereby.
(b) With respect to the employee plans maintained, sponsored, or
contributed to by Seller which are intended to be qualified under Section 401(a)
of the Internal Revenue Code ("Seller Employee Plans"), no event has occurred
and, to Seller's knowledge, there exists no condition or set of circumstances in
connection with which Seller could be subject to any liability under the terms
of or with respect to, such Seller Employee Plans, ERISA, the Internal Revenue
Code or any other applicable law. Each Seller Employee Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code has (i) received a
favorable determination letter from the Internal Revenue Service regarding such
qualified status or (ii) been established under a standardized prototype plan
for which an Internal Revenue Service opinion letter has been obtained by the
plan sponsor and is valid as to the adopting employer. Set forth on Schedule 13
-----------
is a list of the most recent Internal Revenue Service determination letters with
respect to any such Plans, accurate and complete copies of which letters have
been delivered to Parent. Each Seller Employee Plan has been maintained in
material compliance with its terms and with the requirements prescribed by all
applicable laws, including but not limited to ERISA and the Code, which are
applicable to such Seller Employee Plans.
SECTION 3.13. Customers. Schedule 11 is a true and complete list of all
--------- -----------
customers of the Consumer Electronics Business as of the Effective Date
("Customers"). To Seller's knowledge, Seller has good commercial working
relationships with each of its Customers.
SECTION 3.14 Accounts Receivable. To Seller's knowledge, the Purchased
-------------------
Accounts Receivable will be, as of the Closing Date, collectible in the ordinary
course of business. None of the Purchased Accounts Receivable have been assigned
or pledged to any other person or entity.
SECTION 3.15. Year 2000 Matters. None of the Products are date or time
-----------------
sensitive.
SECTION 3.16. Brokers. Other than Bear, Xxxxxx & Co., Inc., the fees and
-------
expenses of whom shall be paid by Seller, neither Seller, nor any of its
affiliates, has employed any broker, finder, investment banker or agent,
incurred or agreed to pay any brokerage fee, finder's fee or commission with
respect to the transactions contemplated by this Agreement, or dealt with
12
anyone purporting to act in the capacity of a broker, finder, investment banker
or agent with respect thereto.
SECTION 3.17. Insurance. Schedule 14 contains a list of all insurance
--------- -----------
policies maintained by the Seller for the benefit of or in connection with the
Purchased Assets and each such policy will be maintained in full force and
effect up to the Closing Date. The Seller is not in default of any material
obligation pursuant to any of these insurance policies. All premiums payable
under all such policies and bonds have been paid and the Seller is otherwise in
full compliance with the material terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage).
SECTION 3.18. Employee Confidentiality Agreements. Any and all employees,
-----------------------------------
including all prior employees, of Seller who have or who have had reasonable
access to any secret, confidential, or proprietary information and to inventions
of the Products relating to the Seller or any affiliate have executed written
confidentiality agreements with Seller pursuant to which such employees have
agreed to maintain in confidence secret, confidential or proprietary information
learned or acquired in the scope of their employment, and any and all such
employees, including all such prior employees, have executed a specific
assignment of any title, shop right or license to Seller and that all Purchased
Assets and Licensed Assets created by all Employees have been by employees or
contractors under work-for-hire, as understood under common law.
SECTION 3.19. Environmental Matters. The Seller has not received any
---------------------
written notice of any violation, investigation or inquiry from a governmental
entity regarding a purported violation of any environmental law (as hereinafter
defined) and, to Seller's knowledge, no such investigation or inquiry is
planned or threatened. There have been no formal environmental investigations,
studies, reviews and audits conducted by or on behalf of Seller or any other
party, which are in the possession of Seller relating to Seller or its
properties prior to the Agreement Date.
SECTION 3.20. Disclaimer of Other Representation and Warranties. Neither
-------------------------------------------------
the stockholders of Seller nor any subsidiaries of Seller make, and they have
not made, any representations or warranties relating to either Seller or any
subsidiaries in connection with the transactions contemplated hereby other than
those expressly set forth by Seller in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that, except as set
forth in the Purchaser's Disclosure Letter, all of the following statements,
representations and warranties are true, accurate and correct:
SECTION 4.1. Organization and Good Standing of Purchaser. Purchaser is a
-------------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes qualification necessary, except for such failures to be so
qualified and, if applicable, in good standing that would not prevent or
materially delay the consummation of the transactions contemplated in this
Agreement or the Ancillary Agreements, or otherwise prevent or materially delay
Purchaser from performing its obligations under this Agreement or the Ancillary
Agreements. Purchaser has all requisite corporate power and authority to enter
into this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby.
13
SECTION 4.2. Authorization and Validity. The execution and delivery of
--------------------------
this Agreement and the Ancillary Agreements and the performance of all
obligations of Purchaser hereunder and thereunder, has been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been, and at the Closing the other Ancillary Agreements will be,
duly executed and delivered by Purchaser. This Agreement constitutes, and, upon
Purchaser's execution of each of the other Ancillary Agreements, each of the
other Ancillary Agreements will constitute, assuming the due authorization,
execution and delivery by Seller, a legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application, now or hereafter in effect, affecting
enforcement of creditors' rights generally; and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
SECTION 4.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and the Ancillary Agreements by Purchaser and the consummation of the
transactions contemplated hereby and thereby do not and will not (a) result in a
violation or default in any material respect of any provision of Purchaser's
charter documents or any judgment, order, writ or decree applicable to
Purchaser, or (b) constitute a default (or event which with the giving of notice
or lapse of time, or both, would become a breach, violation or default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material contract of Purchaser.
SECTION 4.4. Consents. No consent, approval, order or authorization of or
--------
registration, qualification, designation, declaration or filing with, any
governmental entity on the part of Purchaser is required in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, except for (i) compliance with the requirements of the HSR
Act and the Bundeskartellamt and (ii) where the failure to obtain such consents,
approvals, orders or authorizations or to make such registrations,
qualifications, designations, declarations or filings would not prevent or
materially delay consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements.
SECTION 4.5. Litigation. There is no claim, action, suit, arbitration,
----------
mediation, investigation or other proceeding of any nature pending or, to
Purchaser's knowledge, threatened, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency that
could adversely affect, contest or challenge Purchaser's authority, right or
ability to purchase or receive any of the Business Assets from Seller hereunder
or otherwise perform Purchaser's obligations under this Agreement or any of the
Ancillary Agreements.
SECTION 4.6. Brokers. Other than UBS Warburg, for which the fees and
-------
expenses shall be paid by Purchaser, neither Purchaser nor any of its affiliates
has employed any broker, finder or agent, incurred or agreed to pay any
brokerage fee, finder's fee or commission with respect to the transactions
contemplated by this Agreement, or dealt with anyone purporting to act in the
capacity of a broker, finder or agent with respect thereto.
SECTION 4.7. Investigation by Purchaser. Purchaser has conducted an
--------------------------
investigation, review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition, software and prospects
of the Consumer Electronics Business, the Purchased Assets and the Seller
Licensed Assets, which investigation, review and analysis was performed by
Purchaser and its affiliates, and, to the extent Purchaser deemed appropriate,
by Purchaser's representatives. Purchaser acknowledges that it and its
representatives have been provided adequate access to the personnel, properties,
premises and records of Seller.
14
ARTICLE V
COVENANTS
SECTION 5.1. Conduct of Business Prior to the Closing. Seller agrees
----------------------------------------
that, from the Effective Date and continuing until the earlier of the Closing
Date or the termination of this Agreement according to its terms, Seller will
carry on the Consumer Electronics Business in the ordinary course and consistent
with Seller's past practice (taking into account the sale of the Purchased
Assets and license of the Seller Licensed Assets contemplated hereby and
Seller's other agreements hereunder) except for such actions of Seller as may be
contemplated by this Agreement or agreed to by Purchaser. Without limiting the
foregoing, during the period described in the preceding sentence, except in the
ordinary course and consistent with Seller's past practice or as agreed to by
Purchaser, Seller agrees not to: (i) sell, transfer, assign, convey, license,
move, relocate, encumber or otherwise dispose of any of the Purchased Assets
and/or Seller Licensed Assets; (ii) transfer any Employee to any other division
or position of employment within Seller; (iii) terminate the employment of any
Employee; or (iv) materially change the base salary or bonus of any Employee or
establish a bonus plan or any new employee benefits for any Employee without
Purchaser's prior written approval.
SECTION 5.2. Consent of Third Parties. Seller shall use its commercially
------------------------
reasonable efforts to obtain the consent in writing of all persons, if any,
necessary to permit Seller to assign and transfer all of the Purchased Assets
free and clear of all Encumbrances, and license all of the Seller Licensed
Assets, to Purchaser.
SECTION 5.3. Access to Information. From the Effective Date until the
---------------------
earlier of the Closing Date or the termination of this Agreement according to
its terms, Seller will afford to the representatives of Purchaser, including its
counsel and auditors, during normal business hours, access to any and all of the
Business Assets such that Purchaser may have a reasonable opportunity to make a
full investigation of the Business Assets in advance of the Closing Date as it
shall reasonably desire, and the Seller will confer with representatives of
Purchaser and will furnish to Purchaser, either orally or by means of such
records, documents, and memoranda as are available or reasonably capable of
preparation, such information as Purchaser may reasonably request, and Seller
will furnish to Purchaser's auditors all consents and authority that they may
reasonably request in connection with any such examination.
SECTION 5.4 Further Actions. Each of the parties hereto shall, at its
---------------
own expense, execute and deliver such documents and other papers and take such
further actions as may be required to carry out the provisions of this
Agreement, the Escrow Agreement and the Ancillary Agreements, to cause the
conditions to Closing set forth in Article VIII to be fulfilled as promptly as
possible, and to give effect to the transactions contemplated by this Agreement
and the Ancillary Agreements.
SECTION 5.5. Confidentiality. All copies of financial information,
---------------
marketing and sales information, pricing, marketing plans, business plans,
financial and business projections, manufacturing processes and procedures,
formulae, methodologies, inventions, product designs, product specifications and
drawings, and other confidential and/or proprietary information of a party (the
"Disclosing Party") disclosed to the other party (the "Non-Disclosing Party") in
the course of negotiating the transactions contemplated by this Agreement
("Confidential Information") will be held in strict confidence and not used or
disclosed by the Non-Disclosing Party or any of its employees, affiliates or
stockholders and, upon termination of this Agreement in accordance with its
terms and upon the Disclosing Party's written request to the Non-Disclosing
Party, will be promptly destroyed by the Non-Disclosing Party or returned to the
Disclosing Party. The Non-Disclosing Party's employees, affiliates and
stockholders will not be given access to Confidential Information except on a
"need to know" basis. It is agreed that
15
Confidential Information will not include information that: (a) is proven to
---
have been known to the Non-Disclosing Party prior to receipt of such information
from the Disclosing Party; (b) is disclosed by a third party having the legal
right to disclose such information and who owes no obligation of confidence to
the Disclosing Party; (c) is now, or later becomes part of the general public
knowledge or literature in the art, other than as a result of a breach of this
Agreement by the Non-Disclosing Party; or (d) is proven to be independently
developed by the Disclosing Party without the use of any Confidential
Information. The provisions of this Section 5.5 shall supersede the provisions
of the letter agreement, dated as of October 25, 2000, between Purchaser and
Seller (the "Confidentiality Agreement").
SECTION 5.6. Public Announcements. On and prior to the Closing Date,
--------------------
Purchaser and Seller shall advise and confer with each other prior to the
issuance of any reports, statements or releases concerning this Agreement
(including the exhibits hereto) and the transactions contemplated hereby.
Neither Purchaser nor Seller will make any public disclosure prior to the
Closing or with respect to such matters unless both parties agree on the text
and timing of such public disclosure, except as may be required by law, court
process, securities exchange listing agreement or the rules of the National
Association of Securities Dealers. Promptly following the execution of this
Agreement, the parties shall issue a joint press release approved by both
parties announcing the transactions contemplated hereby.
SECTION 5.7. Books and Records. If, in order to properly prepare
-----------------
documents required to be filed with governmental authorities (including Tax
authorities) or its financial statements, it is necessary that any party hereto
or any successors be furnished with additional information relating to the
Business Assets, and such information is in the possession of any other party
hereto, such party agrees to use its good faith efforts to promptly furnish such
information to the party needing such information, at the cost and expense of
the party being furnished such information. From and after the Effective Date
and continuing after the Closing, each party shall cooperate with the other
party and provide at the expense of the requesting party, all information that
may be required to enable such party to comply with all applicable laws, rules
and regulations, and any governmental filing requirements, with respect to
reporting and reflecting the transactions contemplated by this Agreement and the
Ancillary Agreements.
SECTION 5.8. Regulatory and Other Authorizations; Consents.
---------------------------------------------
(a) Efforts. Each party hereto will use all commercially reasonable
efforts to obtain all authorizations, consents, orders and approvals of all
federal, state and local regulatory bodies and officials that may be or become
necessary for the execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and the Ancillary Agreements and will
cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
and appropriate filings in compliance with the rules and regulations of the
Bundeskartellamt with respect to the transactions contemplated hereby as
promptly as is practicable after the date hereof and to supply promptly any
additional information and documentary material that may be requested by any
governmental authority pursuant to the HSR Act and/or by the Bundeskartellamt.
The parties hereto will not take any action that will have the effect of
delaying, impairing or impeding the receipt of any required approvals.
(b) Communications. Each party hereto shall promptly inform the other of
any communication between such party and the Federal Trade Commission, the
Department of Justice or any other United States federal or state, the
Bundeskartellamt, or any other non-U.S. government or governmental authority (an
"Antitrust Authority") regarding any of the transactions contemplated hereby. If
any party or any affiliate of such party receives a request for additional
information or for documents or any material from an Antitrust Authority, or an
16
Antirust Authority makes any objection with respect to the transactions
contemplated hereby, then such party shall use all commercially reasonable
efforts to promptly resolve such request or such objections. No written
materials shall be submitted by any party to an Antitrust Authority in
connection with HSR Act compliance or the merger control or competition
regulations of any other country, without prior disclosure to and coordination
with the other parties and their counsel. Each party hereto will cooperate in
connection with reaching any understandings, undertakings or agreements (oral or
written) involving an Antitrust Authority in connection with the transactions
contemplated hereby.
SECTION 5.09. Maintenance of Insurance. Seller shall continue to
------------------------
maintain in full force and effect until the Closing Date all policies of
insurance in effect with respect to the Purchased Assets or duly renew the same
upon similar terms and conditions.
SECTION 5.10. Bulk Sales. Seller and Purchaser expressly waive
----------
compliance with any and all applicable bulk sales laws in connection with the
transactions contemplated in this Agreement and the Ancillary Agreements;
provided, however, that Seller agrees to indemnify Purchaser for any costs
associated with such noncompliance, including, but not limited to Taxes
associated therewith.
SECTION 5.11 Except as expressly set forth herein to the contrary,
Seller agrees to following during the five year non-competition period set forth
in Section 5.12 hereof:
(a) Whenever Seller enters into a new agreement to license, or otherwise
deliver to the Personal Computer Market and/or Internet Appliance Market any of
the Intangible Assets (as permitted under this Agreement), Excluded Assets
comprising intangible property (i.e. software, copyrights or patents), or Joint
Intangible Assets, Seller will provide an express written statement in the
license agreement or other relevant document that will provide substantially the
following:
"The Licensed Technology is for use solely in connection with personal
computers or internet appliances (or other device within the Personal
Computer Market or Internet Appliance Market)."
(b) Notwithstanding anything else in this Agreement to the contrary, Seller
may license, sell or transfer to any third party without restriction (including
licenses, sales and transfers in the Consumer Electronics Market), and without
requirement to include any statement or legend otherwise required in this
Section 5.11, an Internet browser as a stand-alone product, and which may be
capable of decompressing streaming video standards (e.g. Real Networks, Apple
Quicktime, Windows Media formats, MPEG-1, MPEG-4, etc.) only on the Internet,
but otherwise incapable of decompressing MPEG digital signals.
SECTION 5.12. Non Competition by Seller.
-------------------------
(a) Seller acknowledges that in consideration of the payment of the
Purchase Price, Purchaser is acquiring the goodwill of the Business, including
complete ownership and control of the Business Assets. Therefore, Seller agrees
that for a period commencing upon the Closing Date and ending upon the fifth
(5th) anniversary ("Anniversary Date") thereof, unless otherwise extended,
neither Seller nor Seller's assignees, will, directly or indirectly, license or
sell software, technology, products or services in the Consumer Electronics
Market; provided, however, that Seller may license or sell its Internet Browser
-------- -------
as a stand alone software product within the Consumer Electronics Market,
provided that such Internet Browser (i) may be capable of decompressing
streaming video standards (e.g., Real Networks, Apple Quicktime, Windows Media
formats, MPEG-1, MPEG-4, etc.) only on the Internet, but (ii) otherwise is
incapable of decompressing MPEG-2 digital signals. Seller represents to
Purchaser that the enforcement of the restriction contained in this Section 5.12
would not be unduly burdensome to Seller and that
17
in order to induce Purchaser into this Agreement, Seller further represents and
acknowledges that Seller is willing and able to compete in other areas not
prohibited by this Section 5.12. Nothing herein shall prevent Seller or its
assignees from licensing or selling any software, technology, products or
services in the Personal Computer Market and/or the Internet Appliance Market.
(b) Seller agrees that a breach or violation of this covenant not to
compete by Seller shall entitle Purchaser, as a matter of right, to an
injunction issued by any court of competent jurisdiction, restraining any
further or continued breach or violation of this covenant. Such right to an
injunction shall be cumulative and in addition to, and not in lieu of, any other
remedies to which Purchaser may show itself justly entitled. Further, during
any period in which Seller is in breach of this covenant not to compete, the
time period of this covenant shall be extended for an amount of time that Seller
is in breach hereof.
(c) The representations and covenants contained in this Section 5.12 on
the part of Seller will be construed as ancillary to and independent of any
other provision of this Agreement, and the existence of any claim or cause of
action of Seller against Purchaser or any officer, director, or shareholder of
Purchaser, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Purchaser of the covenants of Seller
contained in this Section 5.12
(d) Seller further acknowledges that the aforementioned restrictions
include, but are not limited to, the licensing of source and/or object code of
any nature within the restricted field of use.
SECTION 5.13. Enabling Agreements. Purchaser and Seller agree to cooperate
-------------------
in good faith in the creation and execution at Closing, or as soon as
practicable thereafter, of any and all enabling agreements between themselves
and/or their subsidiaries that may be required by jurisdictions outside of the
United States of America, including, but not limited to, Germany; provided,
however, that any such agreement shall by its terms be consistent with and
subordinate to this Agreement.
SECTION 5.14. Other Agreements. Purchaser and Seller agree to cooperate in
----------------
good faith in the creation and execution at Closing, or as soon as practicable
thereafter, of (x) a royalty free patent cross license agreement for any patents
included in the Purchased Assets and the Excluded Assets ("Royalty Free Patent
Cross License Agreement"), and (y) Joint Intangible Asset operating agreement
for the administration, enforcement, and licensing of the Joint Intangible
Assets, with each such agreement including customary and reasonable terms
("Joint Intangible Asset Operating Agreement").
SECTION 5.15. Survival. Each of the agreements and covenants set forth in
--------
this Article V shall survive the Closing.
ARTICLE VI
18
EMPLOYEE MATTERS
SECTION 6.1. Offers to Employees; Hired Employees.
------------------------------------
(a) Within ten business days after the Effective Date, Purchaser agrees to
make written offers of employment to the Employees, which offers ("Qualified
Offers") shall contain salary and benefits terms in the aggregate comparable to,
or more favorable to the Employee than, the terms of such Employee's employment
with Seller. Each Qualified Offer shall be contingent upon, and effective upon,
the Closing. Seller agrees that, from the Effective Date and continuing until
the earlier of the Closing Date or the termination of this Agreement according
to its terms, Seller will provide Purchaser with reasonable access to and the
opportunity to meet and interview each Employee. Purchaser agrees that for a
period of one (1) year commencing on any termination of this Agreement,
Purchaser will not directly or indirectly engage or participate in any effort or
act to solicit employees of Seller (or any subsidiary of Seller) to cease their
employment with Seller (or such subsidiary) or to breach any employment
obligation with Seller (or any subsidiary of Seller), or to hire any person who
was an employee of Seller (or any subsidiary of Seller) on the Effective Date.
(b) For purposes of any Employee located outside the United States of
America, a Qualified Offer (as such term is defined above) shall be an offer by
Purchaser or its affiliate to assume such Employee's existing employment
contract with Seller on the same or improved terms or, with such Employee's
consent, the offer of a new employment contract on the same or improved terms.
(c) An Employee hired by Purchaser pursuant to a Qualified Offer shall be
referred to herein as a "Hired Employee". Purchaser agrees that each Hired
Employee shall, for the purposes of any benefits or privileges accruing to
employees of Purchaser or its affiliates based upon seniority or length of
service, be given full credit for such Employee's period of employment with
Seller (to the extent Purchaser's employment plans permit such a calculation of
length of service), and that each Qualified Offer shall include such commitment.
(d) Purchaser agrees to include within its Qualified Offers to the
Employees an aggregate minimum of One Million Dollars ($1,000,000) of
retention/sign-on bonuses in order to induce Employees to (i) maintain their
employment with Seller through Closing, and (ii) maintain their employment with
Seller thereafter. Purchaser agrees to consult with Seller in determining the
allocation of such bonuses among the various Employees.
(e) For a period of two (2) years after the Closing Date, Purchaser shall
not solicit for employment nor hire any person who was an employee of Seller (or
a subsidiary of Seller) and as of the Closing was not an Employee, without the
prior written consent of Seller.
SECTION 6.2. Employee Obligations of Seller.
------------------------------
(a) Seller and any subsidiaries thereof shall be liable for and shall hold
Purchaser and its affiliates harmless from, any and all liabilities with respect
to: (i) the employment by Seller or termination of employment by Seller of any
past, current or future employee or consultant of Seller or any of its
affiliates (collectively, "Seller Employees"); (ii) any claims of discrimination
under state or federal law arising from a Seller Employee's employment or
service with or termination by Seller; (iii) any withholding or employment and
or wage Taxes with respect to any Seller Employees which accrue or become
payable during the period of such Seller Employee's employment or service with
Seller or any affiliate of Seller or arise out of the termination of such
person's employment with Seller or any affiliate of Seller; (iv) any other
claims or obligations arising out of the terms and conditions of employment by
Seller or any of its affiliates of any Seller Employee, whether for salary,
wages, bonuses, profit sharing,
19
commissions, severance, vacation pay, sick pay or otherwise; or (v) any duties
or obligations of Seller or administrators under any existing or future employee
benefit plans or arrangements, including stock incentive plans, maintained by
Seller with respect to Seller Employees. Seller shall be responsible for filing
all employment Tax returns with respect to Seller Employees attributable to
periods of employment or service with Seller or any affiliate of Seller.
(b) Seller shall pay to all Hired Employees, and those German Employees
who become employees of Purchaser by operation of law, terminated by Seller, any
liability for accrued vacation, sick leave or similar accrued benefits with
respect to such Employees attributable to periods of employment or service with
Seller, consistent with Seller's policies and applicable law, and shall make
such payment within the statutory time period therefore.
(c) Seller agrees to comply with the provisions of any statute or
regulation regarding termination of employment, plant closing or layoffs and to
perform all obligations required by Seller with respect to the cessation of any
operations of the Consumer Electronic Business or the termination, re-
assignment, re-location or change in position of any Employee in connection with
the transactions contemplated hereby.
(d) For a period of two (2) years after the Closing Date, Seller shall not
solicit for employment nor hire any Hired Employee without the prior written
consent of Purchaser.
SECTION 6.3 Germany. Purchaser and Seller shall cooperate in notifying
-------
the applicable labor unions, works council, and/or economic comity regarding the
transfer of employment of the Employees located within Germany.
SECTION 6.4 Survival. Each of the agreements and covenants set forth in
--------
this Article VI shall survive the Closing.
ARTICLE VII
TAX MATTERS
SECTION 7.1. Transaction Taxes. Seller shall be responsible for, and
-----------------
shall defend, indemnify and hold harmless Purchaser from and against any and all
excise, value added, registration, stamp, property, documentary, transfer,
sales, use and similar Taxes, levies (including any VAT in Germany), charges and
fees (including all real estate transfer taxes) incurred, or that may be payable
to any taxing authority, in connection with, the transactions contemplated by
this Agreement (collectively, "Transaction Taxes"). Seller and Purchaser shall
use all commercially reasonable efforts to cooperate in order to minimize the
Transaction Taxes and any Taxes to be paid or withheld in connection with the
transactions contemplated by the License Agreement.
SECTION 7.2. Other Taxes. Seller is and shall remain solely responsible
-----------
for all tax matters arising from or relating to the Purchased Assets and related
businesses on or prior to the Closing Date ("Pre-Closing Period"). Seller shall
indemnify and hold harmless Purchaser from any liability for, or arising out of
or based upon, or relating to any Tax matter arising from the Purchased Assets
and related businesses during the Pre-Closing Period. Purchaser shall be solely
responsible for all Tax matters arising from or relating to the Purchased Assets
and related businesses beginning after the Closing Date ("Post-Closing Period").
Purchaser shall indemnify
20
and hold harmless Seller from any liability for, or arising out of or based
upon, or relating to any Tax matter arising from the Purchased Assets and
related businesses during the Post-Closing Period. Seller and Purchaser shall
cooperate concerning all Tax matters relating to this division of
responsibility, including, but not limited to, the filing of Tax returns and
other governmental filings associated therewith.
SECTION 7.3. Tax Liability. In the case of Taxes that are payable with
-------------
respect to a taxable period that begins before the Closing Date and ends after
the Closing Date, the portion of any such Tax that is allocable to the portion
of the period ending on the Closing Date shall be:
(a) in the case of Taxes that are either (x) based upon or related to
income or receipts, or (y) imposed in connection with any sale or other transfer
or assignment of property (real or personal, tangible or intangible) (other than
the Transaction Taxes), deemed equal to the amount which would be payable if the
taxable year ended with the Closing Date; and
(b) in the case of Taxes imposed on a periodic basis with respect to the
assets of Seller, any Purchased Assets or otherwise measured by the level of any
item, deemed to be the amount of such Taxes for the entire period (or, in the
case of such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on the Closing Date
and the denominator of which is the number of calendar days in the entire
period.
ARTICLE VIII
CONDITIONS TO THE CLOSING
SECTION 8.1. Conditions to Obligations of Seller. The obligations of
-----------------------------------
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Intentionally Omitted.
----------------------
(b) Accuracy of Representations and Warranties; Covenants. The
-----------------------------------------------------
representations and warranties of Purchaser contained in Article IV of this
Agreement (as qualified by Purchaser's Disclosure Letter) shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, and all the covenants, conditions and other
obligations contained in this Agreement and the Ancillary Agreements to be
complied with by Purchaser on or before the Closing shall have been complied
with in all material respects, and Seller shall have received a certificate of
Purchaser, dated as of the Closing Date, to such effect signed by an officer
thereof.
(c) Closing Deliveries. Seller shall have received the Closing Deliveries
------------------
of Purchaser set forth in Section 2.6 hereof.
(d) HSR Act; Bundeskartellamt; No Order. Any approvals and/or waiting
-----------------------------------
periods under the HSR Act and/or the Bundeskartellamt applicable to the
transactions contemplated by this Agreement shall have been obtained, or
expired, or been terminated, as the case may be. . No foreign, federal, state
or other governmental authority or other agency or commission or federal, state
or other court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent), or otherwise failed
to provide proper authorization under the law, either foreign or domestic, which
is in effect and has the effect of making the transactions contemplated by this
Agreement and/or the Ancillary Agreements illegal or otherwise restraining or
prohibiting consummation of such transactions.
21
(e) Proceedings. No judgment or order shall have been issued by any
-----------
government entity and no action, suit or proceeding shall have been threatened
or taken by any person:
(i) could reasonably be expected to have the effect of enjoining or
prohibiting the consummation of any material transaction pursuant
to this Agreement and/or any of the Ancillary Agreements; and
(ii) that could reasonably be expected to materially and adversely
affect the Seller's performance of their respective material
obligations pursuant to this Agreement and/or any of the
Ancillary Agreements.
(f) Browser License Fee. Seller shall have received all amounts due on the
-------------------
Closing Date under the terms of the Browser License Agreement.
(g) Purchaser shall have delivered the Escrow Amount to the Escrow Agent
and Seller shall have received a receipt from the Escrow Agent for the Escrow
Amount.
(h) Purchaser, Seller and the Escrow Agent shall have entered into an
Escrow Agreement substantially in the form attached hereto as Exhibit K.
(i) Purchaser and Seller shall have entered into a Patent Cross License
Agreement.
(j) Purchaser and Seller shall have entered into a Joint Intangible Asset
Operating Agreement.
SECTION 8.2. Conditions to Obligations of Purchaser. The obligations of
--------------------------------------
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Accuracy of Representations and Warranties; Covenants. The
-----------------------------------------------------
representations and warranties of Seller contained in Article III of this
Agreement (as qualified by Seller's Disclosure Letter) shall be true and correct
in all material respects as of the Closing, with the same force and effect as if
made as of the Closing, and all the covenants, conditions and other obligations
contained in this Agreement, and the Ancillary Agreements to be complied with by
Seller on or before the Closing shall have been complied with in all material
respects, and Purchaser shall have received a certificate of Seller, dated as of
the Closing Date, to such effect signed by an officer thereof.
(b) Closing Deliveries. Purchaser shall have received the Closing
------------------
Deliveries of Seller set forth in Section 2.5 hereof.
(c) HSR Act; Bundeskartellamt; No Order. Any approvals and/or waiting
-----------------------------------
periods required under the HSR Act and/or the Bundeskartellamt applicable to the
transactions contemplated by this Agreement shall have been obtained, expired,
or been terminated, as the case may be. No foreign, federal, state or other
governmental authority or other agency or commission or federal, state or other
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent), or otherwise failed to provide
proper authorization under the law, either foreign or domestic, which is in
effect and has the effect of making the transactions contemplated by this
Agreement and/or the Ancillary Agreements illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
parties hereto shall use all commercially reasonable efforts to have any such
order or injunction vacated.
22
(d) Opinions. Purchaser will have received an acceptable form of opinion
--------
of Seller's counsel, Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, substantially in the form
set forth in Exhibit D-1 hereto and an acceptable form of opinion of Seller's
counsel, Xxxxxxxx, Xxxxxx & Fingers, regarding the necessity of stockholder
approval, substantially in the form set forth in Exhibit D-2.
(e) Proceedings. No judgment or order shall have been issued by any
-----------
government entity and no action, suit or proceeding shall have been threatened
or taken by any person:
(i) that could reasonably be expected to have the effect of enjoining
or prohibiting the consummation of any material transaction
pursuant to this Agreement and/or any of the Ancillary
Agreements; or
(ii) that could reasonably be expected to materially and adversely
affect the Purchaser's right to conduct the Consumer Electronics
Business or to own the Purchased Assets or the Seller's
performance of its material obligations pursuant to this
Agreement and/or any of the Ancillary Agreements.
(f) Employee Retention. The Purchaser shall have received written
------------------
acceptances to the Qualified Offers of employment delivered to Seller's
Employees pursuant to Section 6.1 (or, in the case of those German Employees
being transferred by operation of law in accordance with Section 613a of the
German civil Code, no objection to such transfer) in respect of (i) all of the
Key Employees (ii) at least ninety percent (90%) of the Important Employees and
(iii) at least eighty percent (80%) of the General Employees. Further, Purchaser
shall have received the employment agreements for the Key Employees in the
United States substantially in the form of Exhibit I.
(g) In the event that Seller shall have entered into an agreement with a
third party ("Acquirer") for the acquisition of Seller through a merger or
consolidation, Purchaser shall have received a written notice from such Acquirer
substantially in the form of Exhibit G, acknowledging that it has read and
understood this Agreement and the Ancillary Agreements and specifically
acknowledging that: (i) it will be bound by the terms of this Agreement and all
of the Ancillary Agreements if it consummates a merger with Seller; (ii)
Purchaser will be the exclusive owner of the Purchased Assets and that Seller
and/or Acquirer shall have no rights to the Purchased Assets except as
specifically set forth in this Agreement and/or an Ancillary Agreement; (iii)
Purchaser will own an undivided one-half interest in and to the Joint Intangible
Assets (with no right of accounting by either party, and such rights in the
Joint Intangible Assets limited only by applicable provisions of the Ancillary
Agreements) and that Seller and/or Acquirer shall have no rights to the
Purchased Assets except as specifically set forth in this Agreement and/or an
Ancillary Agreement,; and (iv) any assignee of this Agreement will be bound by
the various covenants contained in the Agreement, and any assignee of this
Agreement will be bound by certain non-competition, non-solicitation, and no-
hire agreements.
(h) Purchaser shall have received, from the Chief Executive Officer and
General Manager of Digital Media Division of Seller, executed non-solicitation
and no-hire agreements substantially in the form attached hereto as Exhibit H.
(i) Purchaser, Seller and the Escrow Agent shall have entered into an
Escrow Agreement substantially in the form attached hereto as Exhibit K.
(j) Purchaser and Seller shall have entered into a Patent Cross License
Agreement.
23
(k) Purchaser and Seller shall have entered into a Joint Intangible Asset
Operating Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. Termination. This Agreement may be terminated at any time
-----------
prior to the Closing:
(a) by the mutual written consent of Seller and Purchaser; or
(b) by either Seller or Purchaser at any time prior to Closing, if the
other commits a material breach of this Agreement that is not cured within
thirty days after written notice thereof; or
(c) by either Seller or Purchaser, if the Closing shall not have occurred
prior to the three (3) month anniversary of the Effective Date; provided,
however, that the right to terminate this Agreement under this Section 9.1(c)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur prior to such date; or
(d) by either Seller or Purchaser if a permanent injunction or other order
by any federal, state or foreign court of competent jurisdiction which would
make illegal or otherwise restrain or prohibit the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements shall
have been issued and shall have become final and non-appealable.
[Intentionally Omitted]
SECTION 9.2. Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
(excepting only those provisions hereof that by their terms survive the
termination of this Agreement) and there shall be no liability on the part of
any party hereto; provided that nothing herein shall relieve either party from
liability for any willful breach hereof.
SECTION 9.3. Waiver. At any time prior to the Closing, any party hereto
------
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party to be bound thereby.
ARTICLE X
ESCROW AND INDEMNIFICATION
SECTION 10.1. Loss Defined; Indemnitees. For purposes of this Article X,
-------------------------
the term "Loss" will mean and include any and all liability, loss, damage,
claim, expense, cost, fine, fee, penalty, obligation, injury or amounts paid in
settlement, together with reasonable costs and expenses, including the
reasonable attorneys' and experts' fees, court costs, arbitration costs,
24
filing fees and other legal costs and expenses relating thereto. As used in this
Article X, the term "Purchaser Indemnitees" means and includes Purchaser and any
present or future officer, director, employee, affiliate, stockholder or agent
of Purchaser and its successors and assigns. As used in this Article X, the term
"Seller Indemnities" means and includes Seller and any present or future
officer, director, employee, affiliate, stockholder or agent of Seller and its
successors and assigns.
SECTION 10.2. Indemnification by Seller. Seller agrees, subject to the
-------------------------
other terms, conditions and limitations of this Agreement (including the
provisions of Section 10.6(a) hereof), to indemnify the Purchaser Indemnitees
against, and to hold the Purchaser Indemnitees harmless from, all Loss arising
out of, resulting from, caused by or attributable to:
(a) the failure of any representation or warranty of Seller contained in
this Agreement, (including any schedule or exhibit hereto), to be true and
correct as of the Effective Date or as of the Closing Date or the failure of any
representation or warranty contained in the Ancillary Agreements to be true and
correct as of the Closing Date;
(b) the breach or violation by Seller of any covenant or agreement of
Seller contained in this Agreement (including any schedule or exhibit hereto) or
the Ancillary Agreements; and
(c) except for the Assumed Liabilities, the operation or management of the
Consumer Electronics Business or the Business Assets at any time or times on or
prior to the Closing Date, and except as otherwise provided in Article VI
hereof, any charges or actions brought by employees, agents or representatives
of Seller arising out of or based upon actions of the Seller taken on or prior
to the Closing Date; or
(d) any Encumbrances upon the Purchased Assets existing at the Closing.
SECTION 10.3. Indemnification by Purchaser. Purchaser agrees, subject to
----------------------------
the other terms, conditions and limitations of this Agreement (including the
provisions of Section 10.6(b) hereof), to indemnify the Seller Indemnitees
against, and to hold the Seller Indemnitees harmless from, all Loss arising out
of, resulting from, caused by or attributable to:
(a) the failure of any representation or warranty of Purchaser contained
in this Agreement (including any schedule or exhibit hereto), to be true and
correct as of the Effective Date or as of the Closing Date or the failure of any
representation or warranty contained in the Ancillary Agreements to be true and
correct as of the Closing Date;
(b) the breach or violation by Purchaser of any covenant or agreement of
Purchaser contained in this Agreement (including any schedule or exhibit hereto)
or the Ancillary Agreements;
(c) the Assumed Liabilities or claims made for obligations arising after
the Closing Date that have been assumed by Purchaser hereunder; or
(d) the operation of the Consumer Electronics Business and sale and
license of the Products by Purchaser after the Closing Date.
SECTION 10.4. Third Party Claims.
------------------
(a) As used herein, an "Indemnified Party" means a Purchaser Indemnitee
seeking indemnification pursuant to Section 10.2 hereof or a Seller Indemnitee
seeking indemnification pursuant to Section 10.3 hereof. The Indemnified Party
agrees to give the other party ("Indemnitor") prompt written notice of any
event, or any claim, action, suit, demand,
25
assessment, investigation, arbitration or other proceeding by or in respect of a
third party (a "Third Party Claim") of which it has knowledge, for which such
Indemnified Party is entitled to indemnification under this Article X (including
in any case copies of any summons, complaint or other pleading which may have
been served on it and any written claim, demand, invoice, billing or other
document evidencing or asserting the same). No delay on the part of an
Indemnified Party in giving the Indemnitor notice of a Third Party Claim shall
relieve the Indemnitor from any obligation hereunder unless the Indemnitor is
prejudiced thereby.
(b) Within twenty days of delivery of such written notice, the Indemnitor
may, at the expense of the Indemnitor, elect to take all necessary steps
properly to contest any Third Party Claim or to prosecute such Third Party Claim
to conclusion or settlement satisfactory to the Indemnitor. If the Indemnitor
makes the foregoing election, an Indemnified Party will have the right to
participate at its own expense in all proceedings. If the Indemnitor does not
make such election, an Indemnified Party shall be free to handle the prosecution
or defense of any such Third Party Claim, will take all necessary steps to
contest the Third Party Claim or to prosecute such Third Party Claim to
conclusion or settlement satisfactory to such Indemnified Party, and will notify
the Indemnitor of the progress of any such Third Party Claim, will permit the
Indemnitor, at the sole cost of the Indemnitor, to participate in such
prosecution or defense and will provide the Indemnitor with reasonable access to
all relevant information and documentation relating to the Third Party Claim and
the prosecution or defense thereof. In any case, the party not in control of
the Third Party Claim will cooperate with the other party in the conduct of the
prosecution or defense of such Third Party Claim. Notwithstanding the
foregoing, if an Indemnified Party is offered a written settlement proposal by a
third party that has as its sole component the payment of money by the
Indemnified Party and the Indemnitor recommends to the Indemnified Party in
writing that it accept such settlement proposal (the "Sanctioned Settlement")
and the Indemnified Party refuses to accept such settlement proposal, in such
event if the ultimate settlement terms agreed to by the Indemnified Party with
such third party or the final monetary damages award against the Indemnified
Party (either, a "Final Settlement Amount"), is greater than the amount of the
Sanctioned Settlement, the Indemnified Party shall be responsible for the
differential between the Final Settlement Amount and the Sanctioned Settlement
and the Indemnitor's liability shall be limited to the amount specified in the
Sanctioned Settlement.
SECTION 10.5. Limitations on Indemnification.
------------------------------
(a) Limits on Seller Indemnification.
--------------------------------
(i) Seller shall not be required to provide indemnification under
Section 10.2 unless and until the aggregate Loss for which one or more Purchaser
Indemnitees seeks indemnification thereunder exceeds an aggregate of Seventy-
Five Thousand Dollars ($75,000) (the "Deductible Amount"), in which event Seller
shall be liable to indemnify the Purchaser Indemnitees for aggregate Loss which
exceeds the Deductible Amount.
(ii) The maximum aggregate Loss recoverable by Purchaser Indemnitees
(considered together as a group) against Seller under Section 10.2 shall not
exceed Twenty Five Percent (25%) of the Purchase Price (the "Indemnity Cap").
(b) Limits on Purchaser Indemnification.
-----------------------------------
(i) Purchaser shall not be required to provide indemnification under
Section 10.3 unless and until the aggregate Loss for which one or more Seller
Indemnitees seeks indemnification thereunder exceeds an aggregate of the
Deductible Amount, in which event Purchaser shall be liable to indemnify the
Seller Indemnitees for aggregate Loss, which exceeds the Deductible Amount.
26
(ii) The maximum aggregate Loss recoverable by Seller Indemnitees
(considered together as a group) against Purchaser under Section 10.3 shall not
exceed the Indemnity Cap.
(c) Time Limits. Notwithstanding anything herein to the contrary, no
-----------
claim for indemnification under Sections 10.2 or 10.3 may be brought after the
date that is eighteen (18)months after the Closing Date.
SECTION 10.6 Escrow Fund. At the Closing, the Escrow Amount shall be deposited
-----------
with the Escrow Agent, such deposit (together with interest and other income
thereon) to constitute an escrow fund (the "Escrow Fund") and to be governed by
the terms set forth herein and in the Escrow Agreement substantially in the form
attached hereto as Exhibit K. The Escrow Fund shall be available to satisfy, and
---------
to compensate Purchaser for amounts recoverable by Purchaser pursuant to, the
indemnification obligations of Seller set forth in Section 10.2 hereof, subject
to the limitations set forth in this Article X.
SECTION 10.7 Escrow Period. The Escrow Fund shall be maintained by the
-------------
Escrow Agent and be available to satisfy the indemnification obligations of
Seller hereunder until the date that is eighteen (18) months after the Closing
Date (the "Escrow Termination Date").
-----------------------
SECTION 10.8 Claims upon Escrow Fund.
-----------------------
(a) Purchaser shall make a claim upon the Escrow Fund by delivering to the
Escrow Agent on or before the Escrow Termination Date a certificate signed by
any officer of Purchaser (an "Officer's Certificate") specifying in reasonable
---------------------
detail the individual items of indemnifiable Loss included in the amount so
stated, the date each such item was paid, or properly accrued or arose, and the
basis for indemnification. At the time of delivery of any Officer's Certificate
to the Escrow Agent, a duplicate copy of such certificate shall be delivered to
Seller. No payments shall be made out of the Escrow Fund except as set forth in
the Escrow Agreement.
(b) Resolution of Conflicts; Arbitration. In case Seller shall object in
------------------------------------
writing to any claim or claims made in any Officer's Certificate, Seller and
Purchaser shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If Seller and Purchaser should so
agree, a memorandum setting forth such agreement shall be prepared and signed by
both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall
be entitled to rely on any such memorandum and distribute cash from the Escrow
Fund in accordance with the terms thereof. If no such agreement can be reached
after good faith negotiation, either Purchaser or Seller may demand arbitration
of the dispute unless the amount of the damage or loss is at issue in a pending
action or proceeding involving a Third Party Claim, in which event arbitration
shall not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either event the matter shall be settled by arbitration
conducted by one (1) arbitrator mutually agreeable to Purchaser and Seller. The
arbitrator shall set a limited time period and establish procedures designed to
reduce the cost and time for discovery of information relating to any dispute
while allowing the parties an opportunity, adequate as determined in the sole
judgment of the arbitrator, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrator shall rule upon
motions to compel, limit or allow discovery as they shall deem appropriate given
the nature and extent of the disputed claim. The arbitrator shall also have the
authority to impose sanctions, including attorneys' fees and other costs
incurred by the parties, to the same extent as a court of law or equity, should
the arbitrator determines that discovery was sought without substantial
justification or that discovery was refused or objected to by a party without
substantial justification. The decision of the arbitrator as to the validity
and amount of any claim in such Officer's Certificate shall be binding and
conclusive upon the parties to this Agreement, and notwithstanding anything in
this Article X, the Escrow Agent shall be entitled to act in
---------
27
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions regarding the dispute
which shall set forth the award, judgment, decree or order awarded by the
arbitrator. Judgment upon any award rendered by the arbitrator may be entered in
any court having competent jurisdiction. Any such arbitration shall be held in
New York City under the commercial rules of arbitration then in effect of the
International Chamber of Commerce. In any arbitration pursuant to this Section
-------
10.8 to resolve a claim for indemnification, each party shall pay its own
----
expenses. Seller shall pay a fraction of the fees of the (i) arbitrators and the
administrative costs of the arbitration equal to the quotient obtained by
dividing the amount awarded by the arbitrators with respect to such claim (or
agreed in settlement of such claim) by (ii) the portion of the indemnification
claim disputed by Seller; and the balance of such fees and administrative costs
shall be paid by Purchaser.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. Expenses. All costs and expenses, including, without
--------
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 11.2. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given or made by
delivery in person, by courier service, by telecopy (confirmed in writing), or
by registered or certified mail (postage prepaid, return receipt requested), and
shall be deemed to have been duly given or made upon actual delivery, or if
mailed by registered or certified mail, on the third business day following
deposit in the mails, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Seller:
Ravisent Technologies Inc.
000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Telecopy: 000-000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
28
(b) if to Purchaser:
STMicroelectronics, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: 000-000-0000
SECTION 11.3. Headings; Disclosure. The headings contained in this
--------------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. A disclosure made in any section
of Purchaser's Disclosure Letter or Seller's Disclosure Letter, respectively,
with respect to a representation made in this Agreement may apply to or qualify
any other representation made by such party in this Agreement.
SECTION 11.4. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 11.5. Survival. The representation and warranties made herein
--------
shall survive until the date that is twenty-four (24) months after the Closing
Date.
SECTION 11.6. Entire Agreement. This Agreement, the Ancillary Agreements
----------------
and the Confidentiality Agreement constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings with respect to the subject
matter hereof, both written and oral.
SECTION 11.7. Assignment. This Agreement shall not be assigned by
----------
Purchaser or Seller without the prior written consent of the non-assigning
party; provided, however, that Purchaser may assign all or a portion of its
rights and obligations hereunder to one or more affiliates that control or are
under common control with Purchaser. Any purported assignment not permitted by
this Section shall be void.
SECTION 11.8. No Third-Party Beneficiaries. This Agreement is for the
----------------------------
sole benefit of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other person
or entity, including but not limited to any Employee, Hired Employee, any legal
or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement. No statement, reference or disclosure set forth in
this Agreement, the Ancillary Agreements or the exhibits or schedules thereto
constitutes an admission (express or implied) of any liability or obligation of
the parties hereto to any third party, nor an admission (express or implied)
against any such party's interests.
SECTION 11.9. Amendment; Waiver. This Agreement may not be amended or
-----------------
modified except by an instrument in writing signed by Seller and Purchaser.
Waiver of any term or condition of this Agreement shall only be effective if in
writing and shall not be construed as a
29
waiver of any subsequent breach or waiver of the same term or condition, or a
waiver of any other term or condition of this Agreement.
SECTION 11.10. Governing Law; Jurisdiction and Venue. This Agreement
-------------------------------------
shall be governed by, and construed in accordance with, the internal laws of the
State of Delaware. Each party irrevocably consents to submit to the exclusive
jurisdiction of any federal or state court located in the State of Delaware for
any lawsuits, actions or proceedings with respect to this Agreement or the
transactions contemplated hereby.
SECTION 11.11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 11.12. No Joint Venture. Nothing contained in this Agreement will
----------------
be deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
STMicroelectronics, Inc.
By_______________________________
Name:
Title:
STMicroelectronics NV
By ______________________________
Name:
Title:
Ravisent Technologies Inc.
By_______________________________
Name:
Title:
Ravisent I.P, Inc.
By ________________________________
30
Name:
Title:
Ravisent Operating Company, Inc.
By________________________________
Name:
Title:
[SIGNATURE PAGE TO ASSET ACQUISITION AGREEMENT]
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Exhibits and Schedules
Exhibits
--------
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C-1 Form of Browser License Agreement
Exhibit C-2 Intentionally Omitted
Exhibit C-3 Form of Purchaser License Agreement
Exhibit C-4 Form of Seller License Agreement
Exhibit D-1 Opinion of Seller's Corporate Counsel
Exhibit D-2 Opinion of Seller's Delaware Counsel
Exhibit E-1 Form of Patent Assignment
Exhibit E-2 Form of Joint Patent Assignment
Exhibit F-1 Form of Copyright Assignment
Exhibit F-2 Form of Joint Copyright Assignment
Exhibit G Acknowledgment by Palace
Exhibit H Executive Officer Non-solicitation and No Hire Agreement
Exhibit I Form of Employment Agreement
Exhibit J Form of German Enabling Agreement
Exhibit K Form of Escrow Agreement
Schedules
---------
Schedule 1 Assumed Liabilities
Schedule 2 Intangible Assets
Schedule 3 Seller's Disclosure Letter
Schedule 4 Products
Schedule 5 Seller Contracts
Schedule 6 Tangible Assets
Schedule 7 [Intentionally Omitted]
Schedule 8 Required Consents
Schedule 9 Licenses
Schedule 10 Employees
Schedule 11 Customers
Schedule 12 Certain Excluded Assets
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Schedule 13 IRS Determination Letters
Schedule 14 Insurance
33
ALL EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED
