<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1997
REGISTRATION NO. 333-18537
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ATL PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3572 95-3824281
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
1515 SOUTH MANCHESTER AVENUE
ANAHEIM, CALIFORNIA 92802-2907
(714) 780-7200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
KEVIN C. DALY, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATL PRODUCTS, INC.
1515 SOUTH MANCHESTER AVENUE
ANAHEIM, CALIFORNIA 92802-2907
(714) 780-7200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
PATRICK ARRINGTON, ESQ. JEFFREY D. SAPER, ESQ.
ELLEN S. BANCROFT, ESQ. HOWARD S. ZEPRUN, ESQ.
SUSAN N. CAYLEY, ESQ. KAIVAN M. SHAKIB, ESQ.
NEEL GROVER, ESQ. MATTHEW MACKENZIE, ESQ.
BROBECK, PHLEGER & HARRISON LLP WILSON SONSINI GOODRICH & ROSATI
4675 MACARTHUR COURT, SUITE 1000 PROFESSIONAL CORPORATION
NEWPORT BEACH, CALIFORNIA 92660 650 PAGE MILL ROAD
(714) 752-7535 PALO ALTO, CALIFORNIA 94304-1050
(415) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All amounts are estimated
except the Securities and Exchange Commission registration fee. All of the
expenses below will be paid by the Registrant.
<TABLE>
<CAPTION>
ITEM AMOUNT
-------------------------------------------------------------------------- --------
<S> <C>
Registration fee.......................................................... $ 6,891
NASD filing fee........................................................... 2,774
Nasdaq National Market listing (entry) fee................................ 42,250
Blue Sky fees and expenses................................................ 7,500
Printing and engraving expenses........................................... 105,000
Legal fees and expenses................................................... 200,000
Accounting fees and expenses.............................................. 140,000
Transfer Agent and Registrar fees......................................... 7,500
Miscellaneous............................................................. 63,085
--------
Total........................................................... $575,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933. The Registrant's Bylaws (Exhibit 3.3 hereto) provides that the
Registrant shall indemnify its directors and officers to the fullest extent
permitted by Delaware law. The Bylaws require the Registrant, subject to certain
limitations, to advance litigation expenses in the case of stockholder
derivative actions or other actions, against an undertaking by the directors and
officers to repay such advances if it is ultimately determined that the
directors or officers are not entitled to indemnification. The Bylaws further
provide that rights conferred under such Bylaws shall not be deemed to be
exclusive of any other right such persons may have or acquire under any
agreement, vote of stockholders or disinterested directors, or otherwise. The
Registrant believes that indemnification under its Bylaws covers at least
negligence and gross negligence.
In addition, the Registrant's Certificate of Incorporation (the
"Certificate") (Exhibit 3.1 hereto) provides that the Registrant shall indemnify
its directors and officers if such persons acted (i) in good faith, (ii) in a
manner reasonably believed to be in or not opposed to the best interests of the
Registrant, and (iii) with respect to any criminal action or proceeding, with
reasonable cause to believe such conduct was lawful. The Certificate also
provides that, pursuant to Delaware law, its directors shall not be liable for
monetary damages for breach of the directors' fiduciary duty of care to the
Registrant and its stockholders. This provision in the Certificate does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws. The Certificate further
provides that the Registrant be authorized to indemnify its directors and
officers to the fullest extent permitted by law through the Bylaws, agreement,
vote of stockholders or disinterested directors, or otherwise.
II-1
<PAGE> 3
The Registrant intends to obtain directors' and officers' liability
insurance in connection with this Offering.
In addition, the Registrant has entered or, concurrently with this
Offering, will enter, into agreements to indemnify its directors and certain of
its officers in addition to the indemnification provided for in the Certificate
and Bylaws. These agreements will, among other things, indemnify the
Registrant's directors and certain of its officers for certain expenses
(including attorneys fees), judgments, fines and settlement amounts incurred by
such person in any action or proceeding, including any action by or in the right
of the Registrant, on account of services by that person as a director or
officer of the Registrant or as a director or officer of any subsidiary of the
Registrant, or as a director or officer of any other company or enterprise that
the person provides services to at the request of the Registrant.
The Underwriting Agreement (Exhibit 1.1 hereto) provides for
indemnification by the Underwriters of the Registrant, its officers and
directors and by the Registrant of the Underwriter, for certain liabilities
arising under the Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since December 1996, the Registrant has sold and issued the following
unregistered securities:
1. In December 1996, the Registrant granted nonstatutory stock options
to certain employees of the Registrant under its 1996 Stock Incentive Plan
covering an aggregate of 879,000 shares of the Registrant's Class B Common
Stock, at an exercise price of $5.00 per share. These options vest over a
three year period commencing one year following the date of grant. All of
such options were issued in consideration for employment services rendered
to the Registrant. None of the optionees paid any cash consideration for
these options. The sale and issue of these securities was deemed to be
exempt from registration under the Securities Act by virtue of Rule 701
promulgated thereunder in that they were offered and sold either pursuant
to a written compensatory benefit plan or pursuant to written contract
relating to compensation, as provided by Rule 701.
2. In December 1996, the Registrant effected a reincorporation in
Delaware which included a recapitalization in which two classes of common
stock were authorized, and each share of the Registrant's no par Common
Stock was exchanged for 8,005 shares of Common Stock, par value $.0001 per
share. Such issuance was exempt from registration under Section 2(3) of the
Securities Act on the basis that such transaction did not involve a "sale"
of securities.
There were no underwriters, brokers or finders employed in connection with
any of the transactions set forth above.
II-2
<PAGE> 4
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following Exhibits are attached hereto and incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant as filed with the Delaware Secretary of State
on December 19, 1996.**
3.2 Certificate of Merger of the Registrant as filed with the Delaware Secretary of State on
December 19, 1996.**
3.3 Bylaws of the Registrant.**
4.1 Specimen certificate representing shares of Common Stock of the Registrant.**
4.2 1996 Stock Incentive Plan.**
4.3 Form of Notice of Grant of Stock Option and related Stock Option Agreement under 1996 Stock
Incentive Plan.**
5.1 Form of Opinion of Brobeck, Phleger & Harrison LLP.**
10.1 Form of Indemnification Agreement.**
10.2 Real Property lease, dated October 9, 1996, by and between Thomas M. Zapara and Violet J.
Zapara, Trustees of the Zapara Family Trust U/D/T dated December 7, 1995 and Registrant, a
wholly owned subsidiary of Odetics, Inc.**
10.3 Form of Separation and Distribution Agreement between the Registrant and Odetics.
10.4 Form of Tax Allocation Agreement between the Registrant and Odetics.
10.5 Form of Services Agreement between the Registrant and Odetics.**
10.6 Form of Value Added Reseller Agreement.**
10.7 Form of International Value Added Reseller Agreement.**
10.8 Technical Support Agreement dated May 6, 1996, between Technology Service Solutions and
Odetics, Incorporated, as amended May 7, 1996.+**
10.9 Tape Library OEM Purchase Agreement dated August 28, 1996, between Quantum Corporation and
Registrant.+**
10.10 Veritas Software License Agreement, dated November 8, 1996, between Veritas Software
Corporation and Registrant.+**
10.11 Agreement dated December 18, 1995, between Hewlett-Packard GmbH Local Products Organization
and Registrant.+**
10.12 Basic Order Agreement dated April 15, 1993, between Digital Equipment Corporation and Odetics,
Inc. and Registrant, as amended January 11, 1994, March 25, 1994, October 19, 1994, October
27, 1994 and January 12, 1995.+
10.13 Basic Ordering Agreement dated September 14, 1995 between EMC(2) Corporation and
Registrant.+**
10.14 Form of Promissory Note between the Registrant and Odetics.**
10.15 Form of Odetics Associate Agreement.**
10.16 Commitment Letter Agreement dated December 19, 1996 between the Registrant and Imperial
Bank.**
10.17 Commitment Letter Agreement dated December 20, 1996 among the Registrant, Imperial Bank and
Comerica Bank -- California.**
10.18 Development and License Agreement dated January 14, 1997 between the Registrant and Sun
Microsystems, Inc.+
11.1 Statement Regarding Computation of Earnings Per Share.**
23.1 Consent of Independent Auditors.**
23.2 Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit 5.1).
24.1 Power of Attorney.**
27.1 Financial Data Schedules.**
</TABLE>
- ---------------
** previously filed
+ Confidential treatment is being sought with respect to certain portions of
this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
II-3
<PAGE> 5
(b) Financial Statement Schedules
<TABLE>
<CAPTION>
SCHEDULE
- ------------
<S> <C>
Schedule II Valuation and Qualifying Accounts
</TABLE>
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreements certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted as to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 14, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus as filed as
part of the registration statement in reliance upon Rule 430A and contained
in the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared
effective;
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide the underwriters at
the closing as specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 4 to the Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Anaheim, State of California, on the 24th day of
February, 1997.
ATL PRODUCTS, INC.
By: /s/ KEVIN C. DALY
--------------------------------------
Kevin C. Daly, Ph.D.
Chief Executive Officer, President
and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Amendment No. 4 to the Registration Statement on Form S-1 has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- --------------------------------- ------------------
<S> <C> <C>
/s/ KEVIN C. DALY Chief Executive Officer, February 24, 1997
- --------------------------------- President and Chairman of the
Kevin C. Daly, Ph.D. Board
(principle executive officer)
* Director February 24, 1997
- ---------------------------------
Joel Slutzky
* Director February 24, 1997
- ---------------------------------
Crandall Gudmundson
/s/ GREGORY A. MINER Chief Financial Officer February 24, 1997
- --------------------------------- (principal
Gregory A. Miner financial and accounting officer)
*By: /s/ KEVIN C. DALY
- ---------------------------------
Kevin C. Daly, Ph.D.
(Attorney-in-fact)
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ --------------------------------------------------------------------------- ------------
<S> <C> <C>
1.1 Form of Underwriting Agreement.............................................
3.1 Certificate of Incorporation of the Registrant as filed with the Delaware
Secretary of State on December 19, 1996**..................................
3.2 Certificate of Merger of the Registrant as filed with the Delaware
Secretary of State on December 19, 1996**..................................
3.3 Bylaws of the Registrant**.................................................
4.1 Specimen certificate representing shares of Common Stock of the
Registrant**...............................................................
4.2 1996 Stock Incentive Plan**................................................
4.3 Form of Notice of Grant of Stock Option and related Stock Option Agreement
under 1996 Stock Incentive Plan**..........................................
5.1 Form of Opinion of Brobeck, Phleger & Harrison LLP**.......................
10.1 Form of Indemnification Agreement**........................................
10.2 Real Property lease, dated October 9, 1996, by and between Thomas M. Zapara
and Violet J. Zapara, Trustees of the Zapara Family Trust U/D/T dated
December 7, 1995 and Registrant, a wholly owned subsidiary of Odetics,
Inc.**.....................................................................
10.3 Form of Separation and Distribution Agreement between the Registrant and
Odetics....................................................................
10.4 Form of Tax Allocation Agreement between the Registrant and Odetics........
10.5 Form of Services Agreement between the Registrant and Odetics**............
10.6 Form of Value Added Reseller Agreement**...................................
10.7 Form of International Value Added Reseller Agreement**.....................
10.8 Technical Support Agreement dated May 6, 1996, between Technology Service
Solutions and Odetics, Incorporated, as amended May 7, 1996+**.............
10.9 Tape Library OEM Purchase Agreement dated August 28, 1996, between Quantum
Corporation and Registrant+**..............................................
10.10 Veritas Software License Agreement, dated November 8, 1996, between Veritas
Software Corporation and Registrant+**.....................................
10.11 Agreement dated December 18, 1995, between Hewlett-Packard GmbH Local
Products Organization and Registrant+**....................................
10.12 Basic Order Agreement dated April 15, 1993, between Digital Equipment
Corporation and Odetics, Inc. and Registrant, as amended January 11, 1994,
March 25, 1994, October 19, 1994, October 27, 1994 and January 12, 1995+...
10.13 Basic Ordering Agreement dated September 14, 1995 between EMC(2)
Corporation and Registrant+**..............................................
10.14 Form of Promissory Note between the Registrant and Odetics**...............
10.15 Form of Odetics Associate Agreement**......................................
10.16 Commitment Letter Agreement dated December 19, 1996 between the Registrant
and Imperial Bank**........................................................
10.17 Commitment Letter Agreement dated December 20, 1996 among the Registrant,
Imperial Bank and Comerica Bank -- California**............................
10.18 Development and License Agreement dated January 14, 1997 between the
Registrant and Sun Microsystems, Inc.+.....................................
11.1 Statement Regarding Computation of Earnings Per Share**....................
23.1 Consent of Independent Auditors**..........................................
23.2 Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit 5.1)......
24.1 Power of Attorney**........................................................
27.1 Financial Data Schedules**.................................................
</TABLE>
- ---------------
** previously filed
+ Confidential treatment is being sought with respect to certain portions of
this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 1.1
1,650,000 Shares
ATL Products, Inc.
Class A Common Stock
UNDERWRITING AGREEMENT
----------------------
March , 1997
MONTGOMERY SECURITIES
CRUTTENDEN ROTH INCORPORATED
As Representative of the several Underwriters
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
SECTION 1
INTRODUCTORY
------------
ATL Products, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell 1,650,000 shares of its authorized but unissued Class A
Common Stock, par value $.0001 per share (the "Class A Common Stock"), to the
several underwriters named in Schedule A annexed hereto (the "Underwriters"),
for whom you are acting as Representatives. Said aggregate of 1,650,000
shares are herein called the "Firm Common Shares." In addition, the Company
proposes to grant to the Underwriters an option to purchase up to 245,000
additional shares of Class A Common Stock (the "Optional Common Shares"), as
provided in Section 5 hereof. The Firm Common Shares and, to the extent such
option is exercised, the Optional Common Shares are hereinafter collectively
referred to as the "Common Shares." The shares of Class A Common Stock and
Class B Common Stock, par value $.0001 per share (the "Class B Common Stock"),
of the Company are hereinafter referred to as the "Common Stock."
You have advised the Company that the Underwriters propose to make a
public offering of their respective portions of the Common Shares on the
effective date of the registration statement hereinafter referred to, or as
soon thereafter as in your judgment is advisable.
The Company and Odetics, Inc., the Company's parent (the "Parent"),
hereby confirm their respective agreements with respect to the purchase of the
Common Shares by the Underwriters as follows:
<PAGE> 2
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
AND THE PARENT
--------------
The Company and the Parent, jointly and severally, represent and
warrant to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-18537) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, and has been filed with
the Commission. The Company has prepared and has filed or proposes to file
prior to the effective date of such registration statement an amendment or
amendments to such registration statement. There have been delivered to you two
signed copies of such registration statement. Conformed copies of such
registration statement and amendments (but without exhibits) and of the
related preliminary prospectus have been delivered to you in such reasonable
quantities as you have requested for each of the Underwriters. The Company
will next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment thereto,
including the form of final prospectus, or (ii) a final prospectus in accordance
with Rules 430A and 424(b) of the Rules and Regulations. As filed, such
amendment and form of final prospectus, or such final prospectus, shall include
all Rule 430A Information (as hereinafter defined) and, except to the extent
that you shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the extent
not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
preliminary prospectus) as the Company shall have previously advised you in
writing would be included or made therein as the Representative shall have
approved.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include (i) all Rule 430A Information deemed to be included in
such registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations and (ii) a
registration statement, if any, filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the Common Shares. The term "Preliminary Prospectus"
shall mean any preliminary prospectus referred to in the preceding paragraph
and any preliminary prospectus included in the Registration Statement at the
time it becomes effective that omits Rule 430A Information. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to
the Common Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no filing pursuant
to Rule 424(b) of the Rules and Regulations is required, shall mean the form of
final prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A Information"
means information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of the
Act and the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration Statement
and the Prospectus, and any amendments or supplements thereto, will contain all
material statements and information required to be included therein by the Act
and the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, no representation or
warranty contained in this subsection 2(b) shall be applicable to information
contained in or omitted from any Preliminary Prospectus, the Registration
Statement, the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter specifically for use in the preparation thereof.
-2-
<PAGE> 3
(c) The Company does not own or control, directly or indirectly,
any corporation, association or other entity, other than the Company's wholly
owned Subsidiary, ATL Products Limited (the "Subsidiary"). The Company has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware. The Subsidiary has been duly formed
and is validly existing as a private limited liability company under the laws
of the United Kingdom. The Company and the Subsidiary have all requisite
corporate power and authority to own and lease its respective properties and
conduct its respective business as described in the Prospectus; the Company and
the Subsidiary are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders which are
material to the conduct of its business as currently conducted, all of which are
valid and in full force and effect except where the failure to hold such
authorizations, licenses, permits, consents, certificates and orders would not
have a material and adverse effect on the Company's business, results and
operations and financial condition; the Company and each Subsidiary is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the ownership or leasing of properties or the conduct of
its business requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect upon the Company
and the Subsidiary taken as a whole; and no proceeding has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification. The Company owns
all outstanding shares of capital stock of each Subsidiary, free and clear of
any claim, lien or encumbrance of any kind except for liens described in the
Prospectus.
(d) The Company has an authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been, and the issued and outstanding
shares of Common Stock immediately prior to Closing will be duly authorized and
validly issued, fully paid and nonassessable, issued in compliance with all
federal and state securities laws, not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities,
and in conformance with the description thereof contained in the Prospectus.
Prior to the Offering, all outstanding shares of Common Stock of the Company
are owned by the Parent. Except as disclosed in the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, the Company has, and immediately prior to the Closing will
have, no outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in the Prospectus accurately describes such plans or
arrangements in all material respects.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in or
incorporated by reference in the Prospectus. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and sale
of the Common Shares by the Company pursuant to this Agreement. No stockholder
of the Company has any right which has not been waived to require the Company
to register the sale of any shares owned by such stockholder under the Act in
the public offering contemplated by this Agreement. No further approval or
authority of the stockholder or the Board of Directors of the Company will be
required for the issuance and sale of the Common Shares to be sold by the
Company as contemplated herein.
(f) The Class A Common Stock has been approved for quotation on
the Nasdaq National Market, subject to official notice of issuance.
(g) The Company and the Parent each has full legal right, power
and authority to enter into this Agreement and to perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and the Parent and constitutes a valid and binding
obligation of each of the Company and the Parent, enforceable in accordance with
its terms except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally. The execution and delivery of this
Agreement by the Company and the Parent and the consummation of the transactions
herein contemplated will not violate any provisions of the certificate of
incorporation, bylaws or other organizational documents, of the Company or the
Parent, and will not conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice or the passage of time or both, a
default under (i) any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the Company or the
Parent is a party or by which the Company or the Parent or any of their
respective properties may be bound or affected, or (ii) any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or the Parent or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except as has been obtained or except for
compliance with the Act, the
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<PAGE> 4
Blue Sky laws applicable to the public offering of the Common Shares by the
several Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(h) Ernst & Young LLP, who have expressed their opinion with
respect to the financial statements and schedules filed with the Commission as
a part of the Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants to the Company as required
by the Act and the Rules and Regulations.
(i) The financial statements and schedules of the Company, and the
related notes thereto, included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the respective dates
of such financial statements and schedules, and the results of operations and
changes in financial position of the Company for the respective periods
presented, provided, however, that the unaudited quarterly and unaudited interim
financials are condensed, but include all adjustments (consisting of only normal
recurring adjustments) that the Company considers necessary for a fair
presentation of the Company's financial position, operating results and cash
flows for the interim periods. Such statements, schedules and related notes
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis as certified by the independent accountants named
in subsection 2(h), provided, however, that the unaudited quarterly and
unaudited interim financials are condensed, but include all adjustments
(consisting of only normal recurring adjustments) that the Company considers
necessary for a fair presentation of the Company's financial position,
operating results and cash flows for the interim periods. No other financial
statements or schedules are required to be included in the Registration
Statement or incorporated by reference therein. The selected financial data
set forth in the Prospectus under the captions "Capitalization" and "Selected
Consolidated Financial Data" fairly present the information set forth therein
on the basis stated in the Registration Statement. The Company has no
long-term or short-term indebtedness other than the promissory note in the
amount of $[.] million payable to the Parent, trade payables in the ordinary
course of business and other indebtedness set forth in the financial
statements of the Company included in the Prospectus.
(j) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The representations and warranties given by the Company and/or
its officers to independent public accountants for the purpose of supporting
the letters referred to in Section 8(c)(vi) are true and correct.
(k) Neither the Company nor the Subsidiary is (i) in violation or
default of any provision of its certificate of incorporation or bylaws, or
other organizational documents, or (ii) in breach of or default with respect to
any provision of any agreement, judgment, decree, order, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to
which it is a party or by which it or any of its properties are bound, except
where a violation, breach or default with respect to clauses (i) and (ii)
would not have a material adverse effect on the condition (financial or
otherwise), business or results of operations of the Company and the
Subsidiary taken as a whole; and there does not exist any state of facts which
constitutes an event of default on the part of the Company or the Subsidiary
as defined in such documents or which, with notice or lapse of time or both,
would constitute such an event of default.
(l) There are no contracts or other documents which are required
to be described in the Registration Statement or to be filed as exhibits to the
Registration Statement or by the Rules and Regulations which have not been
accurately described or filed as required. Neither the Company nor its
Subsidiary nor, to the best knowledge of the Company or the Parent (as the
case may be), any other party is in breach of or default under any of such
contracts filed as exhibits to the Prospectus, except where a breach or
default would not have a material adverse effect on the condition (financial or
otherwise), business or results of operations of the Company and the Subsidiary
taken as a whole.
(m) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings (including those related to
environmental or discrimination matters) pending, or to the best knowledge of
the Company or the Parent (as the case may be), threatened, as to which the
Company or the Subsidiary taken as a whole is or may be a party or of which
property owned or leased by the Company or the Subsidiary is or may be the
subject, which actions, suits or proceedings could reasonably be expected to,
individually or in the aggregate, prevent or adversely affect the transactions
contemplated by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business or results of
operations of the Company and the Subsidiary taken as a whole; and no labor
disturbance by the employees of the Company or the Subsidiary exists or is
imminent which could reasonably be expected to affect materially and adversely
such condition, properties, business or results of operations. Neither the
Company nor the Subsidiary is a party or subject to the provisions of
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<PAGE> 5
any material injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body.
(n) The Company and the Subsidiary have good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject to
no lien, mortgage, pledge, charge or encumbrance of any kind except (i) those,
if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property by the
Company or its Subsidiary, as the case may be. The Company and the Subsidiary
hold their respective leased properties under valid and binding leases, except
where such leases are not material to the business of the Company and the
Subsidiaries, taken as a whole. Except as disclosed in the Prospectus, the
Company and the Subsidiary own or lease all such properties as are necessary
to their respective operations as now conducted or as proposed to be conducted.
(o) The Company and the Subsidiary are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA") and with all requirements
prescribed by any and all statutes, orders, government rules and regulations
including the Internal Revenue Code of 1986, as amended, currently in effect
with respect to employee benefit plans; no "reportable event" (as defined in
ERISA) nor any event described in Sections 4062, 4063 or 4041(c) of ERISA has
occurred for which the Company would have any liability; neither the Company
nor any Subsidiary has incurred and does not expect to incur material liability
under (i) Title IV of ERISA other than premium payments to the Pension Benefit
Guaranty Corporation arising in the ordinary course or (ii) Section 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan" for
which the Company or any Subsidiary would have any material liability that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service and nothing
has occurred, whether by action or by failure to act, which would cause the
loss of such determination letter. Neither the Company nor any Subsidiary has
incurred any material liability or penalty under Sections 4975 through 4980 of
the Code or under Title I of ERISA. All contributions, premiums or other
payments (including all employer contributions and employee salary reduction
contributions) which are due have been paid to each "pension plan" and all
contributions, premiums or other payments for any period ending on or before
the Closing Date which are not yet due have been paid to each such "pension
plan" or accrued in accordance with the past custom and practice of the
Company. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of any plan activities) has been brought, or to
the knowledge of the Company or the Parent is threatened, against or with
respect to any employee benefit plan of the Company or any Subsidiary. All
"pension plans" and other employee-related plans of the Company and each
Subsidiary are fully funded.
(p) Since the respective dates as of which information is given in
the Registration Statement and Prospectus: (i) neither the Company nor the
Subsidiary has incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any material verbal or written agreement
or other transaction in any such case which is not in the ordinary course of
business; (ii) neither the Company nor the Subsidiary has sustained any
material loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) except as specifically contemplated by the Prospectus, the Company has
not paid or declared any dividends or other distributions with respect to its
capital stock; (iv) neither the Company nor the Subsidiary is in default in the
payment of principal or interest on any outstanding debt obligations; (v) there
has not been any change in the capital stock or indebtedness material to the
Company and the Subsidiary taken as a whole (other than in the ordinary
course of business); and (vi) there has not been any material adverse change in
the condition (financial or otherwise), business, properties or results of
operations of the Company or the Subsidiary.
(q) The Company has sufficient trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted; and, except as
disclosed in the Prospectus, neither the Company nor the Parent has any
knowledge of any material infringement by the Company or the Subsidiary of any
trademark, trade name rights, patent rights, mask works, copyrights, licenses,
trade secret or other similar rights of others, and there is no claim being
made against the Company or the Subsidiary regarding trademark, trade name,
patent, mask work, copyright, license, trade secret or other infringement which
could have a material adverse effect on the condition (financial or otherwise),
business or results of operations of the Company and the Subsidiary, taken as
a whole.
-5-
<PAGE> 6
(r) The Company and the Subsidiary are each conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business or results of operations of the
Company and the Subsidiary, taken as a whole.
(s) All necessary federal, state and foreign income and franchise
tax returns have been filed by the Company and the Subsidiary, except where
the failure to file would not have a material adverse effect on the condition
(financial or otherwise), business or results of operations of the Company and
the Subsidiary, taken as a whole, and to the Company's knowledge, all such tax
returns are complete and correct in all material respects, and all taxes shown
as due thereon have been paid. Neither the Company nor the Parent has any
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company or the Subsidiary which could reasonably be
expected to materially and adversely affect the business, operations or
properties of the Company and the Subsidiary taken as a whole.
(t) The Company is not, and upon the closing of the offering
contemplated hereby will not be, an "investment company" or a company
"controlled by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(u) Neither the Company nor the Parent has distributed and will
not distribute prior to the First Closing Date any offering material in
connection with the offering and sale of the Common Shares other than the
Preliminary Prospectus, the Prospectus, the Registration Statement or any other
materials permitted by the Act.
(v) The Company and the Subsidiary maintain liability, property
and casualty insurance in an amount and or such terms as are reasonable and
customary for businesses similar to the Company, including against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
(w) Neither the Company, the Parent nor, to the knowledge of the
Company and the Parent, any of their respective employees or agents has at any
time during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(x) Neither the Company nor the Parent has taken, and neither will
take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Class A Common Stock to facilitate the sale or resale of the
Common Shares.
(y) The Company and the Parent have caused each of its respective
executive officers and directors as set forth in the Prospectus to furnish to
the Representatives an agreement in the form attached hereto, pursuant to which
each such party has agreed that during the period of 180 days after the first
date that any of the Common Shares are released by you for sale to the public,
without the prior written consent of Montgomery Securities, which consent may
be withheld at the sole discretion of Montgomery Securities, such party will
not directly or indirectly offer, sell, contract to sell or otherwise dispose
of any shares of the Company's Common Stock or securities convertible into or
exchangeable for, or any rights to purchase or acquire, the Company's Common
Stock (including without limitation, Common Stock of the Company which may be
deemed to be beneficially owned in accordance with the rules and regulations of
the Commission); provided, however, that bona fide gift transactions may be
permitted if the donee agrees in writing, prior to the consummation of the
gift, to be bound by the provisions applicable to the share in the hands of the
donor.
(z) The Company's acquisition (the "Acquisition") of the assets of
ATL Customer Service ("ASC"), a subdivision of the Parent, as contemplated by
the Bill of Sale dated December 31, 1996 was completed on December 31, 1996, and
pursuant to the Acquisition, the Company has acquired all assets necessary to
operate its service business as currently conducted. All assets acquired
pursuant to the Acquisition have been acquired free and clear of any lien,
mortgage, pledge, security interest or other encumbrance, except for liens
granted pursuant to the Loan Agreement as described in the Registration
Statement. The Acquisition did not violate any provision of the certificate of
incorporation, bylaws or other organizational documents of the Company or the
Parent, and will not conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise,
indenture, permit or other instrument to which the Company or the Parent is a
party or by which the Company or the Parent or any of their respective
properties may be bound or affected, any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory
body, administrative agency or other governmental body applicable to the
Company or the Parent or any of their respective properties.
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<PAGE> 7
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
OF THE PARENT
-------------
The Parent represents and warrants to, and agrees with, the several
Underwriters that the Parent will not offer to sell, sell or contract to sell
or otherwise dispose of any shares of Common Stock or securities convertible
into or exchangeable for any shares of Common Stock, for a period of 180 days
after the first date that any of the Common Shares are released by you for
sale to the public, without the prior written consent of Montgomery Securities,
which consent may be withheld at the sole discretion of Montgomery Securities.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
--------------------------------------------------
The Representatives, on behalf of several Underwriters, represent and
warrant to the Company and to the Parent that the information set forth (i) on
the cover page of the Prospectus with respect to price, underwriting discounts
and commissions and terms of offering and (ii) under "Underwriting" in the
Prospectus was furnished to the Company by and on behalf of the Underwriters
for use in connection with the preparation of the Registration Statement and
the Prospectus and is correct in all material respects. The Representatives
represent and warrant that, except as expressly provided herein, it has been
authorized by each of the other Underwriters as the Representatives to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 5
PURCHASE, SALE AND DELIVERY OF COMMON SHARES
--------------------------------------------
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Underwriters 1,650,000 Firm Common
Shares and the Underwriters agree, severally and not jointly, to purchase from
the Company the number of Firm Common Shares described below. The purchase
price per share to be paid by the several Underwriters to the Company shall be
$[.] per share.
The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,650,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters and payment therefor shall be made at the offices of
Montgomery Securities, 600 Montgomery Street, San Francisco, California (or
such other place as may be agreed upon by the Company and the Underwriters) at
such time and date, not later than the third (or, if the Firm Common Shares are
priced as contemplated by Rule 15c6-1(c) of the Exchange Act, after 4:30 p.m.
Washington, D.C. time, the fourth) full business day following the first date
that any of the Common Shares are released by you for sale to the public, as
you shall designate by at least 48 hours prior notice to the Company (or at
such other time and date, not later than one week after such third or fourth,
as the case may be, full business day as may be agreed upon by the Company and
the Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public,
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<PAGE> 8
the First Closing Date shall occur upon the later of the third or fourth, as
the case may be, full business day following the first date that any of the
Common Shares are released by you for sale to the public or the date that is 48
hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Company to you, for the respective accounts of the
Underwriters with respect to the Firm Common Shares to be sold by the Company
against payment by you, for the accounts of the several Underwriters, of the
purchase price therefor by wire transfer of federal funds to an account
designated in writing by the Company. The certificates for the Firm Common
Shares shall be registered in such names and denominations as you shall have
requested at least two full business days prior to the First Closing Date, and
shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase up to 245,000 Optional Common Shares; in each case at the purchase
price per share to be paid for the Firm Common Shares, for use solely to
cover any over-allotments made by you for the account of the Underwriters in
the sale and distribution of the Firm Common Shares. The options granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the first date that any of the Common Shares are released by you for sale
to the public, upon notice by you to the Company setting forth the aggregate
number of Optional Common Shares as to which the Underwriters are exercising
the option, the names and denominations in which the certificates for such
shares are to be registered and the time and place at which such certificates
will be delivered. Such time of delivery (which may not be earlier than the
First Closing Date), being herein referred to as the "Second Closing Date,"
shall be determined by you, but if at any time other than the First Closing
Date shall not be earlier than three full business days after delivery of such
notice of exercise. The number of Optional Common Shares to be purchased by
each Underwriter shall be determined by multiplying the aggregate number of
Optional Common Shares to be sold by the Company pursuant to such notice of
exercise by a fraction, the numerator of which is the number of Firm Common
Shares to be purchased by such Underwriter as set forth opposite its name in
Schedule A and the denominator of which is 1,650,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New York, New York, as may be designated by you.
The manner of payment for and delivery of the Optional Common Shares shall be
the same as for the Firm Common Shares purchased from the Company as specified
in the two preceding paragraphs. At any time before lapse of the options, you
may cancel both such options by giving written notice of such cancellation to
the Company. If the options are canceled or expire unexercised in whole or in
part, the Company will deregister under the Act the number of Optional Common
Shares as to which the options has not been exercised.
You have advised the Company that each Underwriter has authorized you
to accept delivery of its Common Shares, to make payment and to receipt
therefor. You may (but shall not be obligated to) make payment for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by you by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Common Shares as
soon after the effective date of the Registration Statement as in the judgment
of the Underwriters is advisable and at the public offering price set forth on
the cover page of and on the terms set forth in the Prospectus.
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<PAGE> 9
SECTION 6
COVENANTS OF THE COMPANY AND THE PARENT
---------------------------------------
The Company and the Parent each covenants and agrees that:
(a) The Company and the Parent will each use its best efforts to
cause the Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the parties
hereto, to become effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A of the Rules and Regulations, or the
filing of the Prospectus is otherwise required under Rule 424(b) of the Rules
and Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly advise
you in writing (i) of the receipt of any comments of the Commission, (ii) of
any request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information, (iii)
when the Registration Statement shall have become effective and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the institution of any proceedings for that
purpose. If the Commission shall enter any such stop order at any time, the
Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment. The Company will not file any amendment or
supplement to the Registration Statement (either before or after it becomes
effective), any Preliminary Prospectus or the Prospectus of which you have not
been furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or which is not in compliance with the Act and the Rules
and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, a registration statement pursuant to Rule 462(b) of
the Rules and Regulations related to the Common Shares and any amendments or
supplements to the Registration Statement or the Prospectus which in your
judgment may be necessary or advisable to enable the several Underwriters to
continue the distribution of the Common Shares and will use its best efforts to
cause the same to become effective as promptly as possible. The Company will
fully and completely comply with the provisions of Rule 430A of the Rules and
Regulations with respect to information omitted from the Registration Statement
in reliance upon such Rule.
(c) The Company will immediately notify you in writing if, at any
time prior to the earliest of (i) the Second Closing Date on which all
remaining Optional Common Shares are purchased, (ii) the cancellation of the
options to purchase the Optional Common Shares as provided herein and (iii) the
expiration of the options to purchase the Optional Common Shares as provided
herein, any representation or warranty of the Company set forth herein shall
not be true and accurate in all material respects or, without limiting the
foregoing, if there shall have been any material adverse change, or a
development involving a material adverse change, in the condition (financial or
otherwise), properties, business or results of operations of the Company.
(d) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the Common
Shares is required to be delivered under the Act any event occurs, as a result
of which the Prospectus, including any amendments or supplements, would include
an untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or if it is necessary at any time to amend the Prospectus,
including any amendments or supplements, to comply with the Act or the Rules
and Regulations, the Company will promptly advise you thereof and will promptly
prepare and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment or
supplement which will effect such compliance and will use its best efforts to
cause the same to become effective as soon as possible; and, in case any
Underwriter is required to deliver a prospectus after such nine-month period,
the Company upon request, but at the expense of such Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
(e) As soon as practicable, but not later than 45 days after the
end of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
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<PAGE> 10
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company, at
its expense, but only for the nine-month period referred to in Section 10(a)
(3) of the Act, will furnish to you or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the purposes
contemplated by the Act.
(g) The Company shall cooperate with you and your counsel in order
to qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the Blue Sky laws of such jurisdictions as you
designate, will comply with such laws and will continue such qualifications,
registrations and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not presently qualified or where
it would be subject to taxation as a foreign corporation. The Company will
advise you promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company, with your cooperation,
will use its best efforts to obtain the withdrawal thereof.
(h) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon the request of the Representatives, to
each of the other Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and statements
of income, stockholder's equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (ii) as soon
as practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other
report filed by the Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any report or communication
of the Company mailed generally to holders of its Common Stock.
(i) During the period of 180 days after the first date that any of
the Common Shares are released by you for sale to the public, the Company will
not, without the prior written consent of Montgomery Securities (which consent
may be withheld at the sole discretion of Montgomery Securities), issue, offer,
sell, grant options to purchase or otherwise dispose of any of the Company's
equity securities or any other securities convertible into or exchangeable with
its Common Stock or other equity security, other than pursuant to the Company's
stock plans disclosed in the Prospectus or in connection with the Company's
acquisition of complementary technologies or businesses.
(j) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements under
the caption "Use of Proceeds" in the Prospectus.
(k) The Company will use its best efforts to qualify or register
its Class A Common Stock for sale in nonissuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary trading
in the Company's Class A Common Stock in California), will comply with such
Blue Sky laws and will continue such qualifications, registrations and
exemptions in effect for a period of five years after the date hereof.
(l) The Company will maintain a transfer agent and registrar for
its Class A Common Stock.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 7
PAYMENT OF EXPENSES
-------------------
Whether or not the transactions contemplated hereunder are consummated
or this Agreement becomes effective or is terminated, the Company and, unless
otherwise paid by the Company, the Parent agree to pay in such proportions as
they may
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<PAGE> 11
agree upon among themselves all costs, fees and expenses incurred in connection
with the performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Class A Common Stock, (iii)
all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Common Shares to the Underwriters, (iv) all fees and
expenses of the Company's counsel and the Company's independent accountants,
(v) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement, each
Preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations related to the Common Shares, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the Blue Sky memorandum, (vi) all
filing fees, attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under state Blue Sky and foreign securities
laws, (vii) all filing fees of the National Association of Securities Dealers,
Inc. and (viii) all other fees, costs and expenses referred to in Item 13 of
the Registration Statement. The Company shall be the primary obligor with
respect to all costs, fees and expenses to be paid by the Company and by the
Parent. Except as provided in this Section 7, Section 9 and Section 11
hereof, the Underwriters shall pay all of their own expenses, including the
fees and disbursements of their counsel (excluding those relating to
qualification, registration or exemption under state Blue Sky and foreign
securities laws and the Blue Sky memorandum referred to above). This Section 7
shall not affect any agreements relating to the payment of expenses between the
Company and the Parent.
The Company and the Parent will pay (directly or by reimbursement) all
fees and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to any fees and expenses of counsel for the Parent.
SECTION 8
CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
-------------------------------------------------
The obligations of the several Underwriters to purchase and pay for
the Firm Common Shares on the First Closing Date and the Optional Common Shares
on the Second Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Parent herein
set forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company's
officers and the Parent made pursuant to the provisions hereof, to the
performance by the Company and the Parent of their respective obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m.(or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares, not
later than 10:00 p.m.), Washington, D.C. Time, on the date of this Agreement,
or at such later time as shall have been consented to by you; if the filing of
the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b)
of the Rules and Regulations, the Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to such Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or,
to the knowledge of the Company, the Parent or you, shall be contemplated by
the Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus, (i)
except as disclosed in the Prospectus, there shall not have been any change in
the capital stock or any material change in the indebtedness (other than in the
ordinary course of business) of the Company, (ii) except as set forth or
contemplated by the Registration Statement or the Prospectus, no material
verbal or written agreement or other transaction shall have been entered into
by the Company, which is not in the ordinary course of business, (iii) no loss
or damage (whether or not insured) to the property of the Company shall have
been sustained which materially and adversely affects the condition
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<PAGE> 12
(financial or otherwise), business or results of operations of the Company,
(iv) no legal or governmental action, suit or proceeding affecting the Company
which is material to the Company or which affects or could reasonably be
expected to affect the transactions contemplated by this Agreement shall have
been instituted or threatened and (v) there shall not have been any material
change in the condition (financial or otherwise), business, management or
results of operations of the Company which makes it impractical or inadvisable
in the reasonable judgment of the Representatives to proceed with the public
offering or purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date,
in form and substance satisfactory to you, except as otherwise expressly
provided below:
(i) An opinion of Brobeck, Phleger & Harrison LLP
counsel for the Company and the Parent, addressed to the Underwriters
and dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The Company has been duly incorporated
and is validly existing as a corporation in good standing under
the laws of the State of Delaware. The Subsidiary is duly formed
and validly existing under the laws of the United Kingdom. The
Company is duly qualified to do business as a foreign corporation
in the State of California. To our knowledge, there are no other
jurisdictions where the ownership or leasing of properties or the
conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the business, results and operations or
the financial condition of the Company and the Subsidiary, taken
as a whole. The Company has corporate power and authority to own
its properties and conduct its business as described in the
Registration Statement;
(2) The authorized issued and outstanding
capital stock of the Company conforms in all material respects to
the description of the capital stock set forth under the caption
"Capitalization" in the Prospectus; immediately upon consummation
of the Offering, to our knowledge, the Parent will own all the
issued and outstanding shares of Common Stock which are not sold
in the Offering; all necessary and proper corporate proceedings
have been taken in order to validly authorize such Common Stock;
all outstanding shares of Common Stock (including the Firm Common
Shares and any Optional Common Shares) have been duly and validly
issued, are fully paid and nonassessable, have been issued in
compliance with the registration and qualification requirements of
federal and state securities laws (other than as may be required
by state securities laws for the Common Shares, as to which such
counsel need express no opinion), were not issued in violation of
or subject to any preemptive rights or, to such counsel's
knowledge, other rights to subscribe for or purchase any of the
Common Shares to be sold by the Company hereunder;
(3) The certificates evidencing the Common
Shares to be delivered hereunder are in due and proper form under
Delaware law, and when duly countersigned by the Company's
transfer agent and registrar, and delivered to you or upon your
order against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Common
Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, and will conform in all
respects to the description thereof set forth under the caption
"Description of Securities" in the Prospectus;
(4) Except as disclosed in or specifically
contemplated by the Prospectus, to such counsel's knowledge, there
are no outstanding options, warrants or other rights calling for
the issuance of, and no commitments, plans or arrangements to
issue, any shares of capital stock (including, without limitation,
the Common Shares) of the Company or any security convertible into
or exchangeable for capital stock of the Company;
(5) (a) The Registration Statement has become
effective under the Act, and to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement
or preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or threatened by the Commission; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) and
462(b) of the Rules and Regulations has been made in the manner
and within the time period required by such Rule 424(b) or 462(b);
(b) The Registration Statement and the
Prospectus (except for the financial statements and schedules and
other financial and statistical data included therein as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the Rules
and Regulations;
(c) To such counsel's knowledge, there
are no franchises, leases, contracts, agreements or documents
which are of a character required to be disclosed in the
Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement, which are not disclosed or filed as
required; and
(d) To such counsel's knowledge, there
are no legal or governmental actions, suits or proceedings
pending or threatened against the Company which are required to
be described in the Prospectus which are not described as
required.
(6) The Company has all requisite corporate
power and authority to enter into this Agreement and to sell and
deliver the Common Shares to be sold by it to the several
Underwriters; this Agreement has been duly and validly authorized
by all necessary corporate action by the Company, has been duly
and validly executed and delivered by and on behalf of the
Company, and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforceability
may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and except as to those provisions
relating to indemnity or contribution for liabilities arising
under the Act as to which no opinion need be expressed; and no
approval, authorization, order, consent, filing, license or permit
of or with any court, regulatory, administrative or other
governmental body is required for the execution and delivery of
this Agreement by the Company or the performance by the Company of
its obligations contemplated by this Agreement to be performed at
the time of closing, except such as have been obtained and are in
full force and effect under the Act and such as may be required
under applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the
clearance of such offering with the NASD;
(7) The execution and delivery of this
Agreement by the Company and the Parent and the performance by the
Company of its obligations thereunder contemplated by the
Agreement to be performed at the time of the closing will not
conflict with, result in the breach of, or constitute, either by
itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument filed as an exhibit
to the Registration Statement or violate any of the provisions of
the certificate of incorporation or bylaws of the Company or, to
such counsel's knowledge, violate any (i) judgment, decree or
order, which has been entered against the Company or (ii) any
statute, rule or regulation of any court or governmental body
having jurisdiction over the Company or any of its properties;
(8) To such counsel's knowledge, the Company
is not in violation of its certificate of incorporation or any
material provision if its bylaws;
(9) To such counsel's knowledge, no holders
of securities of the Company have rights which have not been
waived to the registration of shares of Common Stock or other
securities, because of the filing of the Registration Statement by
the Company or the offering contemplated by the Agreement;
(10) The statements in the Registration
Statement and Prospectus under the captions "Management,"
"Relationship between the Company and Odetics" and "Description of
Securities" and in the Registration Statement in Items 14 and 15,
insofar as they are descriptions of contracts, agreements or other
legal documents are accurate descriptions of such documents in all
material respects;
(11) The statements in the Registration
Statement and Prospectus under the captions "Shares Eligible for
Future Sale" and "Description of Securities" insofar as they
constitute matters of law, are an accurate summary in all material
respects;
(12) The Parent has all requisite corporate
power and authority to enter into this Agreement. This Agreement
has been duly authorized, executed and delivered by or on behalf
of the Parent; the execution and performance of this Agreement by
the Parent and the consummation of the transactions to be
performed by Parent at the time of closing will not violate any
provision of the Certificate of Incorporation or Bylaws of the
Parent and no approval, authorization, order or consent of any
court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of
this Agreement or the performance by the Parent of its obligations
contemplated by this Agreement to be performed at the time of
closing, except such as have been obtained and are in full force
and effect under the Act and such as may be required under the
rules of the NASD and applicable Blue Sky laws;
(13) This Agreement constitutes a valid and
binding agreement of the Parent, enforceable in accordance with
its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and
except with respect to those provisions relating to indemnities or
contributions for liabilities under the Act as to which no opinion
need be expressed.
In rendering such opinion, such counsel may rely as to matters of
local law on opinions of local counsel, and as to matters of fact on
certificates of officers of the Parent and of the Company and of governmental
officials, in which case their opinion is to state that they are so doing and
that the Underwriters are justified in relying on such opinions or certificates
and copies of said opinions or certificates are to be attached to the opinion.
Such counsel shall also include a statement to the effect that nothing has come
to such counsel's attention that would lead such counsel to believe that either
at the effective date of the Registration Statement or at the applicable Closing
Date the Registration Statement or the Prospectus, or any such amendment or
supplement thereto, except for the financial statements and schedules and other
financial and statistical data included therein as to which such counsel need
express no opinion, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
(ii) Such opinion or opinions of Wilson Sonsini
Goodrich & Rosati, P.C., counsel for the Underwriters dated the First
Closing Date or the Second Closing Date, as the case may be, with
respect to the incorporation of the Company, the sufficiency of all
corporate proceedings and other legal matters relating to this
Agreement, the validity of the Common Shares, the Registration
Statement and the Prospectus and other related matters as you may
reasonably require, and the Company and the Parent shall have
furnished to such counsel such documents and shall have exhibited to
them such papers and records as they may reasonably request for the
purpose of enabling them to pass upon such matters. In connection
with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
(iii) A certificate of the Company executed by the
Chairman of the Board or President and the Chief Financial Officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties
of the Company set forth in Section 2 of this Agreement are
true and correct as of the date of this Agreement and as of
the First Closing Date or the Second Closing Date, as the case
may be, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any
order preventing or suspending the use of the Prospectus or
any Preliminary Prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the respective
signers, no proceedings for that purpose have been instituted
or are pending or contemplated under the Act;
(3) Each of the respective signers of
the certificate has carefully examined the Registration
Statement and the Prospectus; in his or her opinion and to the
best of his or her knowledge, the Registration Statement and
the Prospectus and any amendments or supplements thereto
contain all statements required to be stated therein regarding
the Company; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading;
(4) Since the initial date on which the
Registration Statement was filed, no agreement, written or
oral, transaction or event has occurred which should have been
set forth in an amendment to the Registration Statement or in
a supplement to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, and except as disclosed in the Prospectus,
there has not been any material adverse change or a
development involving a material adverse change in the
condition (financial or otherwise),
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<PAGE> 13
business, properties, results of operations or management of
the Company; and there has been no legal or governmental
action, suit or proceeding is pending or, to such person's
knowledge, threatened against the Company which is material to
the Company, whether or not arising from transactions in the
ordinary course of business, or which could reasonably be
expected to adversely affect the transactions contemplated by
this Agreement; since such dates the Company has not entered
into any verbal or written agreement or other transaction
which is not in the ordinary course of business or incurred
any material liability or obligation, direct, contingent or
indirect which is not in the ordinary course of business, made
any change in its capital stock, made any material change in
its short-term debt or funded debt or repurchased or otherwise
acquired any of the Company's capital stock; and the Company
has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the First Closing
Date or Second Closing Date; and
(6) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, the Company has not sustained a material loss
or damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(iv) A certificate of the Parent executed
by the Chairman of the Board or President and the Chief Financial
Officer of the Parent, dated the First Closing Date or the Second
Closing Date, as the case may be, to the effect that:
(1) The representations and warranties
of the Parent set forth in Section 2 of this Agreement are
true and correct as of the date of this Agreement and as of
the First Closing Date or the Second Closing Date, as the case
may be, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any
order preventing or suspending the use of the Prospectus or
any Preliminary Prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued; and to the knowledge of the respective signers, no
proceedings for that purpose have been institute or are
pending or contemplated under the Act;
(3) Each of the respective signers of
the certificate has carefully examined the Registration
Statement and the Prospectus; in his or her opinion and to the
best of his or her knowledge, the Registration Statement and
the Prospectus and any amendments or supplements thereto
contain all statements required to be stated therein regarding
the Company; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading;
(4) Since the initial date on which the
Registration Statement was filed, no agreement, written or
oral, transaction or event has occurred which should have been
set forth in an amendment to the Registration Statement or in
a supplement to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, and except as disclosed in the Prospectus,
there has not been any material adverse change or a
development involving a material adverse change in the
condition (financial or otherwise), business, properties,
results of operations or management of the Company; and there
has been no legal or governmental action, suit or proceeding
is pending or, to such person's knowledge, threatened against
the Company which is material to the Company, whether or not
arising from transactions in the ordinary course of business,
or which could reasonably be expected to adversely affect the
transactions contemplated by this Agreement; since such dates
the Company has not entered into any material verbal or written
agreement or other transaction which is not in the ordinary
course of business or incurred any material liability or
obligation, direct, contingent or indirect which is not in the
ordinary course of business, made any change in its capital
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<PAGE> 14
stock, made any material change in its short-term debt or
funded debt or repurchased or otherwise acquired any of the
Company's capital stock; and the Company has not declared or
paid any dividend, or made any other distribution, upon its
outstanding capital stock payable to stockholders of record on
a date prior to the First Closing Date or Second Closing Date;
and
(6) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, the Company has not sustained a material loss
or damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(v) On the date before this Agreement is executed
and also on the First Closing Date and the Second Closing Date, a
letter addressed to you from Ernst & Young LLP, independent
accountants, the first one to be dated the day before the date of this
Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a Second Closing) to be dated the Second
Closing Date, in form and substance reasonably satisfactory to you.
(vi) On or before the First Closing Date, letters
from the Parent and each director and executive officer of the
Company, in form and substance satisfactory to you, confirming that
for a period of 180 days after the first date that any of the Common
Shares are released by you for sale to the public, such person or
entity will not directly or indirectly sell or offer to sell or
otherwise dispose of any shares of Common Stock or any right to
acquire any such shares without the prior written consent of
Montgomery Securities, which consent may be withheld at the sole
discretion of Montgomery Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Underwriters. The
Company and Parent shall furnish you with such manually signed or conformed
copies of such opinions, certificates, letters and documents as you request.
Any certificate signed by any officer of the Company or Parent (as the case may
be) and delivered to the Underwriters or to counsel for the Underwriters shall
be deemed to be a representation and warranty by the Company or Parent (as the
case may be) to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company and the Parent without liability on the part of any Underwriter or the
Company or the Parent except for the expenses to be paid or reimbursed by the
Company and by the Parent pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof.
SECTION 9
REIMBURSEMENT OF UNDERWRITERS' EXPENSES
---------------------------------------
Notwithstanding any other provisions hereof, if this Agreement shall
be terminated by you pursuant to Section 8, or if the sale to the Underwriters
of the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company or the Parent to
perform any agreement herein or to comply with any provision hereof, the
Company agrees to reimburse you and the other Underwriters upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by you and them
in connection with the proposed purchase and the sale of the Common Shares,
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, telegraph charges and telephone charges
relating directly to the offering contemplated by the Prospectus. Any such
termination shall be without liability of any party to any other party except
that the provisions of this Section, Section 7 and Section 11 shall at all
times be effective and shall apply.
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<PAGE> 15
SECTION 10
EFFECTIVENESS OF REGISTRATION STATEMENT
---------------------------------------
You, the Company and the Parent will use your, its and their best
efforts to cause the Registration Statement to become effective, to prevent the
issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 11
INDEMNIFICATION
---------------
(a) The Company and the Parent, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, or arise out of or are based in whole or in part
on any inaccuracy in the representations and warranties of the Company or the
Parent contained herein or any failure of the Company or the Parent to perform
their respective obligations hereunder or under law; and will reimburse each
Underwriter and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that (i) neither the Company nor the Parent will be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with the information furnished to the Company by
the Underwriters pursuant to Section 4 hereof and (ii) with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
Preliminary Prospectus, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Underwriter from whom the person asserting
any such loss, claim, damage or liability purchased Common Shares to the extent
that any such loss, claim, damage or liability of such Underwriter results from
the fact that a copy of the Prospectus was not sent or given to such person at
or prior to the written confirmation of the sale of such Shares to such person
as required by the Act, provided the untrue statement or omission concerned has
been corrected in the Prospectus, unless such failure is the result of
noncompliance by the Company with Section 6(e) hereof. The Company and the
Parent may agree, as among themselves and without limiting the rights of the
Underwriters under this Agreement, as to their respective amounts of such
liability for which they each shall be responsible. In addition to their other
obligations, under this Section 11(a), the Company and the Parent agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any misstatement or
omission, or any alleged misstatement or omission, or any inaccuracy in the
representations and warranties of the Company or the Parent herein or failure to
perform their obligations hereunder, all as described in this Section 11(a),
they will reimburse each Underwriter on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's or the Parent's obligation to reimburse each
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Company and the
Parent together with interest, compounded daily, determined on the basis of the
prime rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America NT&SA, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments which
are not made to an Underwriter within 30 days of a request for reimbursement,
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which the Company or
the Parent may otherwise have.
-15-
<PAGE> 16
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement, the Parent and each person, if any, who controls the
Company or the Parent within the meaning of the Act ("controlling person"),
against any losses, claims, damages, liabilities or expenses to which the
Company, or any such director, officer, the Parent or controlling person may
become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company by the Underwriters
pursuant to Section 4 hereof; and will reimburse the Company, or any such
director, officer, the Parent or controlling person for any legal and other
expense reasonably incurred by the Company, or any such director, officer, the
Parent or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that no Underwriter shall be required to
contribute any amount in excess of the amount of the total underwriting
commissions received by such Underwriter in connection with the Common Shares
underwritten by it and distributed to the public. In addition to its other
obligations under this Section 11(b), each Underwriter severally agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 11(b)
which relates to information furnished to the Company by the Underwriters
pursuant to Section 4 hereof, it will reimburse the Company (and, to the
extent applicable, each officer, director, the Parent or controlling person)
on a quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, the Parent or controlling person) for such
expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, the Company
(and, to the extent applicable, each officer, director, the Parent or
controlling person) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Company within 30 days
of a request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained in
this Section to the extent it is not prejudiced as a proximate result of
such failure. In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying
parties similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party
and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of paragraph (a),
representing the
-16-
<PAGE> 17
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company, the Parent and the Underwriters from the offering of the Common
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, the Parent and the Underwriters in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The respective
relative benefits received by the Company, the Parent and the Underwriters
shall be deemed to be in the same proportion, in the case of the Company
as the total price paid to the Company for the Common Shares sold by it to the
Underwriters, in the case of Parent as the amount of proceeds received by the
Company which are paid to the Parent upon consummation of the offering, for
repayment of indebtedness, and in the case of the Underwriters as the
underwriting commissions received by them bears to the total of such amounts
paid to the Company and received by the Underwriters as underwriting
commissions. The relative fault of the Company, the Parent and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company, the Parent or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
subparagraph (c) of this Section 11, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in subparagraph (c) of this
Section 11 with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Parent and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 11
were determined solely by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 11, no Underwriter shall be required to contribute any amount in excess
of the amount of the total underwriting commissions received by such
Underwriter in connection with the Common Shares underwritten by it and
distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) Notwithstanding the provisions of this Section 11, on and
after the date upon which the Parent completes the distribution to the Parent's
stockholders of all shares of Common Stock of the Company owned by the Parent,
the Parent's total indemnification and contribution obligation under this
Section 11 shall not exceed the amount of proceeds from the Offering received
by the Company that are paid to the Parent for repayment of indebtedness, which
amount shall be equal to the lesser of (i) 40% of the net proceeds of the
offering before deducting estimated offering expenses or (ii) $10 million.
(f) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 11(a) and 11(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 11(a) and 11(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 11(a) and 11(b) hereof.
(g) The Parent shall not be required to provide indemnification
pursuant to this Section 11 unless the Underwriter or controlling person
seeking indemnification shall have first made a written demand for payment to
the Company with respect to any losses, claims, damages, liabilities or
expenses for which the Parent and the Company shall be required to indemnify
the Underwriters pursuant to this Section 11 and the Company shall have failed
to make such demanded payment within sixty (60) days after receipt thereof.
-17-
<PAGE> 18
SECTION 12
DEFAULT OF UNDERWRITERS
-----------------------
It shall be a condition to this Agreement and the obligation of the
Company to sell and deliver the Common Shares hereunder, and of each
Underwriter to purchase the Common Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all the Common Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Underwriters of all
such shares in accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase Common Shares hereunder
on either the First or Second Closing Date and the aggregate number of Common
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares which the Underwriters are obligated to purchase on such Closing Date,
the nondefaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Common Shares which
such defaulting Underwriters agreed but failed to purchase on such Closing
Date. If any Underwriter or Underwriters so default and the aggregate number
of Common Shares with respect to which such default occurs is more than the
above percentage and arrangements satisfactory to the Underwriters and the
Company for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Company or the
Parent except for the expenses to be paid by the Company and the Parent
pursuant to Section 7 hereof and except to the extent provided in Section 11
hereof.
In the event that Common Shares to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties,
the Underwriters or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
SECTION 13
EFFECTIVE DATE
--------------
This Agreement shall become effective immediately as to Sections 7, 9,
11, 14 and 15 and, as to all other provisions, (i) if, at the time of execution
of this Agreement, the Registration Statement has not become effective, at 2:00
P.M., California time, on the first full business day following the
effectiveness of the Registration Statement, or (ii) if, at the time of
execution of this Agreement, the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the
Company or by release of any of the Common Shares for sale to the public. For
the purposes of this Section 13, the Common Shares shall be deemed to have been
so released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of fax (i) advising
Underwriters that the Common Shares are released for public offering, or
(ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
-18-
<PAGE> 19
SECTION 14
TERMINATION
-----------
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the Company by notice to
you and the Parent or by you by notice to the Company and the Parent at any
time prior to the time this Agreement shall become effective as to all its
provisions, and any such termination shall be without liability on the part of
the Company or the Parent to any Underwriter (except for the expenses to be
paid or reimbursed by the Company and the Parent pursuant to Sections 7 and 9
hereof and except to the extent provided in Section 11 hereof) or of any
Underwriter to the Company or the Parent (except to the extent provided in
Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof, shall
have been imposed upon trading in securities generally or minimum or maximum
prices shall have been generally established on the New York Stock Exchange or
on the American Stock Exchange or in the over the counter market by the NASD,
or trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated or escalated
to such an extent, as, in the judgment of the Underwriters, to affect adversely
the marketability of the Common Shares, (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in any material respect
any statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect, or (iv)
if there shall be any action, suit or proceeding pending or threatened, or
there shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or the
transactions contemplated by this Agreement, which, in the reasonable judgment
of the Underwriters, may materially and adversely affect the Company's business
or earnings and makes it impracticable or inadvisable to offer or sell the
Common Shares. Any termination pursuant to this subsection (b) shall be without
liability on the part of any Underwriter to the Company or the Parent or on the
part of the Company or the Parent to any Underwriter (except for expenses to be
paid or reimbursed by the Company and the Parent pursuant to Sections 7 and 9
hereof and except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California
time, on the tenth full business day after the Registration Statement shall
have become effective if the initial public offering price of the Common Shares
shall not then as yet have been determined as provided in Section 5 hereof.
Any termination pursuant to this subsection (c) shall be without liability on
the part of any Underwriter to the Company or the Parent or on the part of the
Company or the Parent to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Parent pursuant to Sections 7 and 9 hereof
and except to the extent provided in Section 11 hereof).
SECTION 15
REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
---------------------------------------------------
The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, of the Parent and of the
several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Parent, as the case may
be, and will survive delivery of and payment for the Common Shares sold
hereunder and any termination of this Agreement.
-19-
<PAGE> 20
SECTION 16
NOTICES
-------
All communications hereunder shall be in writing and, if sent to the
Underwriters shall be mailed, delivered or telegraphed and confirmed to you at
600 Montgomery Street, San Francisco, California 94111, Attention: Patrick
Arrington, with a copy to Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill
Road, Palo Alto, California 94304, Attention: Howard S. Zeprun, Esq.; and if
sent to (i) the Company shall be mailed, delivered or telegraphed and confirmed
to the Company at 1515 South Manchester Avenue, Anaheim, California 92802-2907,
Attention: Kevin Daly or (ii) the Parent shall be mailed, delivered or
telegraphed and confirmed to the Parent at 1515 South Manchester Avenue,
Anaheim, California 92802-2907, Attention: Joel Slutzky, in either instance
with a copy to Pat Arrington, Brobeck Phleger & Harrison LLP, 4675 MacArthur
Court, Suite 1000, Newport Beach, California 92660-1846. The Company, the
Parent or you may change the address for receipt of communications hereunder by
giving notice to the others.
SECTION 17
SUCCESSORS
----------
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 12
hereof, and to the benefit of the officers and directors and controlling
persons referred to in Section 11, and in each case their respective
successors, personal representatives and assigns, and no other person will have
any right or obligation hereunder. No such assignment shall relieve any party
of its obligations hereunder. The term "successors" shall not include any
purchaser of the Common Shares as such from any of the Underwriters merely by
reason of such purchase.
SECTION 18
PARTIAL UNENFORCEABILITY
------------------------
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 19
APPLICABLE LAW
--------------
This Agreement shall be governed by and construed in accordance with
the internal laws (and not the laws pertaining to conflicts of laws) of the
State of California.
SECTION 20
GENERAL
-------
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document.
-20-
<PAGE> 21
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Parent and you.
-21-
<PAGE> 22
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon
it will become a binding agreement among the Company, the Parent and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
ATL PRODUCTS, INC.
By:
----------------------------------
Title:
------------------------------
ODETICS, INC.
By:
----------------------------------
Title:
-----------------------------
The foregoing Underwriting Agreement is
hereby confirmed and accepted by us in
San Francisco, California as of the date
first above written.
MONTGOMERY SECURITIES
By:
------------------------------------
Title:
---------------------------------
-22-
<PAGE> 23
SCHEDULE A
<TABLE>
<CAPTION>
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------------------------------------ ---------------
<S> <C>
Montgomery Securities . . . . . . . . . . . . .
Cruttenden Roth Incorporated. . . . . . . . . .
---------
TOTAL . . . . . . . . . . . 1,650,000
=========
</TABLE>
B-1
<PAGE> 24
EXHIBIT I
FORM OF OPINION OF BROBECK, PHLEGER & HARRISON
B-2
<PAGE> 1
EXHIBIT 10.3
SEPARATION AND DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of ________, 1997, by
and between ODETICS, INC., a Delaware corporation ("Odetics"), and ATL
PRODUCTS, INC., a Delaware corporation ("ATL").
PRELIMINARY STATEMENT
Odetics is the sole stockholder of ATL.
Odetics, through ATL and ATL's wholly owned subsidiary, ATL Products
Limited, a United Kingdom private limited liability company, is engaged in the
manufacture and sale of automated tape libraries, and related services (the "ATL
Business").
Odetics' Board of Directors has determined that Odetics will cause ATL to
make an initial public offering of up to 1,897,500 shares of its Class A Common
Stock (the "IPO"), and subsequent to the IPO and subject to certain conditions,
distribute to Odetics' stockholders all of the outstanding stock of ATL owned
by Odetics through a spinoff (the "Distribution"). The IPO and the
Distribution are together referred to herein as the "Separation" and will
result in the total and complete separation of the Business and ATL from
Odetics at the time of the Distribution (the "Separation Date"); provided,
however, that Odetics may continue to provide services to ATL pursuant to
services agreements after the Separation Date.
The parties hereto have determined that it is necessary and desirable to set
forth in this Agreement and in a services agreement (the "Services Agreement"),
a Promissory Note and a Tax Allocation Agreement (the "Tax Allocation
Agreement") between ATL and Odetics (the Services Agreement and the Tax
Allocation Agreement are collectively referred to herein as the "Ancillary
Agreements"), the principal corporate transactions determined by Odetics and ATL
to be appropriate to effect the Separation and to set forth other agreements and
undertakings by and between Odetics and ATL that will govern certain other
matters between the date hereof and the Distribution and following the
Distribution.
1
<PAGE> 2
Simultaneously with the execution of this Agreement, Odetics and ATL are
entering into the Ancillary Agreements.
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, the parties do hereby agree as
follows:
ARTICLE I.
THE TRANSFER
1.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, and the other agreements and instruments of conveyance
contemplated hereunder, simultaneously with the execution and delivery of this
Agreement, Odetics has heretofore transferred, assigned and conveyed to ATL all
of Odetics' right, title, and interest in and to all of the assets, tangible
and intangible, related to the Business (the "ATL Assets") for a purchase price
equal to the book value thereof, as calculated in accordance with generally
accepted accounting principles. The parties hereto believe that such purchase
price constitutes fair market value of the ATL Assets.
1.2 Payment of Purchase Price. The purchase price of the ATL Assets will
be included in the principal amount of a Promissory Note (the "Note") in
substantially the form attached hereto as Exhibit A, which will be completed at
the consummation of the IPO, and executed and delivered in connection therewith,
and such purchase price shall be payable in accordance with the terms of the
Note.
2
<PAGE> 3
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF ODETICS
Odetics represents and warrants to ATL as follows:
2.1 Power and Authority; Effect of Agreement. Odetics is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, has requisite corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by it of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Odetics. This
Agreement has been duly and validly executed and delivered by Odetics and
constitutes its legal, valid and binding obligation enforceable against it in
accordance with its terms, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally. The execution, delivery and
performance by it of this Agreement and the consummation by Odetics of the
transactions contemplated by the Transfer does not, and will not, with or
without the giving of notice or the lapse of time, or both: (i) violate any
provision of law, rule or regulation to which it is subject; (ii) violate any
order, judgment or decree applicable to it; (iii) conflict with, or result in a
breach or default under, its Certificate of Incorporation or its Bylaws; or (iv)
conflict with, or result in a breach or default under, any contract to which it
is a party; except, in each case, for violations, conflicts, breaches or
defaults which in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby or have a material adverse
effect on the Business.
2.2 Stock of Transferred Subsidiaries. Odetics is the owner, beneficially
and of record of all of the issued and outstanding stock of the assets referred
to in Section 1.1 hereof, free and clear of all liens, encumbrances, security
agreements, options, claims, charges and restrictions.
2.3 Government Consents. No consent, approval or authorization of, or
exemption from, or filing with, any governmental or regulatory authority is
required in connection with the execution, delivery or performance by Odetics
of the terms of this Article II or the taking by it of any other action
required to effectuate the Transfer.
3
<PAGE> 4
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ATL
ATL represents and warrants to Odetics as follows:
3.1 ATL's Power and Authority. ATL is a corporation duly organized
validly existing and in good standing under the laws of Delaware, and has all
requisite corporate power and authority to carry on the Business as it is now
being conducted and as proposed to be conducted.
3.2 Due Authorization, Execution and Delivery; Effect of Agreement. ATL
has all requisite corporate power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by ATL this Agreement and the consummation
by ATL of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of ATL. This Agreement has been duly and
validly executed and delivered by ATL and constitutes the legal, valid and
binding obligation of ATL, enforceable against ATL in accordance with its terms,
except to the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally. The execution, delivery and performance by ATL of
this Agreement and the consummation by ATL of the transactions contemplated by
the Transfer does not, and will not, with or without the giving of notice or the
lapse of time, or both: (i) violate any provision of law, rule or regulation to
which ATL is subject; (ii) violate any order, judgment or decree applicable to
ATL; (iii) conflict with, or result in a breach or default under, the
Certificate of Incorporation or Bylaws of ATL; or (iv) conflict with, or result
in a breach or default under, any contract to which it is a party; except, in
each case, for violations, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby or have a material adverse effect on the
Business.
3.3 Consents. No consent, approval or authorization of, or exemption
from, or filing with, any governmental or regulatory authority or any other
third party is required in connection with the execution, delivery or
performance by ATL of this Agreement or the taking by of any other action
required to effectuate the Transfer.
4
<PAGE> 5
ARTICLE IV.
COVENANTS OF ODETICS
4.1 Books and Records; Personnel. For a period of six years after the
Separation Date (or such longer period as maybe required by any law or
regulation, any governmental agency, any ongoing litigation or class of
connection with any administrative proceeding):
(a) Odetics shall not dispose of or destroy any of the business
records and files of the Business retained by it or any of its subsidiaries (the
"Retained Records"). If Odetics wishes to dispose of or destroy such records
and files after such six year period, it shall use reasonable efforts to first
give 30 days' prior written notice to ATL and ATL shall have the right, at its
option and expense, upon prior written notice to Odetics within such 30 day
period, to take possession of the Retained Records within 60 days after the date
of ATL's notice to Odetics.
(b) Odetics shall allow ATL and its representatives reasonable
access to all Retained Records during regular business hours and upon reasonable
notice. Odetics shall maintain the Retained Records in a manner and at locations
that reasonably facilitates retrieval and review by ATL. ATL shall have the
right, at its own expense, to make copies of any such records and files and
Odetics shall provide convenient duplication facilities for such purpose,
provided, however, that any such access or copying shall be had or done in such
manner so as not to unreasonably interfere with the normal conduct of Odetics'
business or operations; and
(c) Odetics shall make reasonably available to ATL, upon written
request and at ATL's expense: (i) personnel to assist in locating and obtaining
records and files maintained by it
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(including those created after the date hereof, to the extent necessary and
appropriate in connection with pending and future claims against ATL relating
to the Business) and (ii) any of its personnel whose assistance or
participation (including as a witness during depositions or at trial) is
reasonably required by ATL in anticipation of, or preparation for or during,
existing or future litigation or other matters in which ATL or any of its
affiliates is involved and which is related to the Business.
4.2 Supply Agreements. For a period of three years from the consummation
of the IPO, Odetics shall not unilaterally terminate or assign its guarantee
obligation with respect to any supply agreement pursuant to which it has
guaranteed the performance by ATL of ATL's obligations, unless such suppliers
have consented to the termination or assignment of such guarantee.
4.3 Cooperation. Odetics agrees to cooperate with ATL, both before and
after the Separation Date, to enable both parties to implement the Separation,
including but not limited to performing the obligations undertaken by the
parties hereunder. Such cooperation will include but not be limited to
preparing and submitting required financial reports after the Separation Date,
which may relate to periods before or after the Separation Date, and executing
such documents and doing such other acts and things as may be necessary to
carry out the intent of this Agreement as it relates to the Separation.
ARTICLE V.
COVENANTS OF ATL
5.1 Cooperation. ATL agrees to cooperate with Odetics, both before and
after the Separation Date, to enable both parties to implement the Separation,
including but not limited to performing the obligations undertaken by the
parties hereunder. Such cooperation will include but not be limited to
preparing and submitting required financial reports after the Separation Date,
which may relate to periods before or after the Separation Date, and executing
such documents and doing such other acts and things as may be necessary to carry
out the intent of this Agreement as it relates to the Separation.
5.2 Books and Records; Personnel. For a period of six years after the
Separation Date (or such longer period as may be required by any law or
regulation, any governmental agency, any ongoing litigation or class of
litigation, or in connection with any administrative proceeding):
(a) ATL shall not dispose of or destroy the business records and files
of the Business that are transferred to it or any of its subsidiaries in
carrying out the transactions
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contemplated hereby (the "Transferred Records"). If ATL wishes to dispose of
or destroy such records and files after that time, it shall use reasonable
efforts to first give 30 days' prior written notice to Odetics and Odetics
shall have the right, at its option and expense, upon prior written notice to
ATL within such 30 day period, to take possession of the Transferred Records
within 60 days after the date of Odetics' notice to ATL;
(b) ATL shall allow Odetics and its representatives reasonable access
to all Transferred Records during regular business hours and upon reasonable
notice. ATL shall maintain the Transferred Records in a manner and at locations
that reasonably facilitates retrieval and review by Odetics. Odetics shall have
the right, at its own expense, to make copies of any such records and files and
ATL shall provide convenient duplication facilities for such purposes provided,
however, that any such access or copying shall be had or done in such a manner
so as not to unreasonably interfere with the normal conduct of ATL's business or
operations; and
(c) ATL shall make reasonably available to Odetics upon written
request and at Odetics' expense: (1) ATL's personnel to assist in locating and
obtaining records and files maintained by it (including those created after the
date hereof, to the extent necessary and appropriate in connection with pending
and future claims against Odetics relating to the Business), and (ii) any of
its personnel whose assistance or participation (including as a witness during
depositions or at trial) is reasonably required by Odetics in anticipation of,
or preparation for or during, existing or future litigation or other matters in
which Odetics or any of its affiliates is involved.
ARTICLE VI.
THE IPO AND ACTIONS PENDING THE IPO
6.1 Transactions Prior to the IPO.
(a) Subject to the conditions specified in Section 6.3 hereof, Odetics
and ATL shall use their reasonable best efforts to consummate the IPO. Such
actions shall include, but shall not necessarily be limited to, those specified
in this Section 6.1.
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(b) ATL shall file the IPO Registration Statement, and such amendments
or supplements thereto, as may be necessary in order to cause the same to become
and remain effective as required by law or by the Underwriters, including, but
not limited to, filing such amendments to ATL's Registration Statement on Form
S-1 as may be required by the Underwriting Agreement, the Commission or federal,
state or foreign securities laws. Odetics and ATL shall also cooperate in
preparing, filing with the Securities and Exchange Commission (the "Commission")
and causing to become effective a registration statement registering the ATL
Common Stock under the Exchange Act, and any registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans necessary or appropriate in
connection with the IPO, the Separation, the Distribution or the other
transactions contemplated by this Agreement and the Ancillary Agreements.
(c) ATL and Odetics shall enter into the Underwriting Agreement, in
form and substance reasonably satisfactory to ATL and Odetics, and shall
comply with their respective obligations thereunder.
(d) Odetics and ATL shall consult with each other and the Underwriters
regarding the timing, pricing and other material matters with respect to the
IPO.
(e) ATL shall use its reasonable best efforts to take all such action
as may be necessary or appropriate under state securities laws of the United
States (and any comparable laws under any foreign jurisdictions) in connection
with the IPO.
(f) ATL shall prepare, file and use reasonable best efforts to seek to
make effective, an application for listing of the Class A Common Stock of ATL
(the "ATL Common Stock") issued in the IPO on the Nasdaq National Market,
subject to official notice of issuance.
(g) ATL and Odetics shall participate in the preparation of materials
and presentations as the Underwriters shall deem necessary or desirable.
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(h) ATL shall pay all third party costs, fees and expenses relating to
the IPO, all of the reimbursable expenses of the Underwriters pursuant to the
Underwriting Agreement, all of the costs of producing, printing, mailing and
otherwise distributing the Prospectus, as well as the Underwriters' discount as
provided in the Underwriting Agreement.
6.2 Proceeds of the IPO. The IPO will be a primary offering of ATL Common
Stock and the net proceeds of the IPO will be retained by ATL, subject to its
obligation to pay certain amounts to Odetics pursuant to the Note.
6.3 Conditions Precedent to Consummation of the IPO. As soon as
practicable after the date of this Agreement, the parties hereto shall use
their reasonable best efforts to satisfy the following conditions to the
consummation of the IPO. The obligations of the parties to consummate the IPO
shall be conditioned on the satisfaction, or waiver by Odetics, of the
following conditions:
(a) The IPO Registration Statement shall have been declared effective
by the Commission, and there shall be no stop-order in effect with respect
thereto.
(b) The actions and filings with regard to state securities laws of
the United States (and any comparable laws under any foreign jurisdictions)
described in Section 6.1 shall have been taken and, where applicable, have
become effective or been accepted.
(c) The ATL Common Stock to be issued in the IPO shall have been
accepted for listing on the Nasdaq National Market, on official notice of
issuance.
(d) ATL shall have entered into the Underwriting Agreement and all
conditions to the obligations of ATL and the Underwriters shall have been
satisfied or waived.
(e) Odetics shall be satisfied in its sole discretion that it will
own at least 80.0% of the outstanding ATL voting stock following the IPO, and
all other conditions to permit the Distribution to qualify as a tax free
distribution to Odetics'
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stockholders shall, to the extent applicable as of the time of the IPO, be
satisfied and there shall be no event or condition that is likely to cause any
of such conditions not to be satisfied as of the time of the Distribution or
thereafter.
(f) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Separation or the IPO or any of the other transactions
contemplated by this Agreement or any Ancillary Agreement shall be in effect.
(g) Such other actions as the parties hereto may, based upon the
advice of counsel, reasonably request to be taken prior to the Separation and
the IPO in order to assure the successful completion of the Separation and the
IPO and the other transactions contemplated by this Agreement shall have been
taken.
(h) This Agreement shall not have been terminated.
(i) A pricing committee of Odetics directors designated by the Board
of Directors of Odetics shall have determined that the terms of the IPO are
acceptable to Odetics.
ARTICLE VII.
THE DISTRIBUTION
7.1 The Distribution.
(a) Subject to the conditions specified in Section 7.3 hereof, on or
prior to the Distribution Date, Odetics will deliver to First National Bank of
Boston (the "Agent") for the benefit of holders of record of Odetics' Common
Stock on the record date established by the Board of Directors of Odetics, a
single stock certificate, endorsed by Odetics in blank, representing all of the
outstanding shares of ATL Common Stock then owned by Odetics, and shall cause
the transfer agent for the shares of Odetics Common Stock to instruct the Agent
to distribute on the Distribution Date the appropriate number of such shares of
ATL Common Stock to each such holder or designated transferee or transferees of
such holder.
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(b) Subject to Section 7.4, each holder of Odetics Common Stock on the
Record Date (or such holder's designated transferee or transferees) will be
entitled to receive in the Distribution a number of shares of ATL Common Stock
equal to the number of shares of Odetics Common Stock held by such holder on
the Record Date multiplied by a fraction the numerator of which is the number
of shares of ATL Common Stock beneficially owned by Odetics on the Record Date
and the denominator of which is the number of shares of Odetics Common Stock
outstanding on the Record Date.
(c) ATL and Odetics, as the case may be, will provide to the Agent all
share certificates and any information required in order to complete the
Distribution on the basis specified above.
7.2 Actions Prior to the Distribution.
(a) Odetics and ATL shall prepare and mail, prior to the Distribution
Date, to the holders of Odetics Common Stock, such information concerning ATL,
its business, operations and management, the Distribution and such other
matters as Odetics and ATL shall reasonably determine and as may be required by
law. Odetics and ATL will prepare, and ATL will, to the extent required under
applicable law, file with the Commission any such documentation and any
requisite no action letters which Odetics determines are necessary or desirable
to effectuate the Distribution and Odetics and ATL shall each use its reasonable
best efforts to obtain all necessary approvals from the Commission with respect
thereto as soon as practicable.
(b) Odetics and ATL shall take all such action as may be necessary or
appropriate under the state securities laws of the United States (and any
comparable laws under any foreign jurisdiction) in connection with the
Distribution.
(c) Odetics and ATL shall take all reasonable steps necessary and
appropriate to cause the conditions set forth in Section 7.3(d) (subject to
Sections 7.3(d)) to be satisfied and to effect the Distribution on the
Distribution Date.
(d) ATL shall prepare and file, and shall use its reasonable best
efforts to have approved, an application for the listing of the ATL Common
Stock to be distributed in the Distribution on the Nasdaq National Market,
subject to official notice of distribution.
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7.3 Conditions to Distribution. The Odetics Board currently intends to
effect the Distribution by December 31, 1997. Subject to any restrictions
contained in the Underwriting Agreement, the Odetics Board shall have the sole
discretion to determine the date of consummation of the Distribution at any
time after the Closing Date and on or prior to December 31, 1997. Odetics shall
be obligated to consummate the Distribution no later than December 31, 1997,
subject to the satisfaction, or waiver by the Odetics Board in its sole
discretion, of the conditions set forth below. In the event that any such
condition shall not have been satisfied or waived on or before December 31,
1997, Odetics shall consummate the Distribution as promptly as practicable
following the satisfaction or waiver of all such conditions.
(a) a private letter ruling from the Internal Revenue Service shall
have been obtained, and shall continue in effect, to the effect that, among
other things, the Distribution will qualify as a tax free distribution for
federal income tax purposes under Section 355 of the Code and will not result in
the recognition of any gain to Odetics or Odetics' stockholders, and such ruling
shall be in form and substance satisfactory to Odetics in its sole discretion;
(b) any material governmental approvals and consents necessary to
consummate the Distribution shall have been obtained and be in full force and
effect;
(c) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Distribution shall be in effect and no other event outside
the control of Odetics shall have occurred or failed to occur that prevents the
consummation of the Distribution; and
(d) no other events or developments shall have occurred subsequent to
the date hereof that, in the judgment of the Board of Directors of Odetics,
would result in the Distribution having a material adverse effect on Odetics
or on the stockholders of Odetics.
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The foregoing conditions are for the sole benefit of Odetics and shall not give
rise to or create any duty on the part of Odetics or the Odetics Board of
Directors to waive or not waive any such condition.
7.4 Fractional Shares. As soon as practicable after the Distribution
Date, Odetics shall direct the Agent to determine the number of whole shares
and fractional shares of ATL Common Stock allocable to each holder of record or
beneficial owner of Odetics Common Stock as of the Record Date, to aggregate
all such fractional shares and sell the whole shares obtained thereby at the
direction of Odetics either to Odetics, in open market transactions or
otherwise, in each case at then prevailing trading prices, and to cause to be
distributed to each such holder or for the benefit of each such beneficial
owner, in lieu of any fractional share, such holder's or owner's ratable share
of the proceeds of such sale, after making appropriate deductions of any amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes
attributed to such sale. Odetics and the Agent shall use their reasonable best
efforts to aggregate the shares of Odetics Common Stock that may be held by any
beneficial owner thereof through more than one account in determining the
fractional share allocable to such beneficial owner.
7.5 The ATL Board of Directors. Odetics and ATL shall each take all
actions which may be required to elect or otherwise appoint as directors of
ATL, on or prior to the Distribution Date, persons to be designated by a
nominating committee of ATL's Board of Directors as additional or substitute
members of the Board of Directors of ATL on the Distribution Date.
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ARTICLE VIII.
MUTUAL RELEASES; INDEMNIFICATION
8.1 Release of Pre-closing Claims.
(a) Except as provided in Section 8.1(c), effective as of the date of
consummation of the IPO (the "Closing Date"), ATL does hereby, for itself and
each of its affiliates, successors and assigns, and all persons who at any time
prior to the Closing Date have been stockholders, directors, officers, agents or
employees of ATL (in each case, in their respective capacities as such), remise,
release and forever discharge each of Odetics and its affiliates, successors and
assigns, and all persons who at any time prior to the Closing Date have been
stockholders, directors, officers, agents or employees of Odetics (in each case,
in their respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all losses, claims,
actions, damages, expenses or liabilities whatsoever, (collectively, the
"Liabilities"), whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement, by operation of
law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Closing Date.
(b) Except as provided in Section 8.1(c), effective as of the
Closing Date, Odetics does hereby, for itself and its affiliates, successors and
assigns, and all persons who at any time prior to the Closing Date have been
stockholders, directors, officers, agents or employees of Odetics (in each case,
in their respective capacities as such), remise, release and forever discharge
ATL, and its affiliates, successors and assigns, and all persons who at any time
prior to the Closing Date have been stockholders, directors, officers, agents or
employees of ATL (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Closing Date, including in connection with the transactions and all other
activities to implement any of the Separation, the IPO and the Distribution.
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(c) Nothing contained in Section 8.1(a) or (b) shall impair any right of
any person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified
herein or in the Schedules and Exhibits hereto not to terminate as of the
Closing Date, in each case in accordance with its terms. Nothing contained in
Section 8.1(a) or (b) shall release any person from:
(i) any liability provided in or resulting from any agreement
between Odetics and ATL that is specified herein or the Schedules and Exhibits
hereto as not to terminate as of the Closing Date, or any other liability
specified as not to terminate as of the Closing Date;
(ii) any liability, contingent or otherwise, assumed, transferred,
assigned or allocated to such person;
(iii) any liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims brought
against the parties by third Persons, which liability shall be governed by this
Article VIII and, if applicable, the appropriate provisions of the Ancillary
Agreements.
(d) ATL shall not make, any claim or demand, or commence any action
asserting any claim or demand, including any claim of contribution or any
indemnification, against Odetics, or any other person released pursuant to
Section 8.1(a), with respect to any liabilities released pursuant to Section
8.1(a). Odetics shall not make any claim or demand, or commence any action
asserting any claim or demand, including any claim of contribution or any
indemnification, against ATL or any other person released pursuant to Section
8.1(b), with respect to any labilities released pursuant to Section 8.1(b).
(e) It is the intent of each of Odetics and ATL by virtue of the
provisions of this Section 8.1 to provide for a full and complete release and
discharge of all liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Closing Date, between or among ATL and its affiliates on the one hand, and
Odetics and its affiliates on the other hand (including
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any contractual agreements or arrangements existing or alleged to exist between
or among any such persons on or before the Closing Date), except as expressly
set forth in Section 8.1(c). At any time, at the request of any other party,
each party shall execute and deliver releases reflecting the provisions hereof.
8.2 Indemnification by ATL. Except as provided in Section 8.4, ATL shall
indemnify, defend and hold harmless Odetics, and each of its directors,
officers and employees, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "Odetics Indemnitees"), from
and against any and all Liabilities of the Odetics Indemnitees relating to,
arising out of or resulting from any of the following items (collectively, the
"ATL Liabilities"):
(a) the operation of the ATL Business, as conducted at any time prior
to, on or after the Closing Date (including any Liability relating to, arising
out of or from any act or failure to act by any director, officer, employee,
agent or representative of ATL, whether or not such act or failure to act is or
was within such person's authority); provided however, that ATL shall not be
responsible for and shall not indemnify, defend or hold harmless Odetics for
any tax liability resulting from the reorganization of ATL's international
operations occurring prior to the Closing Date;
(b) the ownership, leasing or use of any assets of ATL, including,
without limitation, the ATL Assets, any personal property, real property and
leasehold interests of ATL;
(c) the failure of ATL or any other person to pay, perform or
otherwise promptly discharge any liabilities of ATL or any material contract or
agreement of ATL in accordance with their respective terms, whether prior to or
after the Closing Date or the date hereof;
(d) any breach by ATL or its affiliates of this Agreement or any of
the Ancillary Agreements; or
(e) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, with
respect to all information contained in any IPO Registration Statement or
Prospectus made by ATL or any of its directors, officers, employees, agents or
representatives.
8.3 Indemnification by Odetics. Odetics shall indemnify, defend and hold
harmless ATL, and each of its directors, officers and employees, and each of
the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "ATL Indemnitees"), from and against any and all Liabilities
of the ATL Indemnitees relating to, arising out of or resulting from any of the
following items:
(a) the operation of the business of Odetics (other than the ATL
Business), as conducted at any time prior to, on or after the Closing Date
(including any Liability relating to, arising out of or from any act or failure
to act by any director, officer, employee, agent or representative of Odetics,
whether or not such act or failure to act is or was within such person's
authority);
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(b) the ownership, leasing or use of any assets of Odetics,
including, without limitation, any personal property, real property and
leasehold interests of Odetics;
(c) the failure of Odetics or any other person to pay, perform or
otherwise promptly discharge any liabilities of Odetics (other than the ATL
Liabilities) or any material contract or agreement of Odetics in accordance
with their respective terms, whether prior to or after the Closing Date or the
date hereof;
(d) any breach by Odetics or its affiliates (other than ATL) of this
Agreement or any of the Ancillary Agreements; or
(e) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, with
respect to all information contained in any IPO Registration Statement or
Prospectus made by Odetics or any of its directors, officers, employees, agents
or representatives.
8.4 Indemnification Obligations Net of Insurance Proceeds and Other
Amounts.
(a) The parties intend that any liability subject to indemnification
or reimbursement pursuant to this Article VIII will be net of insurance proceeds
that actually reduce the amount of the liability. Accordingly, the amount
which any party (an "Indemnifying Party") is required to pay to any person
entitled to indemnification hereunder (an "Indemnitee") will be reduced by any
insurance proceeds theretofore actually recovered by or on behalf of the
Indemnitee in reduction of the related liability. If an Indemnitee receives a
payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any liability and subsequently receives
insurance proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the insurance proceeds
recovery had been received, realized or recovered before the Indemnity Payment
was made.
(b) An insurer who would otherwise be obligated to pay any claim shall
not be relieved of the responsibility with respect thereto or, solely by virtue
of the indemnification provisions hereof, have any subrogation rights with
respect thereto, it being expressly understood and agreed that no insurer or
any other third party shall be entitled to a benefit such insurer or other
third party would not be entitled to receive in the absence of the
indemnification provisions by virtue of the indemnification provisions hereof.
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8.5 Procedures for Indemnification of Third Party Claims.
(a) If an Indemnitee shall receive notice or otherwise learn of the
assertion by any person other than the parties hereto of a claim (a "Third Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 8.2 or 8.3, or any other
Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give
such Indemnifying Party written notice thereof within 20 days after becoming
aware of such Third Party Claim. Any such notice shall describe the Third Party
Claim in reasonable detail. Notwithstanding the foregoing, the failure of any
Indemnitee or other Person to give notice as provided in this Section 8.5(a)
shall not relieve the related Indemnifying Party of its obligations under this
Article VIII, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 8.5(a), the
Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After
notice from an Indemnifying Party to an Indemnitee of its election to assume
the defense of a Third Party Claim, such Indemnitee shall have the right to
employ separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnitee except as set forth in the next
sentence. In the event that the Indemnifying Party has elected to assume the
defense of the Third Party Claim but has specified, and continues to assert,
any reservations or exceptions in such notice, then, in any such case, the
reasonable fees and expenses of one separate counsel for all Indemnitees shall
be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 8.5(b), such Indemnitee may defend such Third Party
Claim at the cost and expense of the Indemnifying Party.
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(d) Unless the Indemnifying Party has failed to assume the defense
of the Third Party Claim in accordance with the terms of this Agreement, no
Indemnitee may settle or compromise any Third Party Claim without the consent
of the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment or
enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
(f) The provisions of this Section 8.5 shall not apply to Taxes (which
are covered by the Tax Allocation Agreement).
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ARTICLE IX.
INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
9.1 Insurance Matters.
(a) ATL agrees that it will reimburse Odetics for its proportionate
share of premiums paid or accrued, from the date hereof until the Distribution
Date, in respect of Insurance Policies under which ATL will continue to have
coverage following the date hereof. Odetics and ATL agree to cooperate in good
faith to provide for an orderly transition of insurance coverage from the date
hereof through the Distribution Date and for the treatment of any Insurance
Policies that will remain in effect following the Closing Date on a mutually
agreeable basis. In no event shall Odetics, or any Odetics Indemnitee have any
liability or obligation whatsoever to ATL in the event that any Insurance Policy
or other contract or policy of insurance shall be terminated or otherwise cease
to be in effect for any reason, shall be unavailable or inadequate to cover any
liability of ATL for any reason whatsoever or shall not be renewed or extended
beyond the current expiration date.
(b)(i) Except as otherwise provided in any Ancillary Agreement, the
parties intend by this Agreement that ATL and its affiliates be
successor-in-interest to all rights that any may have as of the Closing Date as
a subsidiary or affiliate of Odetics prior to the Closing Date under any policy
of insurance issued to Odetics by any insurance carrier or under any agreements
related to such policies executed and delivered prior to the Closing Date,
including any rights ATL and its affiliates may have, as an insured or
additional named insured, subsidiary or affiliate to avail itself of any such
policy of insurance or any such agreements related to such policies as in
effect prior to the Closing Date. At the request of ATL, Odetics shall take
all reasonable steps, including the execution and delivery of any instruments,
to effect the foregoing; provided however that Odetics shall not be required to
pay any amounts, waive any rights or incur any liabilities in connection
therewith.
20
<PAGE> 21
(ii) Except as otherwise contemplated by any Ancillary Agreement,
after the Closing Date, neither of Odetics or ATL shall, without the consent of
the other, provide any such insurance carrier with a release, or amend, modify
or waive any rights under any such policy or agreement, if such release,
amendment, modification or waiver would adversely affect any rights or potential
rights of the other hereunder; provided, however, that the foregoing shall not
(A) preclude either from presenting any claim or from exhausting any policy
limit, (B) require either to pay any premium or other amount or to incur any
liability, or (C) require either to renew, extend or continue any policy in
force. Each of ATL and Odetics will share such information as is reasonably
necessary in order to permit the other to manage and conduct its insurance
matters in an orderly fashion.
(c) This Agreement shall not be considered as an attempted assignment
of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of either Odetics or ATL in respect of
any insurance policy or any other contract or policy of insurance.
(d) ATL does hereby, for itself and its affiliates, agree that
Odetics or any Odetics Indemnitee shall have any liability whatsoever as a
result of the insurance policies and practices of Odetics and its affiliates as
in effect at any time prior to the Closing Date, including as a result of the
level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy, the adequacy or timeliness of
any notice to any insurance carrier with respect to any claim or potential claim
or otherwise.
ARTICLE X.
MISCELLANEOUS
10.1 Counterparts; Entire Agreement; Corporate Power.
(a) This Agreement and each Ancillary Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
21
<PAGE> 22
(b) This Agreement, and the Ancillary Agreements and the Exhibits,
Schedules and Appendices hereto and thereto contain the entire agreement
between the parties with respect to the subject matter hereof, supersede all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter and there are
no agreements or understandings between the parties other than those set forth
or referred to herein or therein.
10.2 Governing Law. This Agreement and, unless expressly provided therein,
each Ancillary Agreement, shall be governed by and construed and interpreted in
accordance with the laws of the State of California without regard to principles
of conflicts of law.
10.3 Assignability.
(a) Except as set forth in any Ancillary Agreement, this Agreement and
each Ancillary Agreement shall be binding upon and inure to the benefit of the
parties hereto and thereto, respectively, and their respective successors and
assigns; provided, however, that no party hereto or thereto may assign its
respective rights or delegate its respective obligations under this Agreement
or any Ancillary Agreement without the express prior written consent of the
other parties hereto or thereto.
10.4 Third Party Beneficiaries. Except for the indemnification rights under
this Agreement of any Odetics Indemnitee or ATL Indemnitee in their respective
capacities as such, (a) the provisions of this Agreement and each Ancillary
Agreement are solely for the benefit of the parties and are not intended to
confer upon any person except the parties any rights or remedies hereunder, and
(b) there are no third party beneficiaries of this Agreement or any Ancillary
Agreement and neither this Agreement nor any Ancillary Agreement shall provide
any third person with any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to this
Agreement or any Ancillary Agreement. No party hereto shall have any right,
remedy or claim with respect to any provision of this Agreement or any
Ancillary Agreement to the extent such
22
<PAGE> 23
provision relates solely to the other two parties hereto or the members of such
other two parties' respective Groups. No party shall be required to deliver any
notice under this Agreement or under any Ancillary Agreement to any other party
with respect to any matter in which such other party has no right, remedy or
claim.
10.5 Notices. All notices or other communications under this Agreement or
any Ancillary Agreement shall be in writing and shall be deemed to be duly
given when (a) delivered in person or (b) deposited in the United States mail
or private express mail, postage prepaid, addressed as follows:
If to Odetics, to: Odetics, Inc.
1515 South Manchester Avenue
Anaheim, California 92802-2907
Attn: Joel Slutzky
If to ATL, to: ATL Products, Inc.
2801 Kelvin Avenue
Irvine, California 92614
Attn: Kevin C. Daly, Ph.D.
Any party may, by notice to the other party, change the address to which such
notices are to be given.
10.6 Severability. If any provision of this Agreement or any Ancillary
Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application
of such provision to Persons or circumstances or in jurisdictions other than
those as to which it has been held invalid or unenforceable, shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby or thereby, as the case may be, is not affected in any
manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and
equitable provision to effect the original intent of the parties.
10.7 Force Majeure. No party shall be deemed in default of this Agreement
or any Ancillary Agreement to the extent that any delay or failure in the
performance of its obligations under this Agreement or any Ancillary Agreement
results from any cause beyond
23
<PAGE> 24
its reasonable control and without its fault or negligence, such as acts of
God, acts of civil or military authority, embargoes, epidemics, war, riots,
insurrections, fires, explosions, earthquakes, floods, unusually severe weather
conditions, labor problems or unavailability of parts, or, in the case of
computer systems, any failure in electrical or air conditioning equipment. In
the event of any such excused delay, the time for performance shall be extended
for a period equal to the time lost by reason of the delay.
10.8 Publicity. Prior to the Distribution, each of ATL and Odetics shall
consult with the other prior to issuing any press releases or otherwise making
public statements with respect to the IPO, the Distribution or any of the other
transactions contemplated hereby and prior to making any filings with any
governmental authority with respect thereto.
10.9 Headings. The article, section and paragraph headings contained in
this Agreement and in the Ancillary Agreements are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or any Ancillary Agreement.
10.10 Survival of Covenants and Representations and Warranties. Except as
expressly set forth in any Ancillary Agreement, the covenants, representations
and warranties contained in this Agreement and each Ancillary Agreement, and
liability for the breach of any obligations contained herein, shall survive each
of the Separation, the IPO and the Distribution and shall remain in full force
and effect regardless of whether Odetics shall consummate, delay, modify or
abandon the Distribution.
10.11 Waivers of Default. Waiver by any party of any default by the
other party of any provision of this Agreement or any Ancillary Agreement shall
not be deemed a waiver by the waiving party of any subsequent or other default,
nor shall it prejudice the rights of the other party.
10.12 Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party or parties who are or are to be
thereby
24
<PAGE> 25
aggrieved shall have the right to specific performance and injunctive or other
equitable relief of its rights under this Agreement or such Ancillary
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The parties agree
that the remedies at law for any breach or threatened breach, including
monetary damages, are inadequate compensation for any loss and that any defense
in any action for specific performance that a remedy at law would be adequate
is waived. Any requirements for the securing or posting of any bond with such
remedy are waived.
10.13 Amendments.
(a) No provisions of this Agreement or any Ancillary Agreement shall
be deemed waived, amended, supplemented or modified by any party, unless such
waiver, amendment, supplement or modification is in writing and signed by the
authorized representative of the party against whom it is sought to enforce
such waiver, amendment, supplement or modification. Without limiting the
foregoing, the parties agree that any waiver, amendment, supplement or
modification of this Agreement or any Ancillary Agreement that solely relates
to and affects only two of the three parties hereto shall not require the
consent of the third party hereto.
(b) Without limiting the foregoing, the parties anticipate that,
prior to the Closing Date, some or all of the Schedules to this Agreement may
be amended or supplemented and, in such event, such amended or supplemented
Schedules shall be attached hereto in lieu of the original Schedules.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties have caused this Separation
and Distribution Agreement to be executed by their duly authorized
representatives.
ODETICS, INC.
a Delaware corporation
By:
--------------------------------------
Joel Slutzky, Chief Executive Officer
ATL PRODUCTS, INC.
a Delaware corporation
By:
--------------------------------------
Kevin C. Daly, Chief Executive Officer
26
<PAGE> 27
EXHIBIT A
Description of Services Calculation of Fees
----------------------- -------------------
<PAGE> 1
EXHIBIT 10.4
TAX ALLOCATION AGREEMENT
BY AND BETWEEN
ODETICS, INC.
AND
ATL PRODUCTS, INC.
<PAGE> 2
TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT (the "Agreement"), dated as of
March 1, 1997, by and between ODETICS, INC., a Delaware corporation
("Odetics"), and ATL PRODUCTS, INC., a Delaware corporation ("ATL"), is entered
into in connection with the initial public offering ("IPO") of ATL. For
purposes of this Agreement, ATL shall also be deemed to refer ATL Products,
Inc., a California corporation, as predecessor of ATL.
WHEREAS, Odetics on behalf of itself and its present and
future subsidiaries other than ATL and its subsidiaries (the "Odetics Group"),
and ATL on behalf of itself and its subsidiaries (the "ATL Group") have
determined that it is necessary and desirable to provide for allocation between
the Odetics Group and the ATL Group of all responsibilities, liabilities and
benefits relating to taxes paid or payable by either group for all taxable
periods, whether beginning before, on or after the IPO, and to provide for
certain other matters;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Code: The Internal Revenue Code of 1986, as amended.
1.2 Effective Date: April 1, 1996.
1.3 Post-Spinoff Period: Any taxable period of ATL ending after
the distribution by Odetics of all of its ATL stock.
1.4 Pre-Spinoff Period: Any taxable period of ATL ending on or
before the distribution by Odetics of all of its ATL stock.
1.5 Spinoff: The distribution by Odetics of all of its ATL stock.
1.6 Tax or Taxes: All taxes of the Odetics Group and the ATL
Group, including any additions to tax, interest and penalties relating to such
taxes.
1.7 Tax Benefit: The tax effect of any loss, deduction, credit or
other item that decreases taxes paid or payable.
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<PAGE> 3
1.8 Tax Detriment: The tax effect of any income, gain, recapture
of credit or other item that increases taxes paid or payable.
ARTICLE II
FILING OF TAX RETURNS
2.1 Pre-Spinoff Period Income Tax Returns
(a) Federal Income Tax Returns. The income and other tax
items of ATL for any Pre-Spinoff Period shall be included in the Odetics
consolidated federal income tax return; provided that ATL is a member of the
Odetics "affiliated group" within the meaning of Section 1504 of the Code.
Odetics shall prepare and timely file all consolidated federal income tax
returns for all such periods.
(b) State Income Tax Returns. Odetics shall prepare and
timely file any consolidated or combined state income tax return that includes
an Odetics Group member and an ATL Group member for all Pre-Spinoff Periods.
2.2 Other Tax Returns. All tax reports or returns for Pre-Spinoff
Periods not covered by Section 2.1 and all tax reports or returns for
Post-Spinoff Periods shall be prepared and filed by ATL for the ATL Group and
by Odetics for the Odetics Group unless otherwise mutually agreed to by them.
ARTICLE III
PAYMENT OF TAXES
3.1 Payment of Taxes in General
(a) Except as otherwise provided in this Article III,
Odetics shall pay, and shall indemnify and hold harmless ATL and each other
member of the ATL Group from and against, all Taxes attributable to the Odetics
Group and the ATL Group (including any Taxes arising to any member of the ATL
Group by virtue of Section 1.1502-6 of the Treasury Regulations), whether
heretofore or hereafter arising or incurred. Odetics shall be entitled to any
reduction in or refund of Taxes for which it is responsible pursuant to the
preceding sentence (except any reduction in or refund of Taxes resulting from
carrybacks of ATL as described in Section 3.4).
(b) ATL shall pay, and shall indemnify and hold harmless
each Odetics Group member from and against, (i) all Taxes attributable to the
ATL Group (in the case of income or franchise Taxes, as determined under
Section 3.2) for any Pre-Spinoff Period commencing on or after the Effective
Date and (ii) all Taxes for any Post-Spinoff
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<PAGE> 4
Period that are attributable to the ATL Group. ATL shall be entitled to any
reduction in or refund of Taxes for which it is responsible pursuant to the
preceding sentence.
(c) Notwithstanding anything to the contrary herein,
Odetics shall be responsible for, and shall indemnify the ATL Group against any
Taxes resulting from the reorganization of the international operations of
Odetics and ATL prior to the IPO.
(d) If a member of the Odetics Group or the ATL Group, as
the case may be, receives a refund of Taxes to which the other group is
entitled under this Article III, then such member shall remit such refund to
the other group by promptly sending such refund to Odetics or ATL, as the case
may be.
3.2 Allocation and Payment of Income and Franchise Taxes
(a) The consolidated Tax liability of the Odetics
consolidated group for each year commencing on or after the Effective Date
shall be apportioned among the Odetics Group and ATL Group members in
accordance with this paragraph. For purposes of this Agreement, the
consolidated Tax liability shall include any liability for alternative minimum
Tax. The Tax liability for a taxable year shall be apportioned only among the
members of the Odetics consolidated group with separate company taxable income
for that year (the "Profit Members"). The Tax liability will be allocated to
the Profit Members in the same ratio as each Profit Member's separate company
taxable income bears to the total of the separate company taxable incomes of
all Profit Members. No Tax liability will be allocated to members of the
affiliated group with a taxable loss computed on a separate return basis ("Loss
Members"). The Profit Members will make payments to Loss Members for Tax
Benefits to the Profit Members as a result of losses or credits generated by
the Loss Members. For purposes of allocating alternative minimum Tax,
alternative minimum taxable income amounts shall be substituted for taxable
income amounts in the foregoing calculation.
(b) The principles set forth in Section 3.2(a) shall be
applied for the allocation of state income Taxes in states where the Odetics
affiliated group files consolidated or combined returns, with appropriate
modifications, to account for differences in the tax laws of the United States
and individual states. As a general rule, the amount of the consolidated or
combined Tax liability to a particular state shall be allocated among the
profitable members of a combined or consolidated group filing in such state
based on the relative amounts of their deemed taxable income in that state.
For this purpose, each member of the consolidated or combined group of
corporations filing in a particular state shall generally be treated as having
an amount of deemed taxable income in that state which that member would be
required to report to the state if the member were filing a separate franchise
or income tax return for the state, but applying the combined apportionment
factors which are in effect for the subject consolidated or combined group of
corporations (rather than the member's individual factors).
Page 3
<PAGE> 5
(c) Payment of the consolidated or combined income or
franchise Tax liability for a taxable period shall be made according to the
schedule of estimated tax installments and final payments prescribed in the
Code or applicable state law. ATL shall pay to Odetics the ATL Group members'
share of each Tax payment within five (5) days of receiving notice from
Odetics, but in no event more than ten (10) days prior to the due date for each
such payment and no later than such due date. Any overpayment of estimated Tax
shall be promptly refunded to the member which made such overpayment.
3.3 Adjustments to Tax Liability and Tax Attributes
(a) Odetics shall be responsible for, and shall indemnify
and hold harmless each member of the ATL Group from and against, all
adjustments to Taxes attributable to the Odetics Group, whether heretofore or
hereafter arising or incurred, except Taxes for which the members of the ATL
Group are liable pursuant to Section 3.1(b).
(b) Except as provided in Section 3.3(c), Odetics shall
be entitled to any Tax Benefit and shall bear any Tax Detriment resulting from
adjustments to Taxes attributable to the Odetics Group or the ATL Group (except
adjustments resulting from carrybacks of ATL from a Post-Spinoff Period). If
an adjustment to a tax item attributable to the Odetics Group increases the Tax
liability of the Odetics Group and correspondingly reduces a Tax liability for
which the ATL Group is responsible under this Agreement, ATL shall pay promptly
to Odetics the amount of the Tax Benefit realized by the ATL Group. If an
adjustment to a tax item attributable to the Odetics Group reduces the Tax
liability of the Odetics Group and correspondingly increases a Tax liability
for which the ATL Group is responsible under this Agreement, Odetics shall pay
promptly to ATL the amount of the Tax Detriment realized by the ATL Group.
(c) ATL shall be responsible for, and shall indemnify and
hold harmless each Odetics Group member from and against, all adjustments to
Taxes (i) for any Pre-Spinoff Period commencing on or after the Effective Date
with respect to the ATL Group and (ii) for any Post-Spinoff Period with respect
to the ATL Group. If an adjustment to a tax item for which ATL is responsible
under this Section 3.3 increases the Tax liability of the ATL Group and
correspondingly reduces the Tax liability of the Odetics Group, Odetics shall
pay promptly to ATL the amount of the Tax Benefit realized by the Odetics
Group. If an adjustment to a tax item for which ATL is responsible under this
Section 3.3 reduces the Tax liability of the ATL Group and correspondingly
increases the Tax liability of the Odetics Group, ATL shall pay promptly to
Odetics the amount of the Tax Detriment incurred by the Odetics Group.
3.4 Carrybacks from Post-Spinoff Periods to Pre-Spinoff Periods.
Any loss, credit or other item attributable to the ATL Group and arising in a
Post-Spinoff Period may be carried back to a consolidated or combined return of
the Odetics affiliated group for a
Page 4
<PAGE> 6
Pre-Spinoff Period as permitted under applicable law. Odetics shall cooperate
with any ATL Group member to the extent reasonably necessary (including,
without limitation, amending any return and filing any claim for refund) for
such member to realize the Tax Benefit of carrying such loss, credit or other
item back to such Pre-Spinoff Period. Odetics shall remit promptly to ATL any
refund or reduction in Tax resulting from such carryback; provided, however,
that the amount payable in respect of any such refund shall be reduced by the
amount of any Tax incurred by any Odetics Group member as a result of the
accrual or receipt of the refund.
ARTICLE IV
COOPERATION
4.1 Cooperation in General
(a) Each of Odetics and ATL agrees to make available to
the other party documents and records in its custody and in the custody of any
member of its group, to furnish other information and otherwise to cooperate to
the extent reasonably required for the filing of tax returns and the handling
of audits of such other party.
(b) So long as the ATL Group is included in the
consolidated financial statements of Odetics, ATL shall timely provide the
necessary financial information of the ATL Group to Odetics so that Odetics may
prepare a consolidated tax provision to meet its deadlines.
4.2 Notice, Defense and Settlement of Tax Claims
(a) If a member of the Odetics Group or ATL Group
receives written notice of a deficiency, contest, audit or other proceeding
with respect to a proposed Tax liability for which a member of the other group
is or may be liable under this Agreement (including liability hereunder to
indemnify or reimburse a member of the other group), then the recipient shall
notify the other group of such matter by promptly sending written notice
thereof to Odetics or ATL, as the case may be. Odetics and ATL shall cooperate
to contest and defend any such proposed Tax liability, with each party bearing
its own expenses relating to such proceeding. The corporation that is liable
under applicable law for such proposed Tax liability (without regard to this
Agreement) shall not settle, compromise or otherwise agree to pay such
liability without the consent of the party that is liable for such Tax under
this Agreement. Such consent shall not be unreasonably withheld.
(b) Odetics shall be responsible for responding to any
notice of deficiency, contest, audit or other proceedings with respect to a
proposed Tax liability of a consolidated or combined federal or state tax
return of the Odetics Group or the ATL Group for a Pre- Spinoff Period. ATL
shall be responsible for responding to any notice
Page 5
<PAGE> 7
of deficiency, contest, audit or other proceedings with respect to a proposed
Tax liability of a stand-alone tax return of ATL or any member of the ATL Group
for a Pre-Spinoff Period. In addition, ATL shall be responsible for responding
to any proposed claims for Taxes other than income or franchise taxes,
including but not limited to sales, property and payroll Taxes, attributable to
the ATL Group for a Pre-Spinoff Period. Odetics shall bear the expense of and
have control of such proceedings relating to the ATL Group except in cases
involving Taxes for which the ATL Group is responsible under this Agreement.
4.3 Confidentiality. The members of both the Odetics Group and
the ATL Group understand the confidential nature of financial information
disclosed in tax returns and the related supporting documentation. Each of
Odetics and ATL (on behalf of themselves and the members of their respective
groups) hereby agrees not to release any tax and supporting documentation or
information with respect to the other party to any outside party (including
taxing authorities) without the consent of the other party, which consent shall
not be unreasonably withheld.
ARTICLE V
RESOLUTION OF DISPUTES
Any dispute or ambiguity concerning the amount of any payment provided
for under this Agreement shall be resolved, in a manner consistent with the
principles and procedures set forth in this Agreement, by an internationally
recognized accounting firm (a so-called "Big- Six" accounting firm) jointly
selected by Odetics and ATL. The judgment of such accounting firm shall be
conclusive and binding upon each of the parties to this Agreement. The
accounting firm's fee shall be borne equally by Odetics and ATL.
ARTICLE VI
GENERAL
6.1 Waiver. Any waiver by any party of any default by the other
party hereunder shall not be deemed to be a continuing waiver of such default
or a waiver of any other default or of any of the terms and conditions of this
Agreement.
6.2 Amendments. The terms and conditions of this Agreement may
not be superseded, modified or amended except in writing stating that it is
such a modification and signed by an authorized representative of each party
hereto.
6.3 Governing Law; Forum Selection. This Agreement shall be
governed by the laws of the State of California, without reference to conflict
of laws principles. All disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction and venue of the California state courts
of Orange County (or, if there is exclusive federal
Page 6
<PAGE> 8
jurisdiction, the United States District Court for the Southern District of
California), and the parties consent to the personal and exclusive jurisdiction
and venue of these courts.
6.4 Attorneys' Fees. The prevailing party in any legal action
brought by one party against the other shall be entitled, in addition to any
other rights and remedies it may have, to reimbursement for its expenses
incurred thereby, including court costs and reasonable attorneys' fees.
6.5 Complete Agreement. This Agreement constitutes the entire
agreement between the parties as to the subject matter hereof, and supersedes
and replaces all prior or contemporaneous agreements, written or oral,
regarding such subject matter, including any prior tax sharing or tax
allocation agreements.
6.6 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of each party hereto, its respective successors and
assigns, and each member of the Odetics Group and the ATL Group not a party
hereto.
6.7 Notices. Any notice which any party desires or is obligated
to give to the other shall be given in writing or by facsimile or telex and
sent to the chief financial officer of the other party. Except as otherwise
expressly provided herein, notice shall be deemed to have been received on the
earlier of the date when actually received or ten (10) days after being
deposited in the mail, postage prepaid, registered or certified mail, or within
one (1) day if by facsimile or telex, promptly confirmed in writing, properly
addressed to the other party.
6.8 Headings; Counterparts. Headings to sections of this
Agreement are to facilitate reference only, do not form a part of this
Agreement and shall not in any way affect the interpretation hereof. This
Agreement may be executed in two (2) or more counterparts or duplicate
originals, all of which shall be regarded as one and the same instrument, and
which shall be the official and governing version in the interpretation of this
Agreement.
6.9 Partial Invalidity. If any provision in this Agreement shall
be found or be held to be invalid or unenforceable in any jurisdiction in which
this Agreement is being performed, then the meaning of said provision shall be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be
severed from the remainder of this Agreement which shall remain in full force
and effect. In such event, the parties shall negotiate, in good faith, a
substitute, valid and enforceable provision which most nearly effects the
parties' intent in entering this Agreement.
6.10 Additional Members. If during a Pre-Spinoff Period any other
corporation becomes a member of the Odetics Group or the ATL Group, then such
corporation shall join in and be bound by this Agreement.
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<PAGE> 9
6.11 Effect of Prior Tax Allocation Agreement. The parties are
parties to an existing tax allocation agreement. Such prior allocation
agreement is superseded by this Agreement retroactive to the Effective Date.
IN WITNESS WHEREOF, Odetics and ATL have caused this Agreement
to be duly executed by their respective officers, each of whom is duly
authorized, as of the date first above written.
ODETICS, INC.
By
------------------------------------
Title
---------------------------------
ATL PRODUCTS, INC.
By
-----------------------------------
Title
--------------------------------
Page 8
<PAGE> 1
EXHIBIT 10.12
CONFIDENTIAL TREATMENT REQUESTED.
CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
BASIC ORDER AGREEMENT
#13844
DIGITAL EQUIPMENT CORPORATION
("Buyer")
AND
ODETICS, INC.
("Seller")
FOR
AUTOMATED HALF INCH TAPE LIBRARIES
(Material, Spares, and Repairs)
PURCHASE PERIOD: April 15, 1993 - August 30, 1998
- --------------------------------------------------------------------------------
(C) DIGITAL EQUIPMENT CORPORATION 1993
This Is An Unpublished Work Which Contains Confidential And Secret Information
Which Is Protected Under The Copyright Laws. The Existence Of The Copyright
Notice Is Not To Be Construed As An Admission Or Presumption That Publication
Has Occurred. Unauthorized Copying Is Strictly Prohibited. All Rights Reserved.
- --------------------------------------------------------------------------------
<PAGE> 2
INDEX
SECTION PAGE
SECTION I BASIC ORDER AGREEMENT .................................... 3
SECTION II PURCHASE ORDERS .......................................... 4
SECTION III PURCHASE PERIOD .......................................... 5
SECTION IV PRICING .................................................. 5
SECTION V MATERIAL FORECAST/CAPACITY PLANNING ...................... 7
SECTION VI DELIVERY/LEADTIME/FLEXIBILITY ............................ 8
SECTION VII QUALITY, INSPECTION, AND ACCEPTANCE....................... 11
SECTION VIII PAYMENT .................................................. 12
SECTION IX WARRANTY ................................................. 12
SECTION X CONFIDENTIAL INFORMATION AND ADVERTISING.................. 13
SECTION XI INTELLECTUAL PROPERTY INDEMNITY .......................... 14
SECTION XII CHANGES .................................................. 14
SECTION XIII TERM OF AVAILABILITY ..................................... 16
SECTION XIV U.S. CUSTOMS, MARKING, AND DUTY DRAWBACK.................. 17
SECTION XV FORCE MAJEURE ............................................ 18
SECTION XVI COMPLIANCE WITH LAWS ..................................... 18
SECTION XVII TERMINTION FOR CAUSE ..................................... 19
SECTION XVIII DOCUMENTATION, TRAINING & TECHNICAL
SUPPORT ............................................... 20
SECTION XIX RIGHTS AND ASSISTANCE TO REPAIR .......................... 20
SECTION XX SIMILAR PRODUCTS ......................................... 21
SECTION XXI BUSINESS REVIEWS ......................................... 21
SECTION XXII NO IMPLIED LICENSE ....................................... 21
SECTION XXIII NOTICES .................................................. 21
SECTION XXIV LIMITATION OF LIABILITY .................................. 22
SECTION XXV CONSIGNED MATERIAL ....................................... 22
SECTION XXVI GENERAL .................................................. 23
EXHIBIT A Material (Product) Specification
B1 Material Pricing
B2 Spares/Repairs Pricing
B3 Worldwide Ordering and Selling Locations
B4 Seller's Cumulative LEADTIME and Unique
Raw Material
C Qualification and Quality Requirements
D Documentation, Training, and Technical Support
E Manufacturing License and
Technical Assistance Agreement
F Non-Disclosure Agreement
Hold Harmless, Indemnity Agreement,
Evidence of Insurance
G Bailment Agreement
H End of Life Requirements
I Return Authorization Procedure for Material,
Spares, and Repairs
J Packaging Requirements
K EEO Certification
L Clean Air and Water Certification
M Glossary of Terms
<PAGE> 3
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SECTION I BASIC ORDER AGREEMENT
A. This Basic Order Agreement and all attachments (called the "Agreement")
is entered into and effective the 15th day of April, 1993 and is made
between Digital Equipment Corporation and those subsidiaries of Digital
Equipment Corporation which are named on and have signed the signature
page of this Agreement (collectively referred to as "Buyer") and
Odetics, Inc. and those subsidiaries of Odetics, Inc. which are named
on and have signed the signature page of this Agreement (collectively
referred to as "Seller"). The Terms and Conditions herein exclusively
govern the purchase and sale of the Material, Spare Parts, Repair
Parts, Accessories, and Unique Raw Material more fully described in
Exhibit B, Material/Spares Pricing, and in applicable specifications,
attached hereto and incorporated herein by reference ("Material,
Spares, and Repairs").
B. This Agreement does not specify a quantity of Material, Spares, and
Repairs to be procured by Buyer, NOR DOES THIS AGREEMENT OBLIGATE BUYER
TO PURCHASE ANY MATERIAL, SPARES, and REPAIRS. All such quantities
shall be specified on Buyer's Purchase Orders as defined in Clause A of
Section II, Purchase Orders, issued under the provisions of this
Agreement and incorporated herein by reference.
C. If any term of this Agreement conflicts with any term of an issued
Purchase Order, this Agreement shall take precedence. If a conflict
occurs within this Agreement, the order of precedence shall be the
Agreement, followed by the Exhibits, and finally the Attachments.
D. Notwithstanding the requirement in Section XXIV, GENERAL, for two
signatures to amend this Agreement, by mutual agreement of the parties,
Buyer may add products of Seller to the list of Material, Spares, and
Repairs available for purchase hereunder by adding such products on a
Purchase Order which is accepted by Seller. Such added products shall
be deemed "Material, Spares, and Repairs as defined herein as though
listed in Exhibits B1 and B2 at the time of execution of this
Agreement. The price for which such added products shall be available
for purchase under this Agreement shall be as stated on such accepted
Purchase Order, subject to the provisions of this Agreement. The Buyer
shall subsequently memorialize the addition to this Agreement of the
added products in an amendment pursuant to Section XXVI, GENERAL.
E. Other than the EXCEPTION: contained in this paragraph, Seller grants
Buyer all necessary rights and licenses for Buyer to market, promote,
resell, distribute, and service
<PAGE> 4
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the Material and including without limitation, rights and licenses
under any applicable patents, copyrights, trademarks, trade secrets,
mask works, and other intellectual property rights. Buyer shall have
the right to use Seller's name or trademarks in connections with any
distribution of the Material under this Agreement.
EXCEPTION: Buyer shall not sell ACL5480 Material that attaches directly
to AS400 product or future derivatives of AS400 product.
F. Terms are defined in this Agreement and further defined in Exhibit M
Glossary of Terms.
SECTION II PURCHASE ORDERS
A. The term "Purchase Order" shall mean Buyer's written Purchase Order
form and any documents incorporated therein by reference.
B. Buyer shall order Material, Spares, and Repairs by issuing facsimile or
telephonic orders or Purchase Orders. Buyer shall issue confirming
written Purchase Orders within ten (10) days after issuing such
facsimile or telephonic orders. Each Purchase Order shall specify items
such as: item description, quantity, delivery schedule, destination,
total price of the Purchase Order. Each Purchase Order issued under
this Agreement shall be made part of, and be incorporated into, this
Agreement. Seller shall have five (5) days after receipt to reject the
Purchase Order. By not rejecting the Purchase Order within five (5)
days, Seller shall have accepted the Purchase Order.
Buyer may, at its option, order Spares or Repairs on a priority one
("P-l") basis by issuing facsimile, electronic mail, or telephonic
orders for P-1 orders only, or by issuing its Purchase Order form
(collectively referred to as "P-1 Purchase Orders").
Seller shall confirm and acknowledge P-1 Purchase Orders placed via
facsimile or telephonic within four (4) hours of receipt of such
Purchase Orders. Seller shall be obligated to comply with all P-1
Purchase Orders issued in accordance with this Agreement. Accordingly,
any failure of Seller to acknowledge any such P-1 Purchase Orders shall
not be deemed a rejection of such order.
Acceptance by Seller is limited to the provisions of the Agreement and
the Purchase Order. No additional or different provisions proposed by
Seller shall apply. In addition, the parties agree that this Agreement
and issued
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Purchase Orders constitute a Contract for the Sale of Goods and satisfy
all statutory and legal formalities of a contract.
C. By mutual agreement only, If Buyer's Purchase Order specifies export
after passage of title, Seller shall furnish Buyer with all necessary
Export/Import documentation. If Buyer's Purchase Order specifies export
before passage of title, Seller shall prepare all export/import
documentation and furnish a copy to Buyer. Export/Import documentation
shall be in accordance with the INCOTERMS then in force.
D. If Seller has more than one (1) geographic location which could supply
Spares and/or Repairs, Seller shall make such Spares and/or Repairs
available to Buyer from Seller's closest location to Buyer's ship to
location. Any of Buyer's locations outside the United States may place
orders with Seller's specified United States and/or foreign facilities
for such Spares and Repairs.
E. Seller shall provide Buyer with a listing of all Seller's Domestic and
Foreign sales and repairs locations with complete addresses, phone
numbers, and contacts on Exhibit B3 Worldwide Ordering and Selling
Locations.
Pursuant to the terms of Section XXIII NOTICES, this exhibit may be
revised by mutual agreement of the parties without the need to amend
the Agreement provided Buyer issues a revised Exhibit B3 in writing
showing the date of revision.
F. [This space reserved for future drop ship language and electronic POs.]
SECTION III PURCHASE PERIOD
A. The period during which Buyer may issue Purchase Orders for Material,
Spares, Repairs under this Agreement (Purchase Period) shall last five
(5) years, beginning on April 1, 1993, and expiring on August 30, 1998.
B. The Purchase Period may be mutually extended by the parties for up to
two (2) additional consecutive twelve (12) month periods. For any
extension(s) requested by Buyer, no less than ninety (90) days written
notice shall be given Seller prior to the end of the then current
Purchase Period.
C. The period during which Buyer may issue Purchase Orders for Spares and
Repairs under this Agreement extends for seven (7) years (Spares
Purchase Period) and shall begin at the end of the the Material
Purchase Period or at such a time
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that the parties have agreed to execute an End of Life Plan
(hereinafter "EOL Plan") a sample of which is contained in Exhibit H,
End of Life Requirements. The Spares Purchase Period may be extended
upon prior mutual written agreement of the parties.
SECTION IV PRICING
A. Except for engineering prototypes, the prices for Material are set
forth in Exhibit B1 Material Pricing and Exhibit B2 Spares/Repairs
Pricing and shall remain fixed for the period set forth therein
(Pricing Period). Ninety (90) days prior to the end of the then current
Pricing Period, Buyer and Seller shall meet to review the pricing and
Material, Spares, and Repairs for the next Pricing Period. If Buyer and
Seller reach agreement, a new Exhibit B shall be generated for the next
Pricing Period and shall be added by amendment to this Agreement. If
Buyer and Seller fail to reach agreement on pricing for the next
Pricing Period, this Agreement may be terminated at the end of the then
current Pricing Period. Buyer's sole liability to Seller for such
termination shall be to pay Seller any unpaid balance due for
conforming Material:
1. Delivered against Buyer's Purchase Order(s) before receipt of
Buyer's termination notice; or
2. Ordered by Buyer and scheduled for delivery within the
LEADTIME provisions specified in SECTION VI of this Agreement.
3. Unique Raw Materials specified in Exhibit B4, Seller's
Cumulative LEADTIME and any Accessories ordered.
B. Prices include all charges such as packaging, packing, customs duties
imposed before passage of title, and all taxes except sales, use, and
other such taxes imposed upon the sale or transfer of Material, Spares,
and Repairs for which Buyer is solely responsible under applicable law
and for which Buyer is properly invoiced by Seller.
C. Seller represents that prices established herein, to be paid Buyer,
shall not exceed the prices charged to any other customer of Seller for
materials which are the same or substantially similar to the Material,
Spares, and Repairs taking into account the quantities and the Terms
and Conditions of this Agreement, and Seller shall forthwith refund any
excess amounts paid by Buyer.
D. Prices for engineering prototypes (hereinafter "Prototypes") apply to
Magnum Material only and include the cost of
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Seller's maintaining Prototypes to the current engineering revision
level up to the point of First Revenue Shipment (hereinafter "FRS"),
which shall be deemed to have occurred when Buyer's engineer releases
Material to manufacturing at revision level AO1. Price shall not
* exceed [ ] fully configured with PTM, IOD, and MUC installed.
By mutual agreement only, upgrading shall occur by Seller upgrading
Prototypes at Buyer's facilities, or by Seller providing upgrade "kits"
to Buyer for Buyer to upgrade Prototypes, or Prototypes shall be
shipped to a facility of Seller's choice for upgrade or replacement.
Seller shall pay all cost of shipping and handling, whichever method
best satisfies the upgrading of Buyer's Prototypes.
Buyer shall notify Seller in writing when the qualification of Material
has reached a point where Seller can begin shipping FRS quality
Material. At this point, Seller shall upgrade or at Seller's option
replace all Prototypes to the AO1 revision level at which point, no
further upgrades shall be required.
E. Prices for Accessories are contained in Exhibit B1 and are firm for a
period of twelve (12) months beginning January 1, 1994 and are based
upon the additional conditions contained herein. Prices shall be
reviewed once per year. Seller shall provide a written notice of intent
to change prices no later than October 1, 1994, and once per year
thereafter. All price changes shall be mutually agreed upon. Once
agreed upon, the current Exhibit B1 shall be replaced with a new
Exhibit B1 along with a new calendar date placed in the lower right
corner of the Exhibit.
By implementing a new Exhibit B1, the parties agree that an Amendment
to the contract is not required to execute approved changes to
Accessories Pricing.
Prices for Accessories are calculated using one of the following
methods for each item of Accessories.
1. If Buyer consigns Accessories, the Price for Accessories shall
not exceed the cost of the actual value added service of
* packaging and/or installing the Accessories plus a [ ] as
quoted by Seller and mutually agreed by the parties.
2. If Seller purchases Accessories from one of Buyer's qualified
suppliers, Seller shall not charge Buyer more
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* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION.
<PAGE> 8
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* than [ ] for value added service of packaging and/or
installing the Accessories as quoted by Seller and mutually
agreed by the parties.
It is understood by the parties that Seller is not responsible
for the qualification or quality of Accessories provided under
subparagraphs 1 and 2 above, except to perform normal incoming
inspection.
3. If Seller purchases Accessories from one of Seller's qualified
suppliers, then Seller shall provide Buyer a written quotation
* and charge Buyer a price mutually agreed by the parties. [ ].
Buyer may, from time to time, change its requirements for Accessories
and modify the Accessories Bill of Materials currently contained in
Exhibit B1. In the event a change occurs to Buyer's Accessories
requirements during the year causing Buyer's Material price to change,
Seller shall promptly notify Buyer in writing within ninety (90) days.
A new Exhibit B1 shall be submitted along with the mutually agreed upon
price for the new Accessories item.
Accessories contained in Exhibit B1, Part I are included in the total
price for Buyer's Material and cannot be purchased by Buyer separately.
Accessories contained in Part II of the Exhibit can be purchased
separately and shall be packaged in individual cartons. Purchases
contained in Exhibit B1, Part II do not require a forecast by Buyer.
SECTION V MATERIAL FORECAST/CAPACITY PLANNING
A. Buyer has implemented significant cost/quality improvement programs
within its manufacturing environment. Several of these programs fall
under the general umbrella term called "Just In Time, Total Quality
Control" ("JIT/TQC"), Six Sigma and ISO 9000. These programs are
outlined in Exhibit C, Qualification and Quality Requirements. It is
Buyer's intention to extend these programs to the Seller's
manufacturing location(s) during the period of this Agreement. Upon
mutual agreement of the parties to the implementation of these
programs, Seller agrees to provide quarterly progress reports to Buyer.
Minimum continuous improvement criteria, such as but not limited to
delivery flexibility and total quality requirements, have been
incorporated into this Agreement. When implemented and mutually agreed
upon, a cost/quality program, shall contain
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* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
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the details to the continuous improvement criteria and their schedule.
B. After initial FRS of Magnum Material, Buyer shall use its best efforts
to maintain an order status of approximately ninety (90) days worth of
Magnum Material. In addition, Buyer shall, for information purposes
only and for the convenience of Seller, provide Seller a rolling
Material forecast issued approximately every thirty (30) days, which
when combined with the on order Material will equal approximately
twelve (12) months visibility into Buyer's Material requirements.
For ACL580 Material, Buyer shall use its best efforts to provide Seller
a twelve (12) month rolling forecast plus place approximately thirty
(30) days of ACL5480 Material on Purchase Orders subject to the
provisions contained in Section VI, Clause A.
C. For capacity planning purposes only, Seller warrants to Buyer the
Maximum Capacity (100% load) to produce Buyer's Material as outlined
below. Subject to the terms and conditions of this Agreement, Seller
represents it has the following Material delivery capacity or the
ability to ramp to this capacity within six (6) months when the need to
do so is indicated by the latest six (6) months of Buyer's rolling
twelve (12) month forecast. The following capacity may be modified upon
the prior mutual written agreement of the parties.
<TABLE>
<CAPTION>
---------------------------------------------------------------------
MANUFACTURING CAPACITY CY93 CY94 CY95 CY96
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Theoretical Maximum 1200 2500 3000 3000
Seller's RAMP 800 1500 2500 2500
Buyer's Magnum RAMP 100 500 600 350
---------------------------------------------------------------------
</TABLE>
D. SELLER AGREES THAT BUYER IS IN NO WAY OBLIGATED TO PURCHASE HEREUNDER
OR TO COMMIT TO ANY OF THE ABOVE CAPACITY AND THAT SUCH INFORMATION IS
PROVIDED SOLELY TO ENSURE THAT SELLER HAS THE CAPACITY TO COMPLY WITH
ANY PURCHASE ORDER BUYER MAY ISSUE HEREUNDER. SELLER AGREES THAT BUYER
IS NOT RESPONSIBLE FOR ANY COSTS OR EXPENSES THAT SELLER MAY INCUR
INCLUDING BUT NOT LIMITED TO THE PROVIDING, MAINTAINING, OR DISPOSITION
OF ANY CAPACITY INDICATED ABOVE OR ANY CHANGES THERETO. SELLER AGREES
THAT IN NO EVENT SHALL BUYER BE LIABLE FOR ANY RETROACTIVE PRICE
INCREASES ("BILLBACK") BASED ON BUYER' S FAILURE TO ACHIEVE ANY
ESTIMATED VOLUME FORECASTS PROVIDED BY BUYER TO SELLER.
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SECTION VI DELIVERY/LEADTIME/FLEXIBILITY
A.1. Beginning with the initial FRS of Magnum Material and for a period of
six (6) months only, Seller shall use its best efforts to meet the
delivery, Leadtime (herein "LEADTIME"), and flexibility terms contained
in this Section after which time, Seller shall comply to all terms
contained herein.
Buyer's Purchase Orders shall state Seller's committed delivery dates
for Material, Spares, and Repairs. TIME AND RATE OF DELIVERY ARE OF THE
ESSENCE OF ALL PURCHASES MADE UNDER THIS AGREEMENT.
2. LEADTIME is defined as the minimum period between Buyer's
issuance of a Purchase Order and the scheduled delivery date.
Initial LEADTIME is defined as the minimum LEADTIME required
for Seller to deliver Material when there is no quantity of
Material previously placed on Buyer's Purchase Orders and
there is no forecast for Material. Ongoing LEADTIME is the
LEADTIME to deliver Material when there is Material currently
scheduled for delivery on Buyer's Purchase Orders, and there
is Material forecasted.
For Magnum Material, Initial LEADTIME shall be no less than
ninety (90) days unless mutually agreed to by the parties.
Ongoing LEADTIME shall be less than ninety (90) days and is
based upon the total quantity of Material placed on Buyer's
Purchase Orders. Unless mutually agreed by the parties, the
maximum quantity of Material Buyer may order during the
Ongoing LEADTIME period is a percentage of the total quantity
of Material currently on order as referenced in Clause G. of
this Section VI.
3. Configuration of Material: It is Buyer's intent to install an
"on-line" customer order system at Seller's facility. Based
upon the quantity of Magnum Material on order during any
thirty (30) day period, Seller agrees to configure Magnum
Material to meet the specific customer requirements and
deliver the Magnum Material within five (5) days from its
receipt of customer order. This is based upon the
configuration order transmitted via the on-line system.
Configuration of Buyer's ACL5480 Material shall occur in
twenty-one (21) calendar days or less from the date the
configuration Purchase Order is issued. Once issued, orders
for ACL5480 Material are firm, and can not be canceled or
rescheduled unless mutually agreed by the parties.
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4. LEADTIME for Spares and Repairs is defined in Exhibit B2.
B. All deliveries shall be Free Carrier (hereinafter "FCA") Anaheim, CA
per Incoterms 1993. Buyer shall select the carrier and shall pay
transportation charges on a "freight collect" basis.
C. If Seller delivers Material, Spares, and Repairs more than one (1) day
in advance of the scheduled delivery date, Buyer may either return such
Material, Spares, and Repairs at Seller's expense for subsequent
delivery on the original delivery date or retain such Material, Spares,
and Repairs and postpone payment until it would have been due if Seller
had delivered Material, Spares, and Repairs as scheduled. Without
limiting any of Buyer's rights and remedies in equity or at law, if
Seller is more than one (1) day late in meeting the scheduled delivery
date, Buyer may require that Seller ship the Material, Spares, and
Repairs via premium means bearing the incremental premium shipping
charges or Buyer may cancel the order for such Material, Spares, and
Repairs without liability to the Buyer.
D. Seller shall deliver the exact quantity of Material, Spares, and
Repairs scheduled. If Seller delivers less than the scheduled
requirement, Seller shall correct the shortage within a two (2) day
period. If Seller fails to correct such shortage within this period,
without limiting any of Buyer's rights and remedies in equity or at
law, Buyer may cancel and/or return all or part of the order without
cost or liability. If Seller delivers more than the quantity ordered,
Buyer may return any excess Material, Spares, and Repairs at Seller's
expense.
E. Buyer may require that shipments of Material, Spares, and/or Repairs
under this Agreement be shipped by Seller to various destinations. The
Purchase Order shall clearly specify the "SHIP TO" location for each
order placed with Seller.
F. Buyer shall measure Seller's performance against commitments for the
purpose of establishing Seller's rate of timely delivery and LEADTIME
improvement against Buyer's requirements. Timely delivery shall mean
delivery of scheduled quantities no more than one (1) day early, or one
(1) day late.
G. Buyer may, without cost or liability, increase, decrease, or cancel the
quantity of Magnum Material ordered under this Agreement in accordance
with the following schedule.
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If Material is rescheduled, the same Material may be rescheduled a
second time providing the maximum reschedule period does not exceed six
(6) months from the originally scheduled delivery date. Material
rescheduled cannot subsequently be canceled.
<TABLE>
<CAPTION>
---------------------------------------------------------------
Period Percentage
In Days In Out Cancel
---------------------------------------------------------------
<S> <C> <C> <C>
* 00 - 14 [ ] [ ] [ ]
* 15 - 21 [ ] [ ] [ ]
* 22 - 30 [ ] [ ] [ ]
* 31 - 60 [ ] [ ] [ ]
* 61 - 90 [ ] [ ] [ ]
* 91 - 120 [ ] [ ] [ ]
---------------------------------------------------------------
</TABLE>
H. P-1 Purchase Orders
1. Seller shall accept and process Purchase Order(s) for P-1
requirements twenty four (24) hours a day, three hundred
sixty-five (365) calendar days a year. All P-1 purchase orders
shall be delivered to Buyer's designated carrier or freight
agent within twenty-four (24) hours of authorization.
2. Invoice(s) for P-1 Purchase Order(s) must be accompanied by a
copy of the waybill(s) for the shipment(s).
3. For Spares and Repairs only, if Buyer places a P-1 Purchase
Order because Seller has failed to meet any requirement of
this Agreement or of Buyer's Purchase Order(s) as they relate
to the required delivery date or quantity of conforming
Spares, and Repairs to be delivered, Seller shall pay all
transportation charges for such order.
I. A copy of Seller's packing list shall accompany all Material, Spares,
and Repairs shipments and shall indicate Buyer's Purchase Order Number,
Part Number, and Serial Number.
J. Seller shall notify Buyer and Agent, where applicable, of availability
of Material, Spares, and Repairs at least twenty-four (24) hours prior
to delivery to the designated place of delivery, as specified on
Buyer's Purchase Order.
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* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 13
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SECTION VII QUALITY, INSPECTION, AND ACCEPTANCE
A. Prior to delivery, Seller shall insure that all Material, Spares, and
Repairs are in accordance with the provisions of this Agreement,
including but not limited to Exhibit A, Material (Product)
Specification, and Exhibit C. Buyer's Quality Specification, Exhibit C,
and Buyer's Packaging Requirements, Exhibit J, and all other quality
requirements specified in the Purchase Specifications for Material,
Spares, and Repairs purchased under this Agreement, are incorporated
herein by reference.
B. Seller authorizes and agrees to assist Buyer in performing source
inspection and quality assurance reviews at Seller's manufacturing
facilities, but this shall in no way relieve Seller of its obligation
to deliver conforming Material, Spares, and Repairs nor waive Buyer's
right of inspection; nor does said right of inspection waive any rights
under the warranty provisions.
C. During the Inspection Period of ninety (90) days after Buyer's receipt
of the shipment of Material or Spares, and Repairs. Buyer shall return
Material, Spares, and Repairs which fails to pass inspection per
Acceptance Quality Level (AQL) criteria defined in Exhibit C for, at
Buyer's option, credit, or repair/replacement within five (5) days of
Buyer's notice to Seller of nonconformance. Seller shall designate
carrier and pickup of rejected Material, Spares, and Repairs and the
pickup shall occur within five (5) days of notice, or Buyer may select
a carrier and return rejected Material, Spares, and Repairs COD, and
risk of loss shall pass to Seller for rejected Material, Spares, and
Repairs FCA Buyer's dock.
D. In the event that Buyer supplies any outgoing test station(s) for
Seller's use, the terms of supplying such test station(s) are set forth
in the Bailment Agreement, Exhibit G and in Section XXV, Consigned
Material, hereto.
SECTION VIII PAYMENT
A. Buyer shall issue payment net thirty (30) calendar days after the later
of the scheduled delivery date and receipt of a correct packing list,
correct invoice, and conforming Material, Spares, and Repairs.
B. Amounts owed to Buyer due to rejections of Material, Spares, and
Repairs or discrepancies on paid invoices shall be at Buyer's option,
fully credited against future invoices payable by Buyer, or paid by
Seller within thirty (30)
<PAGE> 14
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calendar days from Seller's receipt of a debit memo or other written
request for payment from Buyer.
C. Seller and Buyer agree that Buyer may at its sole discretion utilize
for its own purpose or assign to third-parties all content credits for
the value, in whole or in part, of purchases made pursuant to this
Agreement. Such utilization or assignment of offset credits may be in
furtherance of fulfilling international offset obligations to any
government. Seller agrees to make available the maximum offset credits,
by the laws of the government in question and for which Buyer is
entitled, including those assignable to either party.
SECTION IX WARRANTY
A. Beginning with the effective date of this Agreement and for purchases
under this Agreement only, Seller warrants ACL5480 Material for
twenty-four (24) months from the date of delivery of Material to Buyer
or Buyer's customer. Seller warrants Buyer's Magnum II Material for
thirty (30) months and shall extend ACL5480 Material to thirty (30)
months beginning with ACL5480 Material scheduled for delivery after
Buyer's Magnum II Material has achieved First Revenue Shipment
(hereinafter "FRS").
Seller warrants Spares, Repairs, Accessories, and Unique Raw Material
as defined in Exhibit B2 and purchased under this Agreement for twelve
(12) months from the date of delivery to Buyer or Buyer's customer
except in the case where Seller is replacing Spares, Repairs,
Accessories, or Unique Raw Materials which have failed during the
Material warranty period. In which case the warranty period is the
amount of original warranty remaining on Buyer's Material. Purchases of
Expendables, also defined in Exhibit B2, shall carry no warranty unless
they are found to be defective as part of Buyer's original Material
warranty in which case they shall contain whatever Material warranty
remains.
Seller warrants that all Material, Spares, Repairs, Accessories, and
Unique Raw Materials shall be free from defects in material,
workmanship, and design, shall conform to applicable specifications,
drawings, samples, and descriptions referred to in this Agreement, and
shall be suitable for the purpose for which intended. Seller warrants
it has the right to convey the Material, Spares, Repairs, Accessories,
and Unique Raw Materials that the Material, Spares, Repairs,
Accessories, and Unique Raw Materials are free of all liens and
encumbrances, and do not infringe on any intellectual property
interest.
<PAGE> 15
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These warranties shall survive any inspection, delivery, payment, and
termination of this Agreement, and shall run to Buyer, its customers,
successors, and assigns. Seller agrees to provide the traceability of
remaining warranty by serializing all Spares/Repairs, which are Field
Replaceable Units (hereinafter "FRU") as contained in Exhibit B2.
Buyer shall have the right to enforce these warranties on behalf of any
of its customers.
B. Seller shall correct defects in Material, Spares, and Repairs at its
facility. Seller shall repair or replace all defective Material,
Spares, and Repairs within thirty (30) days unless, at Buyer's option
within five (5) business days from date of receipt of such Material,
Spares, and Repairs in which case, Buyer shall pay a warranty surcharge
as contained in Exhibit B2. Seller shall bear all warranty costs such
as labor, material, inspection, and shipping to and from Buyer's
facilities. If Buyer incurs any such costs, it may either recover them
directly from Seller or deduct them from any amounts due Seller.
C. In addition to the above remedies, by mutual agreement, Seller at its
expense, shall provide technical assistance and any parts necessary to
repair Material, Spares, and Repairs still under warranty, at Buyer's
facility. Seller shall provide this within forty eight (48) hours after
it receives Buyer's request for on-site support.
D. Limitation of Warranty: This warranty is limited in the event that
Buyer's Material, Spares, Repairs, Accessories, and/or Unique Raw
Materials are damaged or become defective:
1. As a result of accident or if not used for the purpose for
which it was intended.
2. By the use of parts, exclusive of software products, which are
not manufactured or sold by Seller under this Agreement.
3. By being modified without the written consent of the parties
of this Agreement.
4. As a result of service by a third party not mutually agreed to
by Buyer and Seller.
SECTION X CONFIDENTIAL INFORMATION AND ADVERTISING
A. Seller shall maintain as confidential and shall not disclose to any
person outside its employ, nor use for purposes other than performance
of this Agreement, any specifications,
<PAGE> 16
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drawings, blueprints, data, business information, or other confidential
information which Seller learns by virtue of this Agreement, except as
required by law, and after written notice to Buyer. Upon termination of
this Agreement, Seller shall promptly return to Buyer all confidential
material and all copies.
B. Without Buyer's prior written consent, Seller shall not in any manner
disclose, advertise, or publish the existence or terms of transactions
under this Agreement.
C. Buyer may reproduce and use Seller's manuals, schematics, and
merchandising literature provided by Seller under this Agreement.
D. The obligations of the Non-Disclosure Agreement most recently entered
into by the parties is hereby merged into this Agreement.
SECTION XI INTELLECTUAL PROPERTY INDEMNITY
Seller shall defend, at its expense, any claim against Buyer alleging
that Material, Spares, and Repairs, or any part thereof infringes any
patent, copyright, trademark, trade secret, mask work, or other
intellectual property interest in any country and shall pay all costs
and damages awarded, if Seller is notified promptly in writing of such
a claim. If an injunction against Buyer's or Buyer's customer's use,
sale, lease, license, or other distribution of the Material, Spares,
Repairs, or any part thereof results from such a claim (or if Buyer
reasonably believes such an injunction is likely), Seller shall, at its
expense, (and in addition to the Seller's other obligations, hereunder)
and as Buyer requests, obtain for Buyer and/or Buyer's customers the
right to continue using, selling, leasing, licensing, or otherwise
distributing the Material, Spares, and Repairs, or replace or modify it
so it becomes noninfringing but functionally equivalent. The provisions
of this Section shall not apply to any claim for infringement resulting
solely from Seller's compliance with Buyer's detailed written design
specifications, where provided.
SECTION XII CHANGES
A. Buyer must be advised in writing of ANY and ALL product or process
changes prior to implementation. Seller shall make no changes during
the Purchase Period for Material, Spares, and Repairs which affect
design, form, fit, function, appearance, reliability, place and process
manufacture, or packing and packaging specified by this Agreement
without Buyer's prior written approval. Buyer shall review Seller's
<PAGE> 17
17
written request for such changes within forty (40) days of Buyer's
receipt of such request and whatever documentation Buyer reasonably
requires to evaluate such request, which shall include all maintenance
related information and samples which incorporate the proposed
change(s). Buyer agrees to use reasonable efforts to issue to Seller,
Buyer's final acceptance or rejection of Seller's proposed change
within an additional forty (40) day period.
It is Buyer's intention to review and make disposition on all request
for changes in as timely a manner as possible. For significant changes,
Buyer may require the total number of days as mentioned in the above
paragraph to accomplish an accurate disposition. For non-significant
changes, Buyer may require only thirty (30) days in total. For minor
process changes, Buyer shall use its best efforts to approve changes
within three (3) business days. It is the sole responsibility of Buyer
to determine the significance of any request for change. For minor
process changes only, Seller may implement the change prior to Buyer's
approval. However, any changes rejected by Buyer may result in Seller's
returning the process to its original state and bearing all costs of
such rejected change request.
B. As a part of Seller's internal engineering process, prior to release of
any change, Seller shall demonstrate to Buyer's satisfaction that the
change has not affected the operation and functional performance of the
Material, Spares, and Repairs listed in Exhibit A, hereto.
C. For all changes approved by Buyer, Seller shall furnish to Buyer all
necessary documentation to enable installation and implementation of
the changes and make available for purchase by Buyer hereunder, parts
in kit form and at reasonable prices for nonmandatory changes.
D. Any significant change in manufacturing process or place of manufacture
must be certified per the procedure set forth in Exhibit C, hereto, and
prior to Buyer's written acceptance thereof. If Seller proposed to
transfer the manufacture of Material, Spares, and Repairs to another
manufacturing or repair facility, or to another manufacturing line from
a currently operating and qualified manufacturing line, Seller shall
notify Buyer of the intent in writing forty (40) days prior to the
proposed commencement of any such plan. Seller's notice shall include a
transfer plan acceptable to Buyer and shall include as a minimum a
detailed schedule for the technical qualification, managerial
responsibility, and program support for the Material, Spares, and
Repairs. The plan shall include the formation of a manufacturing team
made up of representatives of both Buyer and Seller which
<PAGE> 18
18
shall monitor and report Buyer's conformance to the schedule and
implementation of the transition plan. Buyer shall use reasonable
efforts to review and approve the plan in a timely manner, but Seller
shall not commence to implement the plan until ten (10) days after
Buyer's approval.
Seller shall continue utilizing the previously approved manufacturing
or repair line to meet Buyer's Purchase Order requirements until Seller
proves the product produced in the new line or facility meets the
requirements of Exhibits A and C, hereto, as well as proving to be
reliable to delivery and program completion of the transition plan and
after satisfactory demonstration of qualification and reliability of
delivery performance, Buyer shall supply in writing notice of the
approval status of the new facility or line.
E. If Seller fails to comply with Clauses A through D of this Section,
then Seller shall bear all of Buyer's costs to correct all changes
affecting Material, Spares, and Repairs.
F. A "Mandatory" Change as used herein shall be defined as: Any change
required to insure that the Material, Spares, and Repairs (i) meet the
applicable Product Purchase Specification(s), (ii) are safe, and (iii)
comply with applicable laws.
1. After receiving written approval from Buyer, Seller shall
start implementation of Mandatory Changes to the Material,
Spares, and Repairs per mutually agreed upon schedule(s) and
shall not ship said Material, Spares, and Repairs until
brought into conformance unless authorized in writing by Buyer
to do otherwise.
2.a. For Mandatory Change(s), Seller shall supply Buyer at no
charge all parts for all affected Material, Spares, and
Repairs including spare parts shipped in kit form and shall
reimburse Buyer's actual installation cost per occurrence.
Such costs shall be waived if Seller has complied with the
requirement of Clause F.3., following. Buyer shall return to
Seller upon Seller's request any "Field Change Order" (FCO)
replaced material with a discounted purchase price greater
than One Hundred ($100) dollars.
b. For Mandatory Change(s) as a result of a change to the
applicable specification initiated by Buyer after initial FRS,
the parties shall mutually agree on a price for replacement
Materials, Buyer bearing the cost of labor to implement the
change.
<PAGE> 19
19
3. "Kits" shall be defined as "Field Change Order" (FCO) material
and shall be delivered to Buyer per the following schedule:
Twenty percent (20%) of total required Kits within ten (10)
days of availability of required material and the remaining
eighty percent (80%) of the Kits within forty (40) days.
Seller shall ship FCO Kits pursuant to Buyer's Purchase Orders
or Purchase Order releases which may be provided to Seller by
phone.
G. Change Notices: Any notice given under this Section shall be initially
transmitted by means agreed to between the parties to addressees
specified in SECTION XXIII, NOTICES herein.
SECTION XIII TERM OF AVAILABILITY
A. In consideration for Buyer's purchase of any Material, Spares, and
Repairs hereunder, Seller grants to Buyer the option to purchase
Material, Spares, and Repairs at the last revision level purchased
under this Agreement for the period of seven (7) years after the
expiration date of this Agreement or any extension thereof or for as
long as said Material, Spares, and Repairs are made available to any of
Seller's other customers, whichever is the later.
B. Thereafter, Seller may discontinue availability of Material, Spares,
and Repairs and by giving Buyer twelve (12) months prior written
notice, provided that, at Buyer's option, Seller shall:
1. Grant to Buyer a royalty-free, nonexclusive, worldwide license
to make, have made, use, sell, or otherwise dispose of said
material, and furnish Buyer all necessary documentation,
specifications, drawings, and other data, including its
sources for raw material necessary to make such Material,
Spares, and Repairs; and in the case of Spares only;
2. Grant to Buyer the right to repair or have repaired Spares.
Seller shall provide Buyer, at Buyer's request, a list of
components and the list of Seller approved suppliers for those
components. The components that are not available to Buyer
from sources other than Seller are to be listed and unit
prices identified with quantity discounts, if any. Those parts
having generic industry identification (not proprietary to
Seller) and available to Buyer shall be cross referenced to
generic part numbers. Seller further agrees to provide Buyer
with the available test specifications and test procedures and
drawings
<PAGE> 20
20
required for testing the finished Spares and Repairs along
with a full description, manufacturer's model numbers, etc. of
the test equipment involved/required to perform such tests.
3. Sell Buyer sufficient quantities of Material, Spares, and
Repairs Buyer deems necessary.
4. Implement the EOL Plan set forth in Exhibit H hereto.
C. The parties agree that the terms of this Agreement shall apply to the
purchase of Material, Spares, and Repairs set forth in Clause A above,
and the terms of Exhibit E, Manufacturing License and Technical
Assistance Agreement shall apply to the license set forth in Clause B
above. However, in no event shall the purchase price for Material,
Spares or any other charges related to Buyer's exercise of its rights
in Clause B above, exceed the prices then charged to Seller's other
customers for like terms, quantities, etc. of Material, Spares, and
Repairs.
SECTION XIV U.S. CUSTOMS, MARKING, AND DUTY DRAWBACK
A. Country of Origin
1. "Country of Origin" Marking: The Seller shall mark, in
English, all Material, Spares, and Repairs with the Country of
Origin (manufacture), in compliance with Section 304 of the
United States Tariff Act. Both the Material, Spares, Repairs
and its container must be conspicuously marked with the
Country of Origin. If the Material, Spares, and Repairs itself
cannot be marked legibly due to size, then its immediate
container must be marked.
2. For each delivery against purchases made under this Agreement,
Seller shall furnish Buyer with a signed certificate stating
Country of Origin (manufacture) by quantity and part number
(Buyer's and Seller's).
B. Duty Drawback
1. For each purchase under this Agreement, and for each item of
Material, Spares, Repairs delivered hereunder for which U.S.
Customs import duties have been paid upon importation, or for
Materials that contain parts for which import duties have been
paid, Seller shall furnish Buyer with a signed "MANUFACTURING
DRAWBACK ENTRY and/or CERTIFICATE" (U.S. Customs Form #CF331
or its successor). Seller warrants that information contained
in such Form #CF331 shall be accurate and
<PAGE> 21
21
shall comply with United States Duty Drawback and Customs laws
and regulations. Seller shall indemnify and hold Buyer
harmless from and against any claims, costs, or damages
resulting from or arising out of Buyer's reliance on such
information and/or Form #CF331.
2. Seller shall provide such required Form(s) #CF331, and/or
information, at the end of each fiscal quarter, unless
otherwise agreed in writing by both parties.
3. Buyer reserves its first right to claim Duty Drawback on all
purchases made under this Agreement.
SECTION XV FORCE MAJEURE
Neither party shall be liable for failure to perform any of its
obligations under this Agreement during any period in which such party
cannot perform due to fire, flood, or other natural disaster, war,
embargo, riot, or the intervention of any government authority,
provided that the party so delayed immediately notifies the other party
of such delay. If Seller's performance is delayed for these reasons for
a cumulative period of twenty (20) days or more, Buyer may terminate
this Agreement and/or any Purchase Order hereunder by giving Seller
written notice, which termination shall become effective upon receipt
of such notice. If Buyer terminates, its sole liability under this
Agreement or any Purchase Orders issued hereunder shall be to pay any
balance due for conforming Material (1) delivered by Seller before
receipt of Buyer's termination notice; and (2) ordered by Buyer for
delivery and actually delivered within fifteen (15) days after receipt
of Buyer's termination notice.
In such event, and only in the event the parties cannot agree on an
alternative remedy, Seller hereby grants to Buyer, a royalty-free,
nonexclusive worldwide license under the terms of Exhibit E.
SECTION XVI COMPLIANCE WITH LAWS
A. All Material, Spares, and Repairs supplied and work performed under
this Agreement shall comply with all applicable United States and
foreign laws and regulations including, but not limited to, emission
and safety standards, the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.), the Fair Labor Standards Act of 1938 (29 U.S.C.
Sections 201-219), the Toxic Substance Control Act of 1976 (15 U.S.C.
Section 2601), all laws restraining the use of convict labor, and
Worker's Compensation Laws. Upon request, Seller agrees to certify
compliance with any
<PAGE> 22
22
applicable law or regulations. Seller's failure to comply with any of
the requirements of this Section may result in a material breach of
this Agreement.
B. The following statutes and Executive Orders (Ex. Or's) together with
regulations issued thereunder are made a part of this Agreement if
applicable: Ex. Or. 11246, Equal Employment Opportunity; Ex. Or. 11625,
as Amended, and Ex. Or. 12138, Small and Small Disadvantaged Business
Concerns; Section 503 of the Rehabilitation Act of 1973 as Amended (29
U.S.C. Section 793); and Section 402 of the Vietnam Era Veterans
Readjustment Assistance Act of 1974, as Amended (38 U.S.C. Section
2012). A copy of the Affirmative Action clauses required under each of
these statutes or Ex. Or's is attached as an Exhibit to this Agreement
and incorporated herein by reference.
C. The provisions of the Clean Air Act (42 U.S.C. Sections 7401 et seq.)
and the Clean Water Act (33 U.S.C. Sections 1251 et seq.) are made a
part of this Agreement. A copy of the Certification required under
these statutes is attached as an Exhibit to this Agreement and
incorporated herein by reference.
Seller agrees to comply with the United States Federal requirements
contained at Title 40, Code of Federal Regulations, Part 82 -
"Protection of Stratospheric Ozone; Labeling". Moreover, Seller shall
not supply to Buyer any product or part that contains or has been
manufactured using a Class I ozone depleting substance, as that term is
defined in the regulations unless Seller has provided prior written
notice to Buyer.
D. The provisions of any applicable State "Right-to-Know" laws and
regulations are made a part of this Agreement. A copy of the applicable
Material Safety Data Sheets as required under such laws and regulations
shall be provided by Seller upon delivery of Material, Spares, and
Repairs and updated as necessary.
E. This Agreement is subject to all applicable United States laws and
regulations relating to exports and to all administrative acts of the
U.S. Government pursuant to such laws and regulations.
All Material, Spares, and Repairs supplied and work performed under
this Agreement shall comply with all applicable laws and regulations.
Without limiting the foregoing, Seller shall comply with the
Occupational Safety and Health Act ("OSHA") 29 C.F.R. Sections 1910,
1200(b), and (g)(8); the Toxic Substance Control Act ("TSCA") 15
<PAGE> 23
23
U.S.C. Section 2612(a); and laws restraining the use of convict labor:
18 U.S.C. Sections 1761 and 1762. Seller's failure to comply with any
of the requirements of this Section may result in a material breach of
this Agreement.
F. The 1980 United Nations Convention on contracts for the international
sale of goods shall not apply to this Agreement or any order issued
under this Agreement.
SECTION XVII TERMINATION FOR CAUSE
A. The occurrence of any of the following constitutes a breach and is
cause for termination of this Agreement and or/its Purchase Orders.
1. Seller fails to deliver Material, Spares, and Repairs on time
for a period of ninety (90) consecutive days after the initial
startup phase of the Magnum Program as referenced in Delivery/
LEADTIME/Flexibility section of this Agreement.
2. Material, Spares, and Repairs do not conform to the applicable
descriptions or specifications.
3. Seller fails to perform any material provision of this
Agreement.
4. Either party assigns this Agreement or any obligation or right
hereunder. (The word "assign" to include, without limitation,
a transfer of major interest in Buyer or Seller.)
5. Either party merges with a third-party (not a parent or
subsidiary company), without the prior written mutual consent
of the parties.
6. Either party becomes insolvent or makes an assignment for the
benefit of creditors, or a receiver or similar officer is
appointed to take charge of all or part of Seller's assets.
B. Seller must cure any of the above breaches except late delivery
pursuant to Clause A, paragraph 1 above, for which there shall be no
cure period and notify Buyer of such cure within thirty (30) days from
receipt of a notice to cure from Buyer. If Seller fails to so cure,
Buyer may terminate this Agreement and/or any Purchase Orders under it
by giving Seller written notice. Buyer shall have no liability except
for payment of any balance due for conforming Material, Spares, and
Repairs delivered before the date of Buyer's notice to cure. Buyer may
at its option, without regard to
<PAGE> 24
24
Seller's ability to cure, terminate this Agreement for cause in the
event of Seller's second or subsequent material breach of any
provision(s) of this Agreement.
C. If this Agreement is terminated, Buyer's liability shall be for payment
of any balance due for conforming Material, Spares, Repairs ordered by
Buyer and delivered before the date of notice to cure, all Material,
Spares, Repairs scheduled for delivery within the minimum LEADTIME
provisions of this Agreement, and for the Unique Raw Materials
referenced in Exhibit B4.
If this Agreement is terminated for cause by Buyer, Seller hereby
grants to Buyer a perpetual, irrevocable, royalty-free, non-exclusive,
worldwide license to make, have made, use, sell, or otherwise make and
distribute Material, Spares, Repairs, in accordance with Exhibit E,
which license shall vest in Buyer on the date this Agreement is
executed by the parties.
SECTION XVIII DOCUMENTATION, TRAINING AND TECHNICAL SUPPORT
During the Purchase Period, Seller shall supply to Buyer the
documentation, training and technical support as listed in Exhibit D
(Documentation, Training, and Technical Support).
Seller hereby grants to Buyer for internal use only, the right to
reproduce, in whole or in part, all documentation and training material
provided to Buyer in order for Buyer to effectively service Seller's
products.
SECTION XIX RIGHTS AND ASSISTANCE TO REPAIR
In the event Seller is unable to fulfill its Repairs obligations under
this Agreement or if Buyer wishes to make its own Repairs or Spares for
use outside the United States where Seller does not have a Repair
facility, by mutual agreement only, Seller grants to Buyer the right to
repair or have repaired Spares. Seller shall provide Buyer, at Buyer's
request, a list of components and the list of Seller approved suppliers
for those components. The components that are not available to Buyer
from sources other than Seller are to be listed and unit prices
identified with quantity discounts, if any. Those parts having generic
industry identification (not proprietary to Seller) and available to
Buyer shall be cross referenced to generic part numbers. Seller further
agrees to provide Buyer with the available test specifications and test
procedures and drawings required for testing the finished Material,
Spares, and Repairs along with a full description, manufacturer's
<PAGE> 25
25
model numbers, etc. of the test equipment involved/required to perform
such tests.
All requested information shall be provided to the Buyer by Seller
within ninety (90) days from such written requests by Buyer.
SECTION XX SIMILAR PRODUCTS
Seller understands that Buyer designs, develops, and acquires hardware
and software for use with its own computer system products and that
existing or planned hardware and software independently developed or
acquired by Buyer may contain ideas and concepts similar or identical
to those contained in the Seller's product. Seller agrees that entering
this Agreement shall not preclude Buyer in any way from using such
ideas and concepts to develop or acquire similar hardware and software
for any purpose, without obligation to the Seller, provided Buyer does
not copy for such use, in whole or in part, the Seller's product.
SECTION XXI BUSINESS REVIEWS
Buyer and Seller shall, each at their own expense, meet periodically to
review performance and business transacted, and to identify and resolve
those issues which have arisen since the last business review meeting.
SECTION XXII NO IMPLIED LICENSE
The parties understand that, except as may be otherwise expressly
stated herein, neither the Terms and Conditions of this Agreement, nor
the acts of either party arising out of this Agreement or related to
Buyer's purchase, use, sale, or other distribution of Material, Spares,
or Repairs may be considered in any way as a grant of any license
whatsoever under any of Buyer's present or future patents, copyrights,
trademarks, trade secrets, or other proprietary rights, nor is any such
license granted by implication, estoppel, or otherwise.
SECTION XXIII NOTICES
Any notice given under this Agreement shall be written or sent by
facsimile. Written notice shall be sent by registered mail or certified
mail, postage prepaid, return receipt requested, or by any other
overnight delivery service which delivers to the noticed destination
and provides proof of delivery to the sender. Any facsimile notice must
be followed within three (3) days by written
<PAGE> 26
26
notice. All notices shall be effective when first received at the
following addresses:
If to Seller: If to Buyer:
ATL PRODUCTS INC. DIGITAL EQUIPMENT CORPORATION
240 East Palais Road 334 South Street
Anaheim, California 92805 Shrewsbury, Massachusetts
01545
ATTENTION: ATTENTION:
Richard Speyer Harvey Perlman or designated
Acquisition Contracts Manager
SECTION XXIV LIMITATION OF LIABILITY
Except as otherwise provided in this Agreement against third-party
claims, neither party shall be liable to the other for special,
indirect, incidental, or consequential damages. The foregoing
limitation shall not limit Seller's liability for any costs, expenses,
and damages arising out of parties unauthorized disclosure of
confidential information; or any indemnification (including
intellectual property indemnity) granted by Seller in connection with
this Agreement.
SECTION XXV CONSIGNED MATERIAL
A. Buyer shall consign to Seller at no charge certain materials
(hereinafter "Consigned Material") which Seller requires in order to
fulfill its configuration obligations under this Agreement. Consigned
Material is specifically referenced in Exhibit B1, Part III and may
include, but is not limited to, 1/2 inch cartridge tape drives; Digital
Linear Tape (herein "DLT") Drives, tape cartridges and cleaning
cartridges; Controllers, Adapters, chassis, cable assemblies, etc. The
parties shall mutually agree on, and Seller agrees to manage, adequate
quantities of Consigned Materials required for Seller to fulfill its
delivery of Material obligations under this Agreement.
If Buyer is unable to deliver the mutually agreed upon quantity of
Consigned Materials, Seller's liability for on-time delivery shall not
apply if Seller promptly notifies Buyer in writing that a shortage of
Consigned Material required for Seller to fulfill a configuration order
within the LEADTIME provisions of this Agreement is eminent.
Buyer shall use its Shipping and Billing Authorization (hereinafter
"SBA") form when issuing Consigned Material.
<PAGE> 27
27
Buyer retains title to all Consigned Materials located at Seller's
facilities. Seller shall insure Consigned Material at no additional
charge to Buyer for its replacement value against all risks of physical
loss to the same or greater degree Seller insures its own equipment.
Seller shall keep all Consigned Material separate and identifiable from
Seller's other materials and equipment and shall use Consigned Material
solely for the purposes of configuring Buyer's Material.
From time to time, but not more than four (4) times per year, Seller
may be required to perform physical inventory or cycle counts of
Consigned Material and provide Buyer with written inventory reports.
Upon Buyer's notice, Seller shall return all Consigned Material within
thirty (30) days at Buyer's expense.
B. Buyer may also consign at no charge to Seller, certain capital
equipment (hardware and/or software) and training which Seller requires
in order to perform certain integration and test procedures as part of
Seller's configuration of Material and in order to meet the
qualification requirements contained in Exhibit C1. This equipment
shall be listed in Exhibit G, Bailment Agreement. The general terms
contained in this Section XXV apply to consigned capital equipment as
well.
C. Buyer may also consign certain Spares or Repairs for repair as
referenced in Exhibit B2. The general terms of this Section XXV apply
to Spares and Repairs as well.
SECTION XXVI GENERAL
A. This Agreement is the complete and entire understanding between the
parties on this subject matter and supersedes all prior agreements,
proposals, representations, statements, or understandings whether
written or oral on this subject between them. The provisions of this
Agreement may be amended or waived only by a writing executed by the
authorized representatives of the parties hereto.
B. In the event that either party to this Agreement shall on any occasion,
fail to perform any provision of this Agreement, and the other party
does not enforce that provision, the failure to enforce shall not
prevent enforcement of the provision on any other occasion.
C. Seller, including its servants, agents, and employees, is an
independent contractor and not an agent or employee of Buyer. Without
limiting the generality of the foregoing, Seller is not authorized to
represent or make any
<PAGE> 28
28
commitments on behalf of Buyer, and Buyer expressly disclaims any
liability therefore.
D. Supplemental terms are included in Exhibit A through Exhibit M and are
incorporated.herein by reference.
E. All rights and remedies conferred by this Agreement, by any other
instrument, or by law are cumulative and may be exercised singularly or
concurrently. If any provision of this Agreement is held invalid by any
law or regulation of any government or by any court, such invalidity
shall not effect the enforceability of any other provisions hereof.
This Agreement and any Purchase Orders issued hereunder shall be
governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts.
<PAGE> 29
29
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
this Agreement under seal as of the date(s) set forth below.
ODETICS, Inc. DIGITAL EQUIPMENT CORPORATION
(Seller) (Buyer)
By /s/ J. Slutzky By /s/ William D. Lowe
--------------------------------- ---------------------------------
William D. Lowe
Group Manager, Storage
10/8/93 10/29/93
- ------------------------------------ ------------------------------------
(Date) (Date)
By /s/ Kevin Daly By /s/ William D. Luisi
--------------------------------- ---------------------------------
Kevin Daly William D. Luisi
President, ATL Products Acquisition Manager, Storage
October 8, 1993 10/20/93
- ------------------------------------ ------------------------------------
(Date) (Date)
<PAGE> 30
EXHIBIT A*
MATERIAL (Product) SPECIFICATION
TO
BASIC ORDER AGREEMENT
BETWEEN
DIGITAL EQUIPMENT CORPORATION
("Buyer")
AND
ODETICS, INC.
("Seller")
(C) DIGITAL EQUIPMENT CORPORATION 1993
This Is An Unpublished Work Which Contains Confidential And Secret Information
Which Is Protected Under The Copyright Laws. The Existence Of The Copyright
Notice Is Not To Be Construed As An Admission Or Presumption That Publication
Has Occurred. Unauthorized Copying Is Strictly Prohibited. All Rights
Reserved.
* CONFIDENTIAL TREATMENT REQUESTED FOR PAGES 1-92 OF EXHIBIT AS EXHIBIT
SOLELY CONTAINS MATERIAL PRODUCT SPECIFICATIONS
<PAGE> 31
EXHIBIT B1
MATERIAL PRICING
TO
BASIC ORDER AGREEMENT
BETWEEN
DIGITAL EQUIPMENT CORPORATION
("BUYER")
AND
ODETICS, INC.
("SELLER")
(C) DIGITAL EQUIPMENT CORPORATION 1993
THIS IS AN UNPUBLISHED WORK WHICH CONTAINS CONFIDENTIAL AND SECRET INFORMATION
WHICH IS PROTECTED UNDER THE COPYRIGHT LAWS. THE EXISTENCE OF THE COPYRIGHT
NOTICE IS NOT TO BE CONSTRUED AS AN ADMISSION OR PRESUMPTION THAT PUBLICATION
HAS OCCURRED. UNAUTHORIZED COPYING IS STRICTLY PROHIBITED. ALL RIGHTS RESERVED.
REVISED DATE 9/24/93
<PAGE> 32
EXHIBIT B1
MATERIAL PRICING
PART I - MAGNUM II
Pricing Period: 4/15/93-6/30/95 Key: "C" Consigned
Shipping Terms: FCA Anaheim, CA "N/C" No Charge
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Item Description Notes Price Quantity
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MATERIAL:
--------
* 1. Base Unit TL820-AA 1,2 [ ] (1) (1) (1) (1)
* 2. Multi-Unit Controller 2,3,5 [ ] (1)
* 3. Pass Through Mechanism 2,3 [ ] (1) (1) (1) (1)
* 4. Import/Output Device 2,6 [ ] (1)
* 5. Tape Drive Support Kit 2 [ ] (1) (1) (3)
* 6. Drive Integration 2,4 [ ] (1) (1) (3)
* 7. TZ87-DY Tape Drives 9 [ ] (3) (3) (9)
- -------------------------------------------------------------------------------------------------------------------------
ACCESSORIES:
-----------
8. SCSI Cables: 7 TBD
* a. 6204267-01 10 [ ] (1) (1)
* b. 6204266-01 11 [ ] (1) (1)
* c. 6204265-01 12 [ ] (2) (2)
* 9. SCSI Terminator 7,13 [ ] (1) (2) TBD
12-41738-01
10. Accessory Kit: 7,8 TBD
* a. Operators Manual 1 [ ] (1)
* b. Facilities Planning 1 [ ] (1)
* c. TK85K-07 Cartridge 15,7 [ ] (7)
* d. TK85K-HC Cleaner 15,7 [ ] (1)
* e. DLT User Manual 14 [ ] (1)
* f. AC Power Cord 1 [ ] (1) (1) (1)
* g. Barcode Labels (1000) [ ] (1)
TL82X-BB
* h. Multi-Unit Attach Kit 1 [ ] (1) (1)
* i. Diagnostic Manual [ ] (1)
- -------------------------------------------------------------------------------------------------------------------------
* TOTAL PRICE [ ] [ ] [ ] [ ]
TL820-AB TL820-AC TL820-AD All Drives
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 33
PART II
Magnum II Customer Orderable Upgrades
Customer/Digital Field Service Orderable Accessories (ACL5480/Magnum II)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE QUANTITY
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPGRADES:
--------
* 1. Multi-Unit Controller 2,3 [ ] (1)
* 2. Import/Outport Device 2,6 [ ] (1) (1)
* 3. Tape Drive Support Kit 2 [ ] (1)
* 4. Conversion Manual [ ] (1) (1)
5. SCSI Cables:
* a. 6204267-01 10 [ ] (1)
* b. 6204266-01 11 [ ] (1)
* c. 6204265-01 12 [ ] (2)
6. SCSI Terminator
* 12-41738-01 [ ] (2)
* 7. TZ87-AW Tape Drive 9 [ ] (3)
* 8. Operators Manual [ ] (1)
* 9. Facilities Planning [ ] (1)
* 10. PTM Cover [ ] (1)
- -------------------------------------------------------------------------------------------------------------------------
* TOTAL PRICE [ ] [ ] [ ]
TL82X-UC TX82X-UB TL82X-AA
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Item Description Notes Price Customer Field Service
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACCESSORIES:
-----------
* 11. Alignment Tool [ ] X
a. 6208110-03 ACL5480
b. 6208150-01 Magnum II
* 12. Software Diagnostic Kit [ ] X
* 13. Field Service Manual [ ] X
* 14. Cartridge Bin Pack [ ] X X
a. 6203100-01 ACL5480
b. 6203300-01 Magnum II
* 15. Software Diagnostics Manual [ ] X
* 16. IOD Guide [ ] X
* 17. Operators Manual [ ] X
* 18. Facilities Planning [ ] X
* 19. Extra Cartridge Sets [ ] X X
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 34
PART III - MAGNUM II
Consignment Material
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
CONSIGNED
--------------------------------------------------------------------------
ITEM DESCRIPTION NOTES YES/NO
<S> <C> <C> <C>
1. TZ87-AW Tape Drive 9 Yes
2. TK85K-07 Cartridge 15 Yes
3. TK85K-HC Head Cleaner 15 Yes
4. SCSI Cable (3) 10,16 No
5. SCSI Cable (2) 11,16 No
6. SCSI Cable (5) 12,16 No
7. SCSI Terminator
12-41738-01 13 No
- --------------------------------------------------------------------------
</TABLE>
<PAGE> 35
NOTES
(1) Prices for base units include (24) bin packs and the costs for all
packaging, packing, crating, shipping labels, power cords, multi- unit
attachment kit, and labor to install all SCSI cables and terminators
as referenced in Exhibit A.
(2) Prices are firm for the pricing period.
(3) Prices are the same for either Magnum or ACL5480 Material, whether
installed at Seller's factory or sold as a customer orderable option
with installation kit for ACL5480 Material only.
(4) Prices include labor to install (3) DLT tape drives, system
integration and test. For the All Drive library option, prices are
based upon the multiple of (3) drives.
(5) Prices for Magnum Material include labor and materials to install MUC,
one (1) SCSI cable, one (1) SCSI terminator, loop's back cable, RS232
cable, and bulkhead.
(6) Prices include installation kit. For Magnum II, IOD is left hinge
mount only. Prices are the same for either Magnum or ACL5480
Material.
(7) Prices are firm for a period of one (1) year and are based upon the
terms contained in Section IV, Paragraph E, of the Agreement.
Accessories ar distinguished as follows.
a. Consigned material shall have the letter "C" in the price
column. There are either no charges for labor to install
consigned material or labor charges are included in Material
prices.
b. If Seller in supplying a Buyer qualified Accessory, Buyer's
part number shall be referenced.
c. If Seller is supplying a Seller qualified Accessory, Seller's
part number shall be referenced.
Where an N/C "No Charge" is shown, prices for Accessory is included in
the Material prices.
(8) Materials contained in the Accessory kit varies by Library option and
shall be included with each Library shipped.
(9) Includes User Manuals, one (1) per library.
(10) Refer to T Tran's BOM Reference #3.
(11) Refer to T Tran's BOM Reference #2.
(12) Refer to T Tran's BOM Reference #5.
<PAGE> 36
NOTES (continued)
(13) Refer to T Tran's BOM Reference #0.
(14) TZ87-DY User Manual consigned with Part I, Item #6.
(15) It is Buyer's goal to authorize Seller to acquire DLT data cartridges
and cleaners directly from Buyer's OEM supplier no later than the FRS
of Magnum II. Until such time, Buyer will consign this material.
(16) Seller is currently acquiring SCSI cables from Seller's qualified
supplier. It is Buyer's goal to qualify these cables with a Digital
qualified supplier. Once qualified, Digital part numbers will be
inserted in the Description column.
<PAGE> 37
PART IV - ACL5480
Material Pricing
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Item Description Notes Price Quantity
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MATERIAL:
--------
* 1. Base Unit 1,2 [ ] 1 1 1 1 1 1 1
* 2. Multi-Unit [ ] 1 1 1 1
3. Controller
* Pass Through [ ] 2 1 1 1 1
4. Mechanism
* Import/Outport [ ] 1 1
5. Device
* STK Bar Code [ ]
* 6. Reader 4 [ ] 1
Cabinet
Interconnect
- ---------------------------------------------------------------------------------------------------------------------------------
* TOTAL PRICE [ ] [ ] [ ] [ ] [ ] [ ] [ ]
Digital Part Number 30-41590-01 30-41591-01 30-41591-02 30-41591-03
Digital Option Number 5 TL3XA-AA TL3XB-AA TL3XB-BA TL3XB-CA
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Item Description Notes Price Quantity
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MATERIAL:
--------
* 1. Base Unit 1,2 [ ] 1 1 1 1 1 1
* 2. Multi-Unit [ ] 1 1 1
3. Controller
* Pass Through [ ] 1 1 1 1
4. Mechanism 1 1
* Import/Outport [ ]
* 5. Device [ ] 1 1 1 1 1 1
STK Bar Code Reader
* 6. Cabinet 4 [ ]
Interconnect
- ---------------------------------------------------------------------------------------------------------------------------------
* TOTAL PRICE [ ] [ ] [ ] [ ] [ ] [ ]
Digital Part Number
Digital Option Number
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See NOTES next page.
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 38
PART V - ACL5480
Upgrades/Accessories Pricing
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Item Description Notes Price Quantity
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UPGRADES:
--------
* 1. Multi Unit Controller [ ] 1 1
2. Pass Through
* Mechanism [ ] 1 1
* 3. Import/Outport Device [ ] 1 1 1
* 4. STK Bar Code Reader [ ] 1
* 5. Cabinet Interconnect 4 [ ]
- ----------------------------------------------------------------------------------------------------------------------
TOTAL PRICE [ ] [ ] [ ] [ ] [ ]
Digital Part Number 30-41588-01 30-41588-02
Digital Option Number TL3XU-AA TL3XU-BA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Item Description Notes Price Customer Field
Service
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
ACCESSORIES:
-----------
1. Add-On Binpacks
* P/N TBD [ ] X X
2. Cartridge Set
* P/N TBD 3 [ ] X X
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
1 Includes 3 of 9 Bar Code Reader and depending on tape drive custom
mounting kits.
2. Mounting Kit type must be determined at time of order placement.
3. Cartridge Set is 280 Data and 8 Cleaning Cartridges with sequentially
number 3 of 9 bar code labels.
4. Cabinet Interconnect is required when connecting 2 units together.
5. Columns with no Digital part number are future libraries options.
Quantities with Digital part and option numbers are other possible
configurations.
*CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 39
EXHIBIT B2
SPARES AND REPAIRS PRICING
TO
BASIC ORDER AGREEMENT
BETWEEN
DIGITAL EQUIPMENT CORPORATION
("BUYER")
AND
ODETICS, INC.
("SELLER")
(C) DIGITAL EQUIPMENT CORPORATION 1993
THIS IS AN UNPUBLISHED WORK WHICH CONTAINS CONFIDENTIAL AND SECRET INFORMATION
WHICH IS PROTECTED UNDER THE COPYRIGHT LAWS. THE EXISTENCE OF THE COPYRIGHT
NOTICE IS NOT TO BE CONSTRUED AS AN ADMISSION OR PRESUMPTION THAT PUBLICATION
HAS OCCURRED. UNAUTHORIZED COPYING IS STRICTLY PROHIBITED. ALL RIGHTS RESERVED.
<PAGE> 40
EXHIBIT B2
SPARES AND REPAIRS PRICING
This Exhibit sets forth the additional conditions under which Seller
shall provide Spares and Repairs to Buyer.
1. Buyer may purchase Spares on a forty-five (45) day, five (5) business
day, P-1 twenty-four (24) hour, or Next Flight Out (Hereinafter "NFO")
LEADTIME basis; and in the case of Repairs, on a thirty (30) day or
five (5) business day LEADTIME basis, both Spares and Repairs offered
at the discounts from list prices stipulated herein through the
ordering centers listed in Exhibit B3. Seller may replace Spares
returned under warranty with either new, refurbished to like-new, or
repaired Spares.
The terms for P-1 Purchase Orders are defined in the Agreement and for
the purposes of this exhibit also refer equally to twenty-four (24)
hour drop ship Purchase Orders. Seller agrees to acknowledge P-1
Orders within 4 hours of receipt of order, 24 hours per day, 365 days
per year. Seller agrees to deliver Spares within 24 hours of
acknowledgment to the FCA point.
NFO Purchase Orders also require the same acknowledgment and delivery
terms except Seller is required to take extraordinary measures to
insure the Spares are delivered to the designated air carrier whose
flight departure and arrival assures the earliest delivery of Spares
to Buyer's designated delivery point.
Except in the case of NFO Purchase Orders, Delivery shall be FCA
Origin at Seller's Services address located in Exhibit B3. NFO
Purchases shall be FCA LAX or Orange County, however, by mutual
agreement, Seller shall arrange all transportation and bill Buyer
separately for transportation charges emanating from the airport to
the delivery point.
* 2. [ ].
Discounts off of list price for the remaining Spares LEADTIMEs and
Repairs are as follows:
<TABLE>
<CAPTION>
Discount % Of List
<S> <C> <C> <C> <C>
* Spares 5 business days - [ ] [ ]
* Spares P-1 24 hours - [ ] [ ]
* Spares NFO - [ ] [ ]
* Repairs 30 day LEADTIME - [ ] [ ]
* Repairs 5 day Exchange - [ ] [ ]
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 41
3. Trunk Spares kits are the mutually agreed upon list of Spares which
Buyer shall order in support of installed libraries. The quantity of
kits ordered will be based upon the geographical distribution and
quantity of installed libraries. The parties may mutually agree to
amend the Trunk Spares list as Buyer deems necessary to support
Buyer's customer. It is understood by the parties that the Trunk
Spare Kit contains only those Spares and Expendables most likely to
require maintenance or field replacement.
4. The Spares Price List shall be updated quarterly by Seller. The list
shall contain at a minimum Buyer/Seller's Part Number, Description,
List Price, a key designating whether the part is common to ACL5480
and Magnum II or unique. A key for ordering Trunk Spares, as well as
a designation of the Spare as either a FRU or an Expendable, and in
the case of FRU's whether it is repairable. In addition list the MTBF
and/or field failure rate.
5. Buyer understands the discounted prices contained in the Exhibit have
been determined based on Buyer's purchase of Material in accordance
with the provisions of Section XXVI, GENERAL, herein. Buyer agrees
that all Spares and Repairs purchased from Seller at these prices
shall be used by Buyer only for performing warranty service or
maintenance in respect to the Material purchased under the terms of
this Agreement.
6. In the event Buyer returns Spares or Repairs during the Material
warranty period and after investigation by Seller, the Spare or Repair
* was found not to be defective (NTF), Seller may collect from Buyer [ ]
for each NTF returned as a service and handling charge and not as a
penalty. Seller shall not begin charging for NTFs until six (6) months
following Buyer's FRS of Magnum Material.
Seller shall promptly notify Buyer of any NTF occurrence so the
parties can arrive at a mutually agreed upon remedy. If after
reaching a remedy, Seller continues to experience NTF's; Seller may
request from Buyer an emergency Business Review once the percentage of
NTF's exceeds by more than 10% of the total of the same part number
being returned over a period of ninety (90) days or ten (10) NTF's
whichever occurs first.
The same terms shall apply for Consigned Materials which Seller
returns to Buyer and Buyer determines is NTF. These terms shall also
apply to materials received by either party and are considered Dead on
Arrival "DOA" as defined in Exhibit M. If either Buyer or Seller
experiences a DOA which can be confirmed by the other party as being
defective, the party which has returned the material as a DOA may
collect the handling charge from the other party.
7. Warranty Management, Credits, Surcharges:
Material returned to Seller shall be in accordance with the provisions
of Exhibit I. Seller shall maintain an accurate accounting of all
Material, Spares, and Repairs returned by Buyer during the original
warranty period. For each item of Material, Spare or Repair returned
under warranty shall be replaced with its replacement equivalent at no
charge. Material rejected by Buyer may at Buyer's option be returned
for credit only.
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 42
* All Spares in excess of [ ] based upon the forty-five (45) day
LEADTIME price and Repairs based upon the thirty (30) day LEADTIME
price shipped to Buyer shall contain an easily identified serial
number which Seller warrants contains a traceable ship date to effect
warranty credit management.
Buyer shall identify the returns by serial number along with the
defect code or any other field failure report Buyer may have. Seller
shall determine whether the return is either in or out of warranty and
credit Buyer appropriately.
Buyer shall not return any Spare with a value less than $100 based
upon the forty-five (45) day LEADTIME price regardless of its warranty
status including the drive belt which shall not be returned regardless
of its value.
In the event Buyer requires Seller to repair or replace a Spare or
Repair under warranty within five (5) business days, BUYER SHALL PAY A
FIVE (5) PERCENT SURCHARGE BASED UPON THE FORTY-FIVE (45) DAY LEADTIME
PRICE CONTAINED IN THIS EXHIBIT FOR EACH ITEM.
8. Reports:
Seller agrees to provide the following reports for Buyer's internal
use along with the quarterly Spare/Repairs Price List update:
A. A listing of each item of Material by serial number delivered
to Buyer or Buyer's customer and the number of months
remaining in warranty.
B. A list of Spares and Repairs shipped to date by part number
with total quantity and value.
C. A detailed listing of each major FRU shipped by serial number
and warranty remaining.
D. A report detailing the total Spares and Repairs returned to
Seller with a defect analysis comparing failure rates.
E. An exception report detailing NTF's, DOA's, and other
erroneous events.
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 43
Odetics Data Management
27-Aug-93
Spare Parts Price List - Digital
SAMPLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Odetics Digital List Part
P/N P/N Description Unit Price Category
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* 1 6203810-1000 Drive Motor Power Supply [ ] Magnum II
* 2 Stepper Motor PWA [ ] Magnum II
* 3 Stepper Motor Assy [ ] Magnum II
* 4 IEC 320 [ ] Magnum II
* 5 11 Pack (X3) [ ] Magnum II
* 6 DLT Extension Axis Assy [ ] Magnum II
* 7 Aztec Logic Power Supply [ ] 5480/Mag II
* 8 Single Motor Power Supply [ ] 5480/Mag II
* 9 Front Door Switch [ ] 5480/Mag II
* 10 Rear Door Switch [ ] 5480/Mag II
* 11 Barcode Scanner [ ] 5480/Mag II
* 12 Carousel Home/Face Sensor [ ] 5480/Mag II
* 13 Fan [ ] 5480/Mag II
* 14 Carousel Drive Belt [ ] 5480/Mag II
* 15 Extension Drive Belt [ ] 5480/Mag II
* 16 Vertical Drive Belt [ ] 5480/Mag II
* 17 Robotics Controller PWA [ ] 5480/Mag II
* 18 Actuator PWA [ ] 5480/Mag II
* 19 Double Encoder Carousel [ ] 5480/Mag II
* 20 Marway Distribution [ ] 5480/Mag II
* 21 Brushed Vertical Motor [ ] 5480/Mag II
* 22 Umbilical Cable Assy [ ] 5480/Mag II
* 23 Control Panel PWA [ ] 5480/Mag II
* 24 Light Curtain Emitter [ ] 5480/Mag II
* 25 Light Curtail Detector PWA [ ] 5480/Mag II
* 26 Plastic Binpack [ ] 5480
* 27 Extension Axis Assy [ ] 5480
28
29
30
- ------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------
Trunk Part MTBF
Spare Type Hours
- --------------------------------------------------------------
<S> <C> <C> <C>
* 1 N FRU-Repairable 6,900
* 2 Y Expendable 2,600
* 3 Y FRU-Non-repairable 35,111
* 4 N Expendable
* 5 N FRU-Non-repairable
* 6 N FRU-Non-repairable
* 7 N FRU-Non-repairable
* 8 N FRU-Non-repairable
* 9 Y FRU-Non-repairable
* 10 Y FRU-Non-repairable
* 11 Y FRU-Repairable
* 12 Y FRU-Repairable
* 13 Y FRU-Repairable
* 14 Y Expendable
* 15 Y Expendable
* 16 Y FRU-Repairable
* 17 N FRU-Repairable
* 18 N FRU-Non-repairable
* 19 N FRU-Non-repairable
* 20 N FRU-Repairable
* 21 N Expendable
* 22 N Expendable
* 23 Y Expendable
* 24 Y FRU-Repairable
* 25 Y FRU-Non-repairable
* 26 Y Expendable
* 27 Y FRU-Repairable
28
29
30
- --------------------------------------------------------------
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 44
Digital Equipment Corporation
334 South Street
Shrewsbury, Massachusetts 01545-4195
508.841.3111
January 11, 1994
DIGITAL
Mr. Richard Speyer
Odetics
Data Management Systems Division
1515 South Manchester Avenue
Anaheim, CA 92802
Dear Mr. Speyer:
Persuant to the terms of Basic Order Agreement #13844, Section 23 Notices,
Section 26 General and specifically Section 4 Pricing paragraph E, the
following items have been changed in Exhibits B1 and B3.
Exhibit B1 Material Pricing:
9. In Part I remove Line #4 Import/Outport Device from part
* #TL820-AB and change the cost from [ ] to [ ].
10. Add TL82X-AA Import/Outport Device to Part II as a customer
orderable upgrade.
11. Change part number TZ87-DY to TZ87-AW.
12. Add part number TL82X-BB to Item #9G Barcode Labels (1000).
13. Add Note 7 to item #8 SCSI Terminator.
14. Add revision date January 10, 1994 to lower right hand corner
of the cover page.
Exhibit B3 Worldwide Ordering & Selling Locations:
1. Add Buyer's address: 9 Northeast Blvd, Salem, NH 03079.
2. Differentiate between the Magnum Material and the ACL5480
Material with key's M1 denoting Magnum Material and M2
denoting ACL5480 Material.
3. Change revisions date from 7/93 to January 10, 1994.
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 45
Digital Equipment Corporation
Mr. Richard Speyer
January 11, 1994
Page 2
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
these changes under seal as of the date(s) set forth below.
ODETICS, INC. DIGITAL EQUIPMENT CORPORATION
(Seller) (Buyer)
By /s/ Richard Speyer By /s/ Harvey Perlman
------------------------ ---------------------------------
Richard Speyer Harvey Perlman
Acquisition Manager
Date 20 Jan 94 Date January 12, 1994
---------------------- -------------------------------
<PAGE> 46
EXHIBIT B1
MATERIAL PRICING
TO
BASIC ORDER AGREEMENT
BETWEEN
DIGITAL EQUIPMENT CORPORATION
("BUYER")
AND
ODETICS, INC.
("SELLER")
(C) DIGITAL EQUIPMENT CORPORATION 1993
THIS IS AN UNPUBLISHED WORK WHICH CONTAINS CONFIDENTIAL AND SECRET INFORMATION
WHICH IS PROTECTED UNDER THE COPYRIGHT LAWS. THE EXISTENCE OF THE COPYRIGHT
NOTICE IS NOT TO BE CONSTRUED AS AN ADMISSION OR PRESUMPTION THAT PUBLICATION
HAS OCCURRED. UNAUTHORIZED COPYING IS STRICTLY PROHIBITED. ALL RIGHTS RESERVED.
REVISED DATE 1/10/94
<PAGE> 47
EXHIBIT B1
MATERIAL PRICING
PART I - MAGNUM II
Pricing Period: 4/15/93 - 6/30/95 Key: "C" Consigned
Shipping Terms: FCA Anaheim, CA "N/C" No Charge
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE Quantity
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MATERIAL:
--------
* 1. Base Unit TL820-AA 1,2 [ ] (1) (1) (1) (1)
* 2. Multi-Unit Controller 2,3,5 [ ] (1)
* 3. Pass Through Mechanism 2,3 [ ] (1) (1) (1) (1)
* 4. Tape Drive Support Kit 2 [ ] (1) (1) (3)
* 5. Drive Integration 2,4 [ ] (1) (1) (3)
* 6. TZ87-AW Tape Drives 9 [ ] (3) (3) (9)
- ------------------------------------------------------------------------------------------------------------------
ACCESSORIES:
-----------
7. SCSI Cables: 7 TBD
* a. 6204267-01 10 [ ] (1) (1)
* b. 6204266-01 11 [ ] (1) (1)
* c. 6204265-01 12 [ ] (2) (2)
* 8. SCSI Terminator 7,13 [ ] (1) (2) TBD
12-41738-01
9. Accessory Kit: 7,8 TBD
* a. Operators Manual 1 [ ] (1)
* b. Facilities Planning 1 [ ] (1)
* c. TK85K-07 Cartridge 15,7 [ ] (7)
* d. TK85K-HC Cleaner 15,7 [ ] (1)
* e. DLT User Manual 14 [ ] (1)
* f. AC Power Cord 1 [ ] (1) (1) (1)
* g. Barcode Labels (1000) [ ]
TL82X-BB
* h. Multi-Unit Attach Kit 1 [ ] (1) (1) (1)
- ------------------------------------------------------------------------------------------------------------------
* TOTAL PRICE [ ] [ ] [ ] [ ]
TL820-AB TL820-AC TL820-AD All Drive
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 48
PART II
Magnum II Customer Orderable Upgrades
Customer/Digital Field Service Orderable Accessories (ACL5480/Magnum II)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE Quantity
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPGRADES:
--------
* 1. Multi-Unit Controller 2,3 [ ] (1)
* 2. Import/Outport Device 2,6 [ ] (1) (1)
* 3. Tape Drive Support Kit 2 [ ] (1)
* 4. Conversion Manual [ ] (1) (1)
5. SCSI Cables:
* a. 6204267-01 10 [ ] (1)
* b. 6204266-01 11 [ ] (1)
* c. 6204265-01 12 [ ] (2)
* 6. SCSI Terminator
* 12-41738-01 [ ] (2)
* 7. TZ87-DY Tape Drive 9 [ ] (3)
* 8. Operators Manual [ ] (1)
* 9. Facilities Planning [ ] (1)
* 10. PTM Cover [ ] (1)
- ------------------------------------------------------------------------------------------------------------
TOTAL PRICE [ ] [ ] [ ]
TL82X-UC TL82X-UB TL82X-AA
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE CUSTOMER FIELD SERVICE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACCESSORIES:
-----------
* 11. Alignment Tool [ ] X
a. 6208110-03 ACL5480
b. 6208150-01 Magnum II
* 12. Software Diagnostic Kit [ ] X
* 13. Field Service Manual [ ] X
* 14. Cartridge Bin Pack [ ] X X
a. 6203100-01 ACL5480
b. 6203300-01 Magnum II
* 15. Software Diagnostics Manual [ ] X
* 16. IOD Guide [ ] X
* 17. Operators Manual [ ] X
* 18. Facilities Planning [ ] X
* 19. Extra Cartridge Sets [ ] X X
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 49
PART III - MAGNUM II
Consignment Material
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
ITEM DESCRIPTION NOTES CONSIGNED
YES/NO
- ------------------------------------------------------------------
<S> <C> <C> <C>
1. TZ87-AW Tape Drive 9 Yes
2. TK85K-07 Cartridge 15 Yes
3. TK85K-HC Head Cleaner 15 Yes
4. SCSI Cable (3) 10,16 No
5. SCSI Cable (2) 11,16 No
6. SCSI Cable (5) 12,16 No
7. SCSI Terminator
12-41738-01 13 No
- ------------------------------------------------------------------
</TABLE>
<PAGE> 50
NOTES
(1) Prices for base units include (24) bin packs and the costs for all
packaging, packing, crating, shipping labels, power cords, multi-unit
attachment kit, and labor to install all SCSI cables and terminators
as referenced in Exhibit A.
(2) Prices are firm for the pricing period.
(3) Prices are the same for either Magnum or ACL5480 Material, whether
installed at Seller's factory or sold as a customer orderable option
with installation kit for ACL5480 Material only.
(4) Prices include labor to install (3)DLT tape drives, system integration
and test. For the All Drive library option, prices are based upon the
multiple of (3) drives.
(5) Prices for Magnum Material include labor and materials to install MUC,
one (1) SCSI cable, one (1) SCSI terminator, loop's back cable, RS232
cable, and bulkhead.
(6) Prices include installation kit. For Magnum II, IOD is left hinge
mount only. Prices are the same for either Magnum or ACL5480
Material.
(7) Prices are firm for a period of one (1) year and are based upon the
terms contained in Section IV, Paragraph E, of the Agreement.
Accessories are distinguished as follows.
a. Consigned material shall have the letter "C" in the price column.
There are either no charges for labor to install consigned material
or labor charges are included in Material prices.
b. If Seller in supplying a Buyer qualified Accessory, Buyer's part
number shall be referenced.
c. If Seller is supplying a Seller qualified Accessory, Seller's part
number shall be referenced.
Where an N/C "No Charge" is shown, prices for Accessory is included in
the Material prices.
(8) Materials contained in the Accessory kit varies by Library option and
shall be included with each Library shipped.
(9) Includes User Manuals, one (1) per library.
(10) Refer to T Tran's BOM Reference #3.
(11) Refer to T Tran's BOM Reference #2.
<PAGE> 51
NOTES (continued)
(12) Refer to T Tran's BOM Reference #5.
(13) Refer to T Tran's BOM Reference #0.
(14) TZ87-AW User Manual consigned with Part I, Item #6.
(15) It is Buyer's goal to authorize Seller to acquire DLT data cartridges
and cleaners directly from Buyer's OEM supplier no later than the FRS
of Magnum II. Until such time, Buyer will consign this material.
(16) Seller is currently acquiring SCSI cables from Seller's qualified
supplier. It is Buyer's goal to qualify these cables with a Digital
qualified supplier. Once qualified, Digital part numbers will be
inserted in the Description column.
<PAGE> 52
PART IV - ACL 5480
Material Pricing
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE QUANTITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MATERIAL:
--------
* 1. Base Unit 1,2 [ ] 1 1 1 1 1 1 1
* 2. Multi-Unit Controller [ ] 1 1 1 1
* 3. Pass Through Mechanism [ ] 2 1 1 1 1
* 4. Inport/Outport Device [ ] 1 1
* 5. STK Bar Code Reader [ ]
* 6. Cabinet Interconnect 4 [ ] 1
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL PRICE [ ] [ ] [ ] [ ] [ ] [ ] [ ]
DIGITAL PART NUMBER 30-41590-01 30-41591-01 30-41591-02 30-41591-03
DIGITAL OPTION NUMBER 5 TL3XA-AA TL3XB-AA TL3XB-BA TL3XB-CA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE QUANTITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MATERIAL:
--------
* 1. Base Unit 1,2 [ ] 1 1 1 1 1 1
* 2. Multi-Unit Controller [ ] 1 1 1
* 3. Pass Through Mechanism [ ] 1 1 1 1
* 4. Inport/Outport Device [ ] 1 1
* 5. STK Bar Code Reader [ ] 1 1 1 1 1 1
* 6. Cabinet Interconnect 4 [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL PRICE [ ] [ ] [ ] [ ] [ ] [ ]
Digital Part Number
Digital Option Number
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See NOTES next page.
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 53
PART V - ACL5480
Upgrades / Accessories Pricing
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE QUANTITY
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UPGRADES:
--------
* 1. Multi Unit Controller [ ] 1 1
* 2. Pass Through Mechanism [ ] 1 1
* 3. Inport/Outport Device [ ] 1 1 1
* 4. STK Bar Code Reader [ ] 1
* 5. Cabinet Interconnect 4 [ ]
- --------------------------------------------------------------------------------------------------------------------------
TOTAL PRICE [ ] [ ] [ ] [ ] [ ]
Digital Part Number 30-41588-01 30-41588-02
Digital Option Number TL3XU-AA TL3XU-BA
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION NOTES PRICE CUSTOMER FIELD
SERVICE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ACCESSORIES:
-----------
* 1. Add-On Binpacks
P/N TBD [ ] X X
2. Cartridge Set
* P/N TBD 3 [ ] X X
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
1. Includes 3 of 9 Bar Code Reader and depending on tape drive custom
mounting kits.
2. Mounting Kit type must be determined at time of order placement.
3. Cartridge Set is 280 Data and 8 Cleaning Cartridges with sequentially
number 3 of 9 bar code labels.
4. Cabinet Interconnect is required when connecting 2 units together.
5. Columns with no Digital part number are future libraries options.
Quantities without Digital part and option numbers are other possible
configurations.
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 54
Digital Equipment Corporation
334 South Street
Shrewsbury, Massachusetts 01545-4195
508.841.3111
DIGITAL
March 25, 1994
Mr. Richard Speyer
Odetics
Data Management Systems Division
1515 South Manchester Avenue
Anaheim, CA 92802
Dear Mr. Speyer,
Pursuant to the terms of Basic Order Agreement #13844, Section 23 Notices,
Section 26 General and specifically Section 4, Pricing paragraph E, the
following items have been changed in Exhibit B1.
Exhibit B1 Material Pricing:
Add to Accessories Section, Item #9 the following parts:
i. Diagnostic Manual QTY: 1
j. Diagnostic Diskett (3.5") QTY: 1
k. RS-232 cable QTY: 1
As agreed, all three items will be added at no charge.
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
these changes under seal as of the date(s) set forth below.
ODETICS, INC. DIGITAL EQUIPMENT CORPORATION
(Seller) (Buyer)
By: /s/ Richard Speyer By: /s/ Paula Swanson
------------------ -------------------------
Richard Speyer Paula Swanson
Contract Manager Purchasing Manager
Date 5 Apr 94 Date March 25, 1994
<PAGE> 55
ATL Products
an Odetics Company
October 19, 1994
In reply refer to: RS10194-418
Digital Equipment Corporation
334 South Street, SHR3-2/Y1
Shrewsbury, Massachusetts 01545-4112
Attention: Paula Swanson
Reference: BOA 13844
Subject: Amendment 3
Dear Paula:
Enclosed for your review and approval are two original Amendment 3s to the
referenced Agreement. Please execute both copies, return one to the
undersigned and retain one for your files.
Should you have any comments or questions regarding the enclosed, please do not
hesitate to call.
Sincerely,
/s/ Richard Speyer
Richard Speyer
Contracts Manager
ATL Products, Inc.
RS/co-s
Enclosure
cc:ATL DMS Digital
K. Daly J. Johnson 40 Old Boston Road
S. Guzowski C. Valerio Stow, Massachusetts 01775-1215
E. Harrison J. Wiseman Attention: Dennis King
D. Petit OG01-1/G13
240 East Palais Road
Anaheim, California 92805-6238
Phone (714) 774-6900
Fax (714) 774-5909
<PAGE> 56
Amendment 3
to
Basic Order Agreement 13844
Between
Odetics Inc., and Digital Equipment Corporation
Pursuant to the terms of Basic Order Agreement #13844, Section 23 Notices,
Section 23 General and specifically Exhibit B2 Spares and Repairs Pricing and
in Exhibit B4 Seller's Cumulative Leadtime and Unique Loose Piece Material, the
following items have been changed:
Exhibit B2.
A) Change the sample Spares Parts List dated August 27, 1993 to the TL820 End
User FRU Price List dated October 19, 1994.
Exhibit B4.
A) Page 2, Definitions/Clarifications, Item 4, change part number 6201680-01
PWA, Carriage QSP1 to part number 6201310-01 Extension Axis.
B) Change Unique Raw Material List dated 9/24/93 to Unique Raw Material List
dated 10/19/94 Should you have any further questions, please contact the
undersigned.
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
these changes under seal as of the date(s) set forth below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Odetics, Inc. Digital Equipment Corporation
(Seller) (Buyer)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Signature /s/ Richard Speyer
Printed Name Richard Speyer Paula Swanson
Title Contracts Manager Purchasing Manager
Date 19 Oct 94
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 57
ATL Products Unique Raw Material
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Minimum Maximum
Estimated Estimated Leadtime Leadtime
Qty Per Per Unit Minimum Maximum Qty of Qty of
P/N Desc Unit Price Value Value Units Units
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
* 1 0395035 Fuse 2 [ ] [ ] [ ] 10 15
* 2 0395036 Fuse 2 [ ] [ ] [ ] 10 15
* 3 0395038 Fuse 2 [ ] [ ] [ ] 10 15
* 4 0395058 Fuse 2 [ ] [ ] [ ] 10 15
* 5 0395059 Fuse 2 [ ] [ ] [ ] 10 15
* 6 0395060 Fuse 2 [ ] [ ] [ ] 10 15
* 7 0395063 Fuse 2 [ ] [ ] [ ] 10 15
* 8 0395064 Fuse 2 [ ] [ ] [ ] 10 15
* 9 0395094 Fuse 2 [ ] [ ] [ ] 10 15
* 10 0395096 Fuse 2 [ ] [ ] [ ] 10 15
* 11 0395098 Fuse 2 [ ] [ ] [ ] 10 15
* 12 0395104 Fuse 2 [ ] [ ] [ ] 10 15
* 13 0395105 Fuse 2 [ ] [ ] [ ] 10 15
* 14 0405055 TAPE DRIVE 3 [ ]
* 15 0415497 SCSI TERM. 1 [ ] [ ] [ ] 25 38
* 16 0425012 Cable Assy 1 [ ] [ ] [ ] 25 38
* 17 0525002 Clean Tape 1 [ ] [ ] [ ] 10 15
* 18 0525003 7 Pack 1 [ ] [ ] [ ] 10 15
* 19 0615044 Nut 2 [ ] [ ] [ ] 10 15
* 20 0725029 Lubricant 1 [ ] [ ] [ ] 10 15
* 21 0725067 Tri Flow 1 [ ] [ ] [ ] 10 15
* 22 0795048 CART LABELS 1 [ ] [ ] [ ] 10 15
* 23 0805000 MANUAL 1 [ ]
* 24 0995088 Bag 1 [ ] [ ] [ ] 10 15
* 25 6203082-01 Cover 1 [ ] [ ] [ ] 10 15
* 26 6203222-01 Label 1 [ ] [ ] [ ] 10 15
* 27 6203350-01 Rear Panel Assy 1 [ ] [ ] [ ] 25 38
* 28 6203935-01 Panel, Logo 1 [ ] [ ] [ ] 10 15
* 29 6204266-01 CABLE ASSY 1 [ ] [ ] [ ] 10 15
* 30 6204267-01 CABLE ASSY 1 [ ] [ ] [ ] 10 15
* 31 6207120-01 MANUAL 1 [ ] [ ] [ ] 10 15
* 32 6207121-01 MANUAL 1 [ ] [ ] [ ] 10 15
* 33 6207123-01 MANUAL 1 [ ] [ ] [ ] 10 15
* 34 6207129-01 Unpack Inst. 1 [ ] [ ] [ ] 10 15
* 35 6207131-01 Label 1 [ ] [ ] [ ] 10 15
* 36 6207907-03 Label 2 [ ] [ ] [ ] 10 15
* 37 6208178-01 SUP MANL 1 [ ] [ ] [ ] 10 15
* 38 6209315-01 Panel, Logo 1 [ ] [ ] [ ] 10 15
* Total [ ] [ ]
C = Consigned to ATL by Digital
PRICES PER THE BOA
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
10/19/94 Company Confidential
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 58
ATL Products TL 820 End User FRU Price List
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Repairable,
Non
End User Repairable,
Digital P/N ATL P/N Description Unit Price Expendable
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
* 1 0345051 Stepper Motor Assembly [ ] NR
* 2 0355032 Power Supply, Switching [ ] R
* 3 0355033 Power Supply [ ] R
* 4 0355034 Power Supply [ ] NR
* 5 0365042 Switch Panel [ ] E
* 6 0405024 Optical Sensor [ ] E
* 7 0405042 Scanner [ ] R
* 8 0405055 TZ87 Drive [ ]
* 9 0475009 Fan [ ] E
* 10 0495031 Power Strip [ ] E
* 11 0645072 Timing Belt [ ] E
* 12 0645083 Belt [ ] E
* 13 6201310-01 Extension Axis [ ] R
* 14 6201650-01 Control Panel PCBA [ ] R
* 15 6201710-01 Door Interface PCBA [ ] E
* 16 6203170-01 Carousel Motor Assembly [ ] R
* 17 6203235-01 IEC Power Dist. [ ] R
* 18 6203300-01 DLT Binpack [ ] E
* 19 6203620-01 Light Curtain Detector, PCBA [ ] NR
* 20 6203650-01 RS 232 PCBA [ ] R
* 21 6204059-01 Switch Assembly, Door [ ] E
* 22 6204210-01 Robotics Controller PCBA [ ] R
* 23 6204220-01 Actuator Driver, PCBA [ ] R
* 24 6204230-02 Stepper Motor Drive PCBA [ ] R
* 25 6204254-01 Umbilical Cable [ ] E
* 26 6204280-01 Light Curtain PCBA [ ] NR
* 27 6205015-01 PTM Tray Assembly [ ] R
* 28 6205735-01 IOD Assembly [ ] R
* 29 6209071-03 Differential, MUC Assembly [ ] R
* 30 6209322-01 Vertical Motor Assembly [ ] NR
* TOTAL [ ]
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
Sparing MTBF MSBF
Level (Hours) (Swaps)
- -------------------------------------------------------
<S> <C> <C> <C>
* 1 240,000,000
* 2 690,000
* 3 12,000,000
* 4 1,700,000
* 5 40,000,000
* 6 100,000,000
* 7 1,200,000
* 8
* 9 500,000
* 10 18,000,000
* 11 1,000,000,000
* 12 1,000,000,000
* 13 640,000 750,000
* 14 5,800,000
* 15 46,000,000
* 16 240,000,000
* 17 6,000,000
* 18 Very High
* 19 12,000,000
* 20 8,000,000
* 21 110,000,000
* 22 310,000
* 23 870,000
* 24 1,600,000
* 25 1,000,000,000
* 26 12,000,000
* 27 2,700,000 160,000,000
* 28 2,700,000 210,000,000
* 29 330,000
* 30 240,000,000
* TOTAL
- -------------------------------------------------------
</TABLE>
+ To the extent the PTM, IOD and MUC are options as well as FRUs, the price was
* established in conjunction with the TL820. The BOA price to Digital is [ ].
These prices are not entitled to any leadtime discounts and must be purchased
in accordance with the terms of the BOA regarding forecasting and purchase
orders.
October 19, 1994 Company Confidential
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 59
ATL PRODUCTS
AN ODETICS COMPANY
October 25, 1994
In reply refer to: RS10254-428
Digital Equipment Corporation
334 South Street, SHR3-2/Y1
Shrewsbury, Massachusetts 01545-4112
Attention: Paula Swanson
Reference: BOA 13844
Subject: Amendment 4
Dear Paula:
Enclosed for your review and approval are two original Amendment 4s to the
referenced Agreement. Per your request, I have changed 9c to be the "Unit
Price" rather than the "Total Price". If you are in agreement with this
Amendment, please sign and return one copy to the undersigned.
Should you have any comments or questions regarding the enclosed, please do not
hesitate to call.
Sincerely,
\s\ Richard Speyer
Richard Speyer
Contracts Manager
ATL Products, Inc.
RS/co-s
Enclosure
cc: ATL DMS Digital
K. Daly J. Johnson 40 Old Boston Road
S. Guzowski C. Valerio Stow, Massachusetts 01775-1215
E. Harrison J. Wiseman Attention: Dennis King
D. Petit OG01-1/G13
M. Spowart
J. Woolcott
240 East Palais Road
Anaheim, California 92805-6238
Phone (714) 774-6900
Fax (714) 774-5909
<PAGE> 60
AMENDMENT 4
TO
BASIC ORDER AGREEMENT 13844
BETWEEN
ODETICS INC., AND DIGITAL EQUIPMENT CORPORATION
- -------------------------------------------------------------------------------
Pursuant to the terms of Basic Order Agreement #13844, Section 23 Notices,
Section 23 General and specifically Exhibit B1 Material Pricing, the following
items have been changed by mutual agreement:
EXHIBIT B1.
* Item 9c should be changed from consigned to a purchase price of [ ] (X7).
* Item 9d should be changed from consigned to a purchase price of [ ] (X1).
* The total price for a TL820-AB should be changed from [ ] to [ ]
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
these changes under seal as of the date(s) set forth below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Odetics, Inc. Digital Equipment Corporation
(Seller) (Buyer)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Signature /s/ Richard Speyer /s/ Paula Swanson
Printed Name Richard Speyer Paula Swanson
Title Contracts Manager Purchasing Manager
Date 24 OCT 94 27 - Oct. 94
- ---------------------------------------------------------------------------------------------------
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION
<PAGE> 61
ATL PRODUCTS
AN ODETICS COMPANY
January 12, 1995
In reply refer to: RS01125-010
Digital Equipment Corporation
334 South Street, SHR3-2/Y1
Shrewsbury, Massachusetts 01545-4112
Attention: Paula Swanson
Reference: BOA 13844
Subject: Amendment Number 5
Dear Paula:
Enclosed for your review and approval are two original Amendment 5s to the
referenced Agreement. Please execute both copies. Return one copy to the
undersigned and retain one for your files.
Should you have any questions or comments regarding the enclosed, please do not
hesitate to contact me.
Sincerely,
/s/ Richard Speyer
Richard Speyer
Contracts Manager
ATL Products, Inc.
RS/co-s
Enclosure
cc: K. Daly
S. Guzowski
E. Harrison
D. Petit
M. Spowart
J. Woolcott
J. Johnson - DMS
C. Valerio - DMS
J. Wiseman - DMS
240 East Palais Road
Anaheim, California 92805-6238
Phone (714) 774-6900
Fax (714) 774-5909
<PAGE> 62
AMENDMENT 5
TO
BASIC ORDER AGREEMENT 13844
BETWEEN
ODETICS INC., AND DIGITAL EQUIPMENT CORPORATION
________________________________________________________________________________
Pursuant to the terms of Basic Order Agreement #13844, Section 23 Notices,
Section 23 General and specifically Section I E, Basic Order Agreement, has
changed by mutual agreement to read as follows:
"Seller grants Buyer all necessary rights and licenses for Buyer to market,
promote, resell, distribute and service the Material and including without
limitation, rights and licenses under any applicable patents, copyrights,
trademarks, trade secrets, mask works, and other intellectual property rights.
Buyer shall have the right to use Seller's name or trademark in connections
with any distribution of the Material under this Agreement".
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
these changes under seal as of the date(s) set forth below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Odetics, Inc. Digital Equipment Corporation
(Seller) (Buyer)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Signature /s/ Richard Speyer
Printed Name Richard Speyer Paula Swanson
Title Contracts Manager Purchasing Manager
Date 12 JAN 94
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.18
CONFIDENTIAL TREATMENT REQUESTED.
CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
SUN MICROSYSTEMS COMPUTER COMPANY
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT including Exhibits ("Agreement") is made
by and between Sun Microsystems, Inc., a Delaware Corporation acting by and
through its Sun Microsystems Computer Company division and having its principal
place of business at 2550 Garcia Avenue, Mountain View, California 94043-1100
("Sun"), and ATL Products, Inc., a California corporation having its principal
place of business at 1515 South Manchester Avenue, Anaheim, California
92802-2907 ("Developer"), and is effective as of the 15th day of January, 1997
(the "Effective Date").
RECITALS
WHEREAS, Developer has developed and owns certain software and hardware
technology and documentation relating to DLT tape libraries; and
WHEREAS, Sun has developed and owns certain mass storage technology used in
high end computer systems; and
WHEREAS, Sun and Developer desire to develop a Sun DLT tape library comprised
of (a) Developer's hardware tape library with certain Sun specific
modifications, (b) library monitor software to be developed by Developer for
Sun, and (c) at Sun's option [ * ] software to be developed by Developer for
Sun, in accordance with the terms and conditions set forth herein; and
WHEREAS, Developer desires to sell, and Sun desires to purchase, the Sun DLT
tape library on an original equipment manufacturer ("OEM") basis, pursuant to
the Award Letter (as defined herein);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
promises, and undertakings set forth herein, and for other good and valuable
consideration, Sun and Developer agree as follows:
1. DEFINITIONS
1.1 "ACCEPTANCE CRITERIA" means the criteria for the acceptance of
the Developed Product as set forth in the Statement of Work.
1.2 "ADD-ON MODULES" means software modules adding additional
functionality to the Library Monitor Software, as more fully set forth in the
Statement of Work, as it may be amended by the parties from time to time,
including any Error Corrections, Updates, Upgrades, Derivative Works of the
Add-on Modules, revisions, and any related Documentation. If Sun elects to
proceed with the development of the [ * ] Software, Add-on Modules to the [ * ]
Software will be described in the Statement of Work for the [ * ] Software.
1.3 "BINARY CODE" means machine-readable, executable code of a
computer program.
1.4 "CONFIDENTIAL INFORMATION" means (a) information which the
disclosing party desires to protect against unrestricted disclosure or
competitive use by the receiving party and which (i) if disclosed in tangible
form, is marked as "confidential" or "proprietary" or with words of similar
import
* Confidential Treatment Requested for Redacted Portion
Confidential 1 ATL Dev & Lic Agreement
1/14/97
<PAGE> 2
in writing by the disclosing party, or (ii) if disclosed orally, is designated
orally as confidential and within thirty (30) days thereafter is confirmed in
writing to the recipient, and (b) the terms, conditions, and existence of this
Agreement. Confidential Information may include proprietary Information of
third parties who have granted licenses to the disclosing party. "Confidential
Information" does not include information received from the disclosing party
which the receiving party can clearly establish by written evidence (a) is or
becomes known by the receiving party without an obligation to maintain its
confidentiality; (b) is or becomes generally known to the public through no act
or omission of the receiving party; or (c) is independently developed by
receiving party without use of the Confidential Information.
1.5 "DELIVERABLE" means any of the deliverable items specified in
the Statement of Work.
1.6 "DERIVATIVE WORK" means: (a) for copyrightable or copyrighted
material (including materials subject to mask work rights), a work which is
based upon one or more pre-existing works, such as a revision, modification,
translation, abridgement, condensation, expansion, collection, compilation, or
any other form in which such pre-existing works may be recast, transformed, or
adapted; (b) for patentable or patented materials, any adaptation, addition,
improvement, or combination; and (c) for material subject to trade secret
protection, any new material, information, or data relating to and derived from
such existing trade secret material, including new material which may be
protectable by copyright, patent, or other proprietary rights.
1.7 "DESIGNATED PLATFORM" means Sun workstations or servers
running Solaris 2.4 or later.
1.8 "DEVELOPED PRODUCT(S)" means the Source Code and Binary Code
forms of the Library Monitor Software and its related Add-on Modules and Sun
Features to be developed by Developer for Sun under this Agreement, including
any Error Corrections, Updates, Upgrades, revisions, and any related
Documentation, all as more fully set forth in the Statement of Work, and any
additional products which the parties may agree to develop hereunder in
accordance with an additional Statement of Work, including but not limited to
the [ * ] Software and its related Add-on Modules and Sun Features.
1.9 "DEVELOPER TECHNOLOGY" means all Technology provided by
Developer, including but not limited to Developer Confidential Information, the
Library Monitor Software and its related Add-on Modules.
1.10 "DEVELOPMENT EQUIPMENT" means the development hardware,
software, and other equipment and supplies provided to Developer by Sun
hereunder as more particularly described in Exhibit B.
1.11 "DEVELOPMENT PERIOD," with respect to any development program
undertaken hereunder, means the period beginning on the date of first
disclosure by either party of any information, pursuant to the Confidential
Disclosure Agreement between the parties dated November 16, 1995 ("CDA") or
under this Agreement, with respect to a Statement of Work and ending on the
date of acceptance by Sun of the last Deliverable set forth in that Statement
of Work.
1.12 "DOCUMENTATION" means the user's manuals for the Developed
Product, in Frame format, and any other documentation which the parties agree,
currently and hereafter from time to time, in writing, to treat as
Documentation, under this Agreement, including documentation necessary to
* Confidential Treatment Requested for Redacted Portion
Confidential 2 ATL Dev & Lic Agreement
1/14/97
<PAGE> 3
support and service the Developed Product, together, in each case, with any
Updates, Upgrades, Derivative Works, modifications, or enhancements thereto.
1.13 "ERROR" means any reproducible failure of the Developed
Product to conforming any material respect to the Specifications or
Documentation therefor, as the same may be amended and/or supplemented from
time to time.
1.14 "ERROR CORRECTION" means either a modification to the
Developed Product that, when made or added to the Developed Product, only
establishes material conformity to the current Specifications and Documentation
therefor, or a procedure or routine that only eliminates the practical adverse
effect of an Error in the regular operation of the Developed Product, without
adding new features or functionality.
1.15 "FEES" means those fees, if any, to be paid by Sun to
Developer in connection with the development of the Developed Product, as set
forth on Exhibit A.
1.16 "INTELLECTUAL PROPERTY RIGHTS" means all intellectual property
rights worldwide arising under statutory or common law or by contract and
whether or not perfected, now existing or hereafter filed, issued, or acquired,
including all (a) patent rights; (b) rights associated with works of authorship
including copyrights and mask work rights; (c) rights relating to the
protection of trade secrets and confidential information; and (d) any right
analogous to those set forth herein and any other proprietary rights relating
to intangible property; but specifically excluding trademarks, service marks,
trade dress, trade names, and design patent rights.
1.17 "[ * ] SOFTWARE" means software, [ * ] to be developed by
Developer for Sun at Sun's option under this Agreement, including any Error
Corrections, Updates, Upgrades, Derivative Works of the [ * ] Software,
revisions, and any related Documentation, all as more fully set forth in an
additional Statement of Work to be added to this Agreement.
1.18 "LIBRARY MONITOR SOFTWARE" means software allowing for the
remote administration of Sun DLT tape libraries via a Java enabled browser, to
be developed by Developer for Sun under this Agreement, including any Error
Corrections, Updates, Upgrades, Derivative Works of the Library Monitor
Software, revisions, and any related Documentation and excluding any related
Adcl--on Modules and Sun Features, all as more fully set forth in the Statement
of Work.
1.19 "NON-CONFORMANCE" means a failure of the (a) Developed Product
to conform materially to the Specifications, or to perform correctly when
measured against the Specifications; or (b) Documentation to describe
accurately an observable function of the Developed Product.
1.20 "ON-SITE EMPLOYEE" means any employee or contractor of
Developer performing work or receiving training at any Sun location.
1.21 "ROYALTIES" means the royalties payable by Sun to Developer,
if any, in connection with the Developed Product, as set forth in Exhibit A.
1.22 "SOURCE CODE" means code of a computer program that is not
executable by a computer
* Confidential Treatment Requested for Redacted Portion
Confidential 3 ATL Dev & Lic Agreement
1/14/97
<PAGE> 4
system directly but must be converted into machine language by compilers,
assemblers, and/or interpreters, as well as documentation, release notes, or
other specifications which describe the content, organization, and structure of
the software programs included therein.
1.23 "SPECIFICATIONS" means the document or documents, including
but not limited to the Statement of Work, that characterize and define the
logical, functional, performance, and operational aspects of the Developed
Product, as defined and agreed by the parties in accordance with the Statement
of Work.
1.24 "STATEMENT OF WORK" means the development program and schedule
determined by the parties pursuant to this Agreement which sets forth the
stages of development of the Developed Product, including the Deliverables and
associated target dates pertinent thereto. The Statement of Work for the
Library Monitor Software and its related Add-on Modules and Sun Features, is as
set forth on Exhibit C, as that Exhibit may be amended from time to time in
accordance with Section 5.5. From time to time during the term of this
Agreement, one or more additional Statements of Work for one or more additional
Developed Products, including but not limited to the [ * ] Software, may be
added by mutual written consent of the parties.
1.25 "SUN DLT LIBRARY" means a Sun DLT tape library comprised of
(a) Developer's hardware tape library with certain Sun specific modifications,
including but not limited to cosmetic changes, (b) the Library Monitor
Software, and (c) at Sun's option the [ * ] Software.
1.26 "SUN FEATURES" means software modules adding Sun specific
features and functions to the Library Monitor Software as more fully described
in the Statement of Work. If Sun elects to proceed with the development of the
[ * ] Software, the software modules adding Sun specific features and functions
to the [ * ] Software will be set forth in the Statement of Work for the [ * ]
Software.
1.27 "SUN TECHNOLOGY" means all Technology provided by Sun,
including but not limited to Sun Confidential Information and Sun Features.
1.28 "TARGET DATE" means a date set forth in the Statement of Work
for delivery of a Deliverable as that date may be modified in accordance with
Section 5.4.
1.29 "TECHNOLOGY" means technical information, know-how, ideas,
concepts, processes, procedures, designs, schematics, works of authorship,
inventions and discoveries owned or licensed (with a right to sublicense) by a
party hereto.
1.30 "TEST PLAN" means the plan for testing the designs and
specifications of the Developed Product for substantial and material
conformance with the Specifications and product standards set forth in the
Statement of Work. The Test Plan is described in the Statement of Work.
1.31 "TEST REPORTS" means the safety agency compliance reports, the
environmental qualification reports, the software test and integration reports,
the performance test data, and the shipping package design and test data set
forth in the Statement of Work.
1.32 "UPDATES" means later releases (including new releases),
modifications, enhancements, additions, improvements, or extensions to any
Developed Product or Derivative Work thereof typically identified by a change
in the digit(s) to the right of the first digit of the version number (x.(xx)),
* Confidential Treatment Requested for Redacted Portion
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excluding Error Corrections, made after the end of the Development Period and
during the term of this Agreement.
1.33 "UPGRADES" means later releases (including new releases) of
any Developed Product or Derivative Work thereof adding new features and/or
functionality and typically identified by a change in the first digit of the
version number ((x).xx), excluding Error Corrections, made after the end of the
Development Period and during the term of this Agreement.
2. OWNERSHIP
2.1 SUN TECHNOLOGY. Sun is and will be the sole and exclusive
owner of all right, title, and interest in and to Sun Technology and all
associated Intellectual Property Rights, and this Agreement does not affect
such ownership. Derivative Works of Sun Technology will be owned exclusively
by Sun whether or not developed solely by Sun, solely by Developer, or jointly
by both parties. Developer acknowledges that it acquires no rights under this
Agreement to Sun Technology or Derivative Works thereof, other than the limited
rights, if any, specifically granted in this Agreement.
2.2 DEVELOPER TECHNOLOGY. Developer is and shall remain the sole
and exclusive owner of all right, title, and interest in and to Developer
Technology and all associated Intellectual Property Rights, and this Agreement
does not affect such ownership. Derivative Works of Developer Technology
will be owned exclusively by Developer whether or not developed solely by
Developer, solely by Sun, or jointly by both parties. Sun acknowledges that it
acquires no rights under this Agreement to Developer Technology or Derivative
Works thereof, other than the limited rights, if any, specifically granted in
this Agreement.
2.3 DEVELOPED PRODUCT AND SUN FEATURES. The parties hereby agree
that (a) the Library Monitor Software and the Add-on Modules, and all
associated Intellectual Property Rights, shall be owned exclusively by
Developer, and (b) the Sun Features and all associated Intellectual Property
Rights shall be owned exclusively by Sun.
2.4 NO LIMITATIONS ON USE. Except as expressly set forth in this
Agreement, nothing contained in this Agreement shall be construed to limit or
restrict, in any way or manner, any right of either party to encumber,
transfer, license, access, reference, use, or practice any Technology owned or
to be owned by it in any way for any purpose or use, including products
competitive with the Developed Product.
2.5 FURTHER ASSURANCES. Each party agrees to cooperate with the
other and take all reasonable actions required to vest and secure in each party
the ownership rights and appurtenant Intellectual Property Rights as provided
in this Agreement. Should any such rights vest in a party by operation of law
or otherwise in a manner inconsistent with the parties' intentions as expressed
herein, then that party shall upon request by the other party promptly make the
appropriate and necessary assignment of rights to the other, and/or otherwise
take all steps reasonably requested to conform to the parties' respective
ownership rights with this Agreement, including but not limited to the
execution of recordable instruments and other documents necessary to perfect
such assignments. The parties agree that the costs attendant to such actions
shall be borne by the requesting party.
3. LICENSE GRANTS; OBLIGATIONS
3.1 LICENSES TO DEVELOPED PRODUCT. On the terms and subject to the
conditions set forth herein, Developer grants Sun a fully-paid, worldwide,
non-transferable (except as provided in Section 17.2), exclusive, irrevocable,
perpetual license to use the Library Monitor Software, in its Binary Code form,
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(a) in connection with the Sun DLT Library, (b) to support Sun's sale and
license of the Sun DLT Library to third parties, and/or (c) to copy, have
copied, distribute and sublicense the use of the Library Monitor Software,
pursuant to a binary code license substantially in the form of Sun's Binary
Code License, attached as Exhibit D, for distribution as part of the Sun DLT
Library or on a stand-alone basis. [ * ] The above exclusive license will
become non-exclusive, in the event the Corporate Supply Agreement or other
similar agreement between Sun and Developer covering the Sun DLT Library is
cancelled or terminated other than for breach by Developer. "FCS" as used in
this Agreement means the general release of a product, excluding alpha, beta
and early access versions.
3.2 LICENSES TO ADD-ON MODULES. On the terms and subject to the
conditions set forth herein, Developer grants Sun a fully-paid (except as
provided in Article 8), worldwide, non-transferable (except as provided in
Section 17.2), non-exclusive, irrevocable, perpetual license to use the Add-on
Modules, in their Binary Code form, (a) in connection with the Sun DLT Library,
(b) to support Sun's sale and license of the Sun DLT Library to third parties,
and/or (c) to copy, have copied, distribute and sublicense the use of the
Add-on Modules, pursuant to a binary code license substantially in the form of
Sun's Binary Code License, attached as Exhibit D, for distribution as part of
the Sun DLT Library or on a stand-alone basis. [ * ]
3.3 COMPATIBILITY AND BRANDING. The Developed Product will be
compatible and operate with the Designated Platform. The Developed Product may
be branded and marked by Sun under any Sun brand or mark.
3.4 IMPLEMENTATION OF ERROR CORRECTIONS AND UPDATES. Sun may
implement Error Corrections for any Errors detected by Developer in the
Developed Product, and may implement any Updates or Upgrades developed by it or
delivered by Developer in accordance with this Agreement.
3.5 NO OTHER RIGHTS. Other than the limited rights granted herein
neither party acquires any right, title or interest in or to the other party's
Technology, nor in the Intellectual Property Rights therein and appurtenant
thereto. Any purported grant of license or sublicense not expressly authorized
herein shall be void.
4. DELIVERY
4.1 DELIVERY OF DELIVERABLES ON TARGET DATES. Developer shall
deliver to Sun the Deliverables, including (a) the Library Monitor Software and
its related Add--.on Modules in Binary Code form, as set forth in the Statement
of Work, and (b) the Sun Features in Binary Code and Source Code forms.
4.2 DETECTED ERRORS. Each party shall promptly inform the other
party regarding any Errors it may detect in its relevant Technology or the
Developed Product.
4.3 DELIVERY OF ERROR CORRECTIONS, UPDATES, UPGRADES AND
DERIVATIVE WORKS. During the term of this Agreement, Developer shall, promptly
after its development, deliver to Sun at no charge any Error Corrections,
Updates, Upgrades and Derivative Works made by or for it with respect to the
Developed Product.
4.4 DELIVERY OF DEVELOPED PRODUCT. Upon completion of the
Developed Product, Developer shall deliver it to Sun for final evaluation and
testing. In connection with such delivery, Developer shall
* Confidential Treatment Requested for Redacted Portion
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prepare and deliver to Sun a detailed report with back-up documentation
evidencing that Developer has fully tested the Developed Product in accordance
with the Test Plan and has fully evaluated the Documentation, and reasonably
believes that the Developed Product is free from Non-Conformance and meets the
Acceptance Criteria as defined in the Statement of Work.
4.5 ESCROW. Concurrently with or promptly after the delivery to
Sun of any Developed Product in Binary Code form, Developer shall deliver any
Developer-owned Source Code for such Developed Product into an escrow account
to be mutually established by the parties with Data Securities International,
Inc. (the "Escrow Agent"). The parties shall execute documents providing for
the release of the Source Code to Sun from the Escrow Agent only upon
termination of this Agreement by Sun in accordance with the provisions of
Section 16.2 (Termination for Cause) or Section 16.3 (Termination for
Insolvency Event). In the event of the release of the Source Code to Sun, Sun
and its affiliates will have the unrestricted right to use the Source Code for
any purpose, including but not limited to the support of the Developed Products
and the development of new products, provided that Sun agrees not to license,
transfer or assign the Source Code to any third parties.
5. DEVELOPER'S OBLIGATIONS AND DEVELOPMENT UNDERTAKINGS
5.1 COMMITMENTS. During the course of the development work
described in this Agreement, Developer shall:
(a) develop the Developed Product according to the Statement of
Work, using diligent and good faith efforts to design, develop, complete, test,
and deliver to Sun all Deliverables by or before their associated Target Dates;
(b) commit and utilize sufficient resources and qualified
personnel necessary and appropriate for the timely and satisfactory completion
of the Developed Product;
(c) ensure that the Developed Product conforms to the
Specifications;
(d) cooperate with Sun and provide Sun reasonable access during
normal Developer business hours to personnel working on behalf of Developer in
connection with the Statement of Work;
(e) deliver to Sun the Deliverables;
(f) conduct periodic status meetings with Sun, at the frequency
reasonably requested by Sun, and provide a written status report to Sun
concerning Developer's progress on its Deliverables and other activities and
obligations required under this Agreement once every two (2) weeks;
(g) provide to Sun all engineering support, technical training,
Confidential Information and other resources which Developer in its reasonable
judgment deems appropriate to assist Sun with the Statement of Work; and
(h) notify Sun of any factor, occurrence, non-occurrence, or event
that is likely to cause a material delay in delivery of any Deliverable by or
before its associated Target Date, or that otherwise is likely to affect
adversely Developer's ability to meet any obligation under this Agreement.
5.2 USE OF DEVELOPMENT EQUIPMENT. During the Development Period,
unless otherwise agreed in writing by the parties, Developer shall not use or
permit use of the Development Equipment for any purpose other than development
of the Developed Product. After the Development Period,
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unless otherwise agreed between the parties, Developer shall return the
Development Equipment to Sun in accordance with the terms of the Equipment Loan
Agreement (as defined in Section 6.3).
5.3 TESTING. Developer shall perform and be responsible for the
testing and debugging of all releases of the Developed Product. Developer
shall provide all assistance necessary for Sun fully to test and evaluate the
Developed Product and the Sun DLT Library. Sun may test and/or examine each
such Deliverable according to the Test Plan and in the Test Environment to
determine whether it substantially and materially conforms to the
Specifications.
5.4 SCHEDULE CHANGES. In the event Developer determines that a
particular Target Date will likely be missed, it shall promptly give notice to
Sun setting forth in reasonable detail the reason for the anticipated delay,
any corrective measures Developer intends to undertake, and the estimated
revised Target Date. Any such estimated revised Target Date that is more than
five (5) days beyond the original Target Date shall be subject to Sun's written
approval. In the event the parties cannot agree on a proposed revised Target
Date, the matter shall be escalated to the respective management of the parties
for resolution and for termination of the Agreement, if management of the
parties cannot reach agreement in good faith. In the event Sun believes that
such delay materially compromises the viability of the development effort, Sun
may terminate the Agreement and/or any Corporate Supply Agreement or similar
agreement covering the Sun DLT Library for breach.
5.5 STATEMENT OF WORK. The Statement of Work sets forth the key
Deliverables and associated Target Dates as specified in Exhibit C. The parties
may, from time to time, and by mutual agreement, modify the Statement of Work,
provided that the key Deliverables and associated Target Dates may be modified
or deleted only by written modification to the Statement of Work attached
hereto as Exhibit C.
5.6 SPECIFICATIONS. The Specifications for the Developed Product
shall be as set forth in the Statement of Work.
6. SUN'S OBLIGATIONS
6.1 [ * ] SOFTWARE OPTION. At Sun's option, the [ * ] Software
and its related Add-on Modules and Sun Features will be developed by Developer
for Sun in accordance with the terms and conditions of this Agreement and such
other supplemental terms as may be mutually agreed upon by the parties. The
terms applicable to the [ * ] Software and its' related Add-on Modules and Sun
Features will be substantially the same as the terms applicable to the Library
Monitor Software and its related Add-on Modules and Sun Features. In the event
Sun desires to exercise such option, Sun will notify Developer in writing on or
prior to November 1, 1997. If Sun exercises such option, Sun and Developer
will promptly negotiate the detailed terms to be set forth in the Statement of
Work for the [ * ] Software and any supplemental terms that will apply to the
development.
6.2 SUPPORT AND INFORMATION. Sun will provide any engineering
support, technical training, Confidential Information, and other resources
which Sun in its reasonable judgment deems appropriate to assist Developer with
the Statement of Work ("Resources"). Sun shall not be obligated to provide
specific Resources or specific levels of any Resource unless expressly
specified in the Statement of Work.
* Confidential Treatment Requested for Redacted Portion
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6.3 DEVELOPMENT EQUIPMENT. Sun shall provide to Developer the
Development Equipment in accordance with and subject to the terms of the
Equipment Loan & Software License Agreement attached as Exhibit B (the
"Equipment Loan Agreement").
6.4 SUN UPDATES. Sun may, in its sole discretion, upgrade any Sun
Technology provided to Developer in the event that a new release becomes
available during the Development Period, and subject to Developer's written
agreement to any modification to the Statement of Work and/or scope of the
Developed Product requested by Sun, which agreement shall not be unreasonably
withheld.
7. EVALUATION AND ACCEPTANCE/REJECTION OF DELIVERABLES
7.1 ACCEPTANCE AND/OR REJECTION OF DELIVERABLES. Sun shall have
the right to evaluate and test each Deliverable at any time during its
development, and to observe testing conducted by Developer. Developer shall
deliver to Sun, at Sun's request, any Deliverable for evaluation or testing at
any time during its development, including but not limited to the dates set
forth in the Statement of Work. Developer shall provide all reasonable
assistance necessary for Sun fully to test and evaluate each Deliverable. Sun
shall have the right to reject any Deliverable because of any Non-Conformance.
Unless otherwise stated in the Statement of Work, Sun shall advise Developer in
writing within fifteen (15) business days of receipt of any Deliverable for
testing or evaluation whether Sun accepts or rejects such Deliverable. If Sun
rejects the Deliverable, then Sun shall provide to Developer a written
statement of the reasons for such rejection. Upon rejection, Developer shall
promptly prepare an Error Correction and resubmit such Deliverable to Sun for
evaluation pursuant to this Section.
7.2 ACCEPTANCE AND/OR REJECTION OF DEVELOPED PRODUCT. Unless
otherwise stated in the Statement of Work, Sun shall advise Developer in
writing within fifteen (15) business days of receipt of the completed
Developed Product for testing or evaluation whether Sun accepts or rejects such
Developed Product in accordance with the Acceptance Criteria. If Sun rejects
the Developed Product, then Sun shall provide to Developer a written statement
of the reasons for such rejection. Upon rejection, Developer shall promptly
prepare an Error Correction and resubmit such Developed Product to Sun for
evaluation pursuant to this Section. Continued failure of the Developed
Product to conform to the Acceptance Criteria shall constitute grounds for Sun
to terminate this Agreement unless the parties agree upon a plan to correct the
Non-Conformance.
8. FEES AND ROYALTIES
8.1 FEES. Sun agrees to pay to Developer the Fees specified in
Exhibit A, if any, on the dates set forth therein in connection with
Developer's performance of the initial Statement of Work. Fees for services
under additional Statements of Work shall be as set forth in this Agreement or
otherwise as agreed in writing by the parties.
8.2 ROYALTIES. Sun agrees to pay to Developer in U.S. Dollars the
Royalties specified in Exhibit A, if any. Royalties will be paid quarterly
within forty-five (45) days following the end o f the calendar quarter in which
the Developed Product ships. Payments shall be accompanied by a certified
statement of the number of Developed Product sold in the calendar quarter and
the total cumulative volume of Developed Product sold as of the end of that
quarter.
8.3 BOOKS AND ACCOUNTS. Sun will maintain accounts, books, and
records, consistent with generally accepted accounting principles, sufficient
to allow the correctness of the Royalties to be determined. Developer shall
have the right through an independent auditor to audit such accounts upon
reasonable notice first having been given.
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9. CONFIDENTIAL INFORMATION
9.1 LIMITED RIGHTS. Each party acknowledges that it acquires only
the right to use the other party's Confidential Information under the terms and
conditions of this AgreeMent for so long as it is in effect and does not
acquire any rights of ownership or title in the other party's Confidential
Information. Each party shall hold in confidence any Confidential Information
received by it from the other and shall protect the confidentiality of such
with the same degree of care that it exercises with respect to its own
information of like import, but in no event less than reasonable care, for a
period of five (5) years from receipt thereof, except that the obligation to
maintain and protect the confidentiality of Source Code shall continue in
perpetuity. Access to each party's Confidential Information shall be
restricted to the other party's employees and independent contractors with a
need to have access. In the event that the receiving party is required to
disclose Confidential Information pursuant to law, the receiving party shall
notify the other of the required disclosure with sufficient time to seek
relief, cooperate with the other party in taking appropriate protective
measures, and shall make such disclosure in the fashion which maximizes
protection of the Confidential Information from further disclosure. This
Article 9 will not affect any other confidential disclosure agreement between
the parties.
9.2 EMPLOYEES AND CONTRACTORS. The receiving party shall inform
its employees and/or contractors having access to Confidential Information of
the limitations, duties, and obligations regarding non-disclosure of
Confidential Information imposed by (a) this Agreement and/or (b) third parties
who have supplied information and/or technology to the disclosing party,
provided the disclosing party shall first have notified the receiving party of
any such obligations. The receiving party shall obtain or have obtained its
employees' and/or contractors' agreements to comply with such limitations,
duties and obligations. The receiving party agrees to provide notice to the
disclosing party immediately after learning of a breach of any of the
restrictions regarding confidentiality set forth in this Article 9.
9.3 COMPETITIVE PRODUCTS. Each party understands that the other
party may now or in the future be developing information internally, or
receiving information from third parties, that may be similar to the other
party's Confidential Information. Accordingly, nothing in this Agreement shall
be construed as a representation or inference that either party will not
develop or acquire products, for itself or others, that compete with the
technology, products, systems or methods contemplated by the other party's
Confidential Information, provided such party has not done so in breach of this
Agreement. Nothing in this Agreement shall prevent or be construed as
prohibiting either party from independently developing any product that
competes with or is similar to any of the other party's products.
9.4 ON-SITE EMPLOYEES. Developer will not seek access to,
receive, or use any Confidential Information of Sun or any of its affiliates
for which Developer does not have a need to know for the purposes of this
Agreement, and Developer's On-Site Employees will not disclose to Developer or
any third party any Confidential Information of Sun which he or she obtains
which Developer did not need to know for the purposes of this Agreement. As a
condition of their presence on Sun's premises, Developer's On-Site Employees
shall sign the agreement attached as Exhibit E.
9.5 INJUNCTIVE RELIEF. The parties acknowledge that any material
violation by a party ("Violating Party") of the rights and obligations provided
in this Article 9 may result in immediate and irreparable injury to the other
party ("Non-Violating Party"), and each hereby agrees that the Non-Violating
Party shall be entitled to immediate temporary, preliminary, and permanent
injunctive relief against any such continued violations upon adequate proof, as
required by applicable law.
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The parties hereby submit themselves to the personal jurisdiction of the courts
of competent subject matter jurisdiction, provided below, for purposes of entry
of such injunctive relief.
10. PROPRIETARY NOTICES
10.1 RETENTION OF NOTICES. Neither party shall delete any
copyright notices and/or other proprietary notices included on or embedded in
the Developed Product or the other party's Technology.
10.2 REFERENCE TO OTHER'S TRADEMARKS. Except as expressly provided
in this Agreement, or later provided by written modification to this Agreement
and/or execution of any necessary trademark licenses, neither party is granted
any right, title, interest, or license to use the other party's trademarks,
tradenames, logos, product designs, corporate identities, or other marketing
designations or brands ("Trademarks") used in connection with the parties'
products, technologies, or businesses. Specifically, Developer shall not use
the names "Sun," "Solaris," "Java," or any other Sun Trademark in the name of
Developer's products (e.g., Developer's products may not be named "SunXYZ" or
"JavaXYZ" or "XYZ for Solaris").
11. SUPPORT
11.1 DEVELOPER'S SUPPORT. Developer shall provide support to Sun
as set forth on Exhibit F during the Development Period and for a period agreed
to in connection with the Award Letter (as defined in Section 13).
11.2 LIMITATIONS ON SUPPORT. Developer acknowledges and agrees
that, other than Sun's frontline support of Developed Product distributed by
Sun, Sun is not obligated in any way to maintain or provide support to
Developer or its customers. Developer shall be solely responsible for
maintaining and supporting its customers and shall not refer its customers to
Sun for support.
12. OEM RELATIONSHIP
12.1 COMMENCEMENT OF RELATIONSHIP. The parties intend to enter
into an original equipment manufacturer ("OEM") relationship, wherein, after
Sun's acceptance of the Developed Product and the Sun DLT Library, Developer
will sell the Sun DLT Library exclusively to Sun for distribution by Sun in
accordance with the terms of an Award Letter (the "Award Letter"),
substantially in the form of Exhibit G hereto. The parties acknowledge that
the final terms of the Award Letter are still being negotiated.
13. REPRESENTATIONS AND WARRANTIES
13.1 WARRANTY RE DEVELOPED PRODUCT. Developer represents and
warrants to Sun that the Developed Product will conform to the Specifications
and Documentation.
13.2 AUTHORIZATION. Each party represents and warrants that it has
the right to enter into this Agreement, and that there exist no prior
commitments or other obligations which prevent such party from making all of
the grants and undertakings provided for in this Agreement.
13.3 DISCLAIMER. Except as expressly warranted above, each of the
parties' respective Technology is provided "ASIS" and without any warranty of
any kind. EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH PARTY HEREBY DISCLAIMS ALL
OTHER WARRANTIES WITH RESPECT TO ALL TECHNOLOGY, CONFIDENTIAL INFORMATION,
DOCUMENTATION, MATERIALS, SERVICES, AND ALL OTHER MATTER PROVIDED HEREUNDER,
INCLUDING WITHOUT LIMITATION
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ANY WARRANTY OF DESIGN, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, OR ARISING FROM A COURSE OF DEALING OR TRADE PRACTICE. Sun
shall not be liable to Developer for any defects or deficiencies in the
Developed Product whether or not caused, in whole or in part, by defects or
deficiencies in any Technology provided or developed by Sun. Developer shall
not be liable to Sun for any defects or deficiencies in the Developed Product
caused by defects or deficiencies in any Technology provided by Sun.
14. LIMITATION OF LIABILITY
14.1 EXCEPT FOR A VIOLATION OF ARTICLE 9 OR THE OBLIGATIONS OF
ARTICLE 15, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE
PERFORMANCE OF OR ALLEGED FAILURE TO PERFORM THIS AGREEMENT (INCLUDING LOSS OF
REVENUE, PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE), REGARDLESS OF THE
THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN PREVIOUSLY ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE OCCURRING.
14.2 EACH PARTY ACKNOWLEDGES THAT THE TECHNOLOGY OF THE OTHER PARTY
IS NOT DESIGNED OR INTENDED FOR USE IN ON-LINE CONTROL OF AIRCRAFT, AIR
TRAFFIC, AIRCRAFT NAVIGATION OR AIRCRAFT COMMUNICATIONS; OR IN THE DESIGN,
CONSTRUCTION, OPERATION OR MAINTENANCE OF ANY NUCLEAR FACILITY, AND EACH PARTY
DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OF FITNESS FOR SUCH USES. EACH PARTY
REPRESENTS AND WARRANTS THAT IT WILL NOT USE OR RESELL PRODUCTS EMBODYING THE
TECHNOLOGY OF THE OTHER PARTY FOR SUCH PURPOSES.
15. INTELLECTUAL PROPERTY INDEMNIFICATION
15.1 INDEMNITY. Developer will defend at its expense any legal
proceeding brought against Sun, to the extent that it is based on a claim that
a Deliverable, the Developed Product or any part thereof, infringes or
misappropriates any Intellectual Property Right of a third party, except to the
extent that such claim arises out of (a) any Sun Technology; or (b) any
combination by Sun of the Deliverable or the Developed Product with products
not provided by Developer. Developer will pay all damages and costs finally
awarded by a court attributable to such claim, provided that Sun: (i) promptly
notifies Developer in writing of such claim; (ii) gives Developer all
reasonably requested information which Sun has concerning the claim; (iii)
reasonably cooperates with and assists Developer, at Developer's expense, in
the defense of such claim; and (iv) gives Developer sole authority to control
the defense and settlement of any such claim, except that Developer shall not
enter into any settlement that materially adversely affects Sun's rights or
interests, without Sun's prior written approval. Sun shall have no authority
to settle any claim on behalf of Developer.
15.2 ADDITIONAL OBLIGATION. Should the use and/or distribution of
the Developed Product be enjoined or become the subject of a claim of
infringement, Developer shall either (a) procure for Sun the right to continue
to use and distribute the same, or (b) replace or modify the same to make it
non-infringing without materially changing the form, fit, and function of the
Developed Product.
16. TERM AND TERMINATION
16.1 TERM OF AGREEMENT. This Agreement shall commence on the
Effective Date and expire five (5) years after Sun's first customer shipment of
the last Developed Product developed under this Agreement (the "Initial Term").
At the end of the Initial Term, this Agreement shall automatically be renewed
for successive additional one (1) year periods, (a) unless either party
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notifies the other in writing at least six (6) months prior to the expiration
of the current term of its desire to terminate this Agreement in which case
this Agreement shall expire at the end of the current term, or (b) until Sun
notifies Developer in writing that it no longer intends to purchase the Sun DLT
Library from Developer in which case this Agreement shall expire at the end of
the then-current term.
16.2 TERMINATION FOR CAUSE. If either party commits a material
breach of the terms and conditions of this Agreement, the other party may
terminate this Agreement upon sixty (60) days' prior written notice to the
defaulting party describing in reasonable detail such breach, unless within
sixty (60) day period after receipt of such Notice all breaches specified
therein shall have been remedied, or if the breach is one which by its nature
cannot be fully remedied in sixty (60) days, the party has taken substantial
measures toward remedying the breach within sixty (60) days, has provided a
written plan for remedying such breach which is acceptable to the non-breaching
party, and continues to use best efforts to remedy the breach promptly,
provided that such period cannot exceed a total of one hundred twenty (120)
days.
16.3 TERMINATION FOR INSOLVENCY EVENT. This Agreement may be
terminated at the option of the terminating party upon written notice thereof
upon the occurrence of any of the following events with respect to the other
party: (i) a receiver is appointed for such party or its property; (ii) such
party makes a general assignment for the benefit of its creditors; (iii) such
party commences, or has commenced against it, proceedings under any bankruptcy,
insolvency or debtor's relief law, which proceedings are not dismissed within
sixty (60) days; or (iv) such party is liquidated or dissolved.
16.4 CHANGE OF CONTROL. In the event more than twenty percent
(20%) of the equitable ownership of Developer is transferred to a direct
competitor of Sun, Sun may, at its option, terminate the license granted under
the Equipment Loan Agreement, or terminate this Agreement in its entirety, upon
notice to Developer.
16.5 SURVIVAL OF RIGHTS AND OBLIGATIONS UPON TERMINATION. The
provisions of Articles 2, 3, 9, 10, 11, 12, 13, 14, 15, 16, and the relevant
provisions of Article 17, and any other term or condition which by its nature
is clearly intended to survive the expiration or termination of this Agreement,
shall survive any expiration or termination of this Agreement. ln addition,
upon termination of this Agreement for any reason the licenses necessary to Sun
for distribution of the Developed Product or Derivative Works, if otherwise
terminable, shall survive for twelve (12) months from the date of termination.
The expiration or termination of this Agreement shall not affect the Award
Letter, except as provided therein.
16.6 RETURN OF MATERIALS UPON TERMINATION. In the event of
termination, upon notice from the disclosing party, all materials containing
Technology or Confidential Information of the disclosing party shall be
returned promptly to that party or destroyed and certified as same by an
officer of the receiving party, except for materials necessary to the receiving
party to fulfill its support obligations to its licensees or end users.
17. MISCELLANEOUS
17.1 FORCE MAJEURE. A party is not liable for nonperformance of
this Agreement for non-performance caused by events or conditions beyond that
party's control, it the party makes reasonable efforts to perform. This
provision does not relieve either party of its obligation to make payments then
owing.
Confidential 13 ATL Dev & Lic Agreement
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<PAGE> 14
17.2 ASSIGNMENT. Neither party may assign or otherwise transfer
any of its rights or obligations under this Agreement, without the prior
written consent of the other party, except that Sun may assign this Agreement
to an affiliated company. For purposes of this Agreement, "affiliated company"
means Sun Microsystems, Inc. ("SMI"), any division thereof, or any company of
which more than 50% of the voting stock is owned or controlled by SMI.
17.3 RELATIONSHIP OF PARTIES. This Agreement is not intended to
create a relationship such as a partnership, franchise, joint venture, agency,
employment relationship. Neither party shall act in a manner which expresses
or implies a relationship other than that of independent contractor, nor bind
the other party.
17.4 WAIVER OR DELAY. Any express waiver or failure to exercise
promptly any right under this Agreement will not create a continuing waiver or
any expectation of non-enforcement.
17.5 SEVERABILITY. If any term or provision of this Agreement is
found to be invalid under any applicable statute or rule of law then, that
provision notwithstanding, this Agreement shall remain in full force and effect
and such provision shall be deemed omitted.
17.6 EXPORT CONTROL. Technology delivered under this Agreement is
subject to U.S. export control laws and may be subject to export or import
regulations in other countries. Each party agrees to comply strictly with all
such laws and regulations and acknowledges that it has the responsibility to
obtain such licenses to export, re-export, or import as may be required after
receipt of the other's Technology.
17.7 BENEFICIARIES. This Agreement is made for the benefit of the
parties hereto, and not for the benefit of any third parties unless otherwise
stated herein.
17.8 GOVERNING LAW AND JURISDICTION. Any action related to this
Agreement will be governed by California law and controlling U.S. federal law.
No choice of law rules of any jurisdiction will apply. Any action brought
hereunder shall be brought exclusively in the United States District Court for
the Northern District of California or the California Superior Court for the
County of Santa Clara, as applicable, applying the governing law of this
Agreement.
17.9 NOTICES. All notices required to be given under this
Agreement shall be deemed to have been given upon receipt at the addresses
listed above. Either party may change its address for the purpose of this
Agreement by giving the other party written notice of its new address.
17.10 HEADINGS. Headings used in this Agreement are for ease of
reference only and shall not be used to interpret any aspect of this Agreement.
17.11 ENTIRE AGREEMENT. This Agreement, together with its Exhibits
and any On-Site Employee Confidentiality Agreements entered into in accordance
with this Agreement, is the parties' entire understanding and agreement with
respect to its subject matter and supersedes (a) all prior or contemporaneous
oral or written communications, proposals, understandings, and representations
with respect to its subject matter; and (b) any conflicting terms of any quote,
order, acknowledgment, or similar communication between the parties. This
Agreement may not be modified or amended, in whole or in part, except in a
writing executed by duly authorized representatives of each party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
Confidential 14 ATL Dev & Lic Agreement
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<PAGE> 15
<TABLE>
<S> <C>
SUN MICROSYSTEMS, INC., BY ITS DIVISION ATL PRODUCTS, INC.
SUN MICROSYSTEMS COMPUTER COMPANY
By: /s/ Kathleen M. Holmgren By: /s/ Kevin C. Daly
-------------------------------------------------- -------------------------------------------
Name: Kathleen M. Holmgren Name: Kevin C. Daly
------------------------------------------------ -----------------------------------------
Title: VP/GM Strange Products Title: C.E.O.
----------------------------------------------- ----------------------------------------
Date: January 16, 1997 Date: January 15, 1997
------------------------------------------------ -----------------------------------------
</TABLE>
Confidential 15 ATL Dev & Lic Agreement
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<PAGE> 16
EXHIBIT A
FEES AND ROYALTIES
1. LIBRARY MONITOR SOFTWARE:
Fee: [ * ]
Royalty: [ * ]
ADD-ON MODULES:
Fee: [ * ]
Royalty: [ * ]
SUN FEATURES:
Fee: Sun will pay Developer an NRE fee to be
mutually agreed upon by Sun Developer when
Sun Features are added to Statement of Work.
Royalty: [ * ] by Sun to Developer for Sun Features.
2. [ * ] SOFTWARE:
Fee: [ * ]
Royalty: [ * ]
ADD-ON MODULES:
Fee: [ * ] by Sun to Developer for development of
Add-on Modules to be mutually agreed upon by
Sun and Developer when Add-on Modules are
added to Statement of Work.
Royalty: [ * ] for the Application Add-on Module or
the Device Add-on Module. Royalty for other
Add-on Modules, if any, to be mutually agreed
upon by Sun and Developer when Add-on Modules
are added to Statement of Work.
SUN FEATURES:
Fee: Sun will pay Developer an NRE fee to be
mutually agreed upon by Sun and Developer
when Sun Features are added to Statement of
Work.
Royalty: [ * ] by Sun to Developer for Sun Features.
* Confidential Treatment Requested for Redacted Portion
Confidential 16 ATL Dev & Lic Agreement
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<PAGE> 17
EXHIBIT B
EQUIPMENT LOAN AND SOFTWARE LICENSE AGREEMENT
Sun agrees to loan to ATL Products, Inc. ("Licensee"), free of charge on the
terms and conditions of this Equipment Loan and Software License Agreement, the
equipment and/or software identified in this Exhibit B. Licensee acknowledges
and agrees that it may use the loaned equipment solely in connection with the
purposes set forth in the Agreement.
________________________________________________________________________________
1. LOANED/LICENSED TO:
2. DESIGNATED SITE:
3. DESIGNATED EQUIPMENT FOR LOANED SOFTWARE:
4. PRIMARY & SECONDARY CONTACTS FOR LICENSEE:
5. LOAN PERIOD:
Delivery Date: __________________________________
Return: 30 days after termination of the Agreement or completion of
Licensee's development obligations under this Agreement, whichever
occurs first.
6. DESCRIPTION OF LOANED EQUIPMENT (HARDWARE):
PRODUCT ID MODEL OR RELEASE PART # SERIAL # QUANTITY LIST PRICE
1.
2.
3.
4.
________________________________________________________________________________
7. DESCRIPTION OF LOANED EQUIPMENT (SOFTWARE AND DOCUMENTATION):
PRODUCT ID MODEL OR RELEASE PART # SERIAL # QUANTITY LIST PRICE
1.
2.
3.
4.
Confidential 17 ATL Dev & Lic Agreement
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<PAGE> 18
TERMS AND CONDITIONS
This Agreement is made and entered into as of the Delivery Date by and between
Sun Microsystems, Inc., acting by and through its division Sun Microsystems
Computer Company ("Sun") and the company named on the preceding page
("Bailee").
1.0 USE AND LOCATION OF PRODUCTS
Bailee shall use the Loaned Equipment and/or Loaned Software (collectively
referred to as "Products") solely for the purposes set forth in the attached
Agreement. Bailee shall be solely responsible for installation of the Products
at the Designated Site.
2.0 TITLE
Title and full ownership rights to the loaned Equipment are and shall remain
with Sun. Sun hereby reserves, and Bailee hereby agrees that Sun shall have, a
security interest in the Loaned Equipment, and Bailee further agrees to execute
and deliver, upon request, UCC-1 financing statements or any other instruments,
recordings, or filings deemed necessary by Sun to perfect and preserve its
right, title, and interest in and to the Loaned Equipment under applicable
local law. Baile shall not move the Loaned Equipment or any portion thereof
from the Designated Site without the prior written approval of Sun.
3.0 TERM AND TERMINATION
3.1 This Agreement shall be effective upon the first delivery of
Products and it shall remain in force until the Return Date specified on the
reverse side. Either party may terminate this Agreement at any time for any
reason.
3.2 Upon the termination of this Agreement for any reason, Bailee
shall immediately terminate use of the Products, and within five (5) days
return the Products to Sun.
4.0 RISK OF LOSS OR DAMAGE
Bailee shall be responsible for the Products from the time they are delivered
to Bailee or a common carrier, as the case may be, until they are returned to
Sun. Bailee shall reimburse Sun for any damage to the Products sustained
during this time period, except for reasonable wear and tear. Bailee shall
insure the Loaned Equipment against loss or damage during the term of this
Agreement, and shall deliver to Sun, upon request, proof of such insurance.
Upon return of the Products, Sun shall provide Bailee with an invoice for
damage to the Products, payable by Bailee upon receipt. Failure by Sun to
provide such an invoice within sixty (60) days following return of the Products
by Bailee shall constitute acceptance of the Products "as is," and no
reimbursement by Bailee shall be required.
5.0 SOFTWARE LICENSE
5.1 Loaned Software is confidential and proprietary information of
Sun and/or its licensors. Bailee agrees to take adequate steps to protect
Loaned Software from unauthorized disclosure or use.
5.2 Except as specifically authorized in Paragraph 1 above, Bailee
shall not modify, decompile, disassemble, decrypt, extract, or otherwise
reverse engineer Loaned Software, except to the extent any of the foregoing
limitations are unenforceable under applicable law.
6.0 DISCLAIMER OF WARRANTIES & LIMITATION OF LIABILITY
6.1 THE PRODUCTS ARE PROVIDED "AS IS." SUN MAKES NO WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE PRODUCTS.
6.2 IN NO EVENT SHALL SUN BE LIABLE FOR ANY DIRECT, SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES RELATED TO THIS AGREEMENT OR THE
USE OF THE PRODUCTS, EVEN IF SUN HAS BEEN ADVISED OF OR OTHERWISE HAS REASON TO
KNOW OF THE POSSIBILITY OF SUCH DAMAGES.
7.0 COMPLIANCE WITH U.S. EXPORT CONTROL LEGISLATION
Products, including technical data, are subject to U.S. export control laws,
including the U.S. Export Administration Act and its associated regulations,
and may be subject to export or import regulations in other countries. Baile
agrees to comply strictly with all such regulations and acknowledges that it
has the responsibility to obtain licenses to export, re-export, or import
Products.
8.0 PROHIBITED PURPOSES
PRODUCTS ARE NOT DESIGNED OR LICENSED FOR USE IN ON-LINE CONTROL EQUIPMENT IN
HAZARDOUS ENVIRONMENTS SUCH AS OPERATION OF NUCLEAR FACILITIES, AIRCRAFT
NAVIGATION OR CONTROL, OR DIRECT LIFE SUPPORT MACHINES, AND BAILEE SHALL NOT
USE PRODUCTS IN SUCH APPLICATIONS.
9.0 MISCELLANEOUS
9.1 This Agreement is the parties' entire agreement relating to
loan of the Products and supersedes all prior or contemporaneous oral or
written communications, proposals, and representations with respect to its
subject matter. No modification to this Agreement will be binding, unless in
writing and signed by a duly authorized representative of each party.
9.2 Neither party shall assign or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
the other party, except that Sun may freely assign this Agreement to an
affiliated company.
9.3 If any term or provision of this Agreement is found to be
invalid under any applicable statute or rule of law, then, that provision
notwithstanding, this Agreement shall remain in full force and effect and such
provision shall be deleted.
9.4 This Agreement may not be modified, amended, rescinded,
canceled, or waived, in whole or part, except by a written instrument signed by
the parties.
9.5 Any action related to this Agreement shall be governed by
California law, excluding choice of law rules.
9.6 In addition to any other relief, the prevailing party in any
action arising out of this Agreement shall be entitled to attorneys' fees and
costs.
9.7 "Sun Trademarks" means all marks, names, logos, designs, and
other designations or brands used by Sun in connection with Products, including
but not limited to Sun, Sun Microsystems, the Sun Logo, and Product designs.
Bailee is granted no right or license to use any Sun Trademarks, or any
confusingly similar designation or foreign equivalent. Bailee shall display
Products with the Sun trademarks as affixed by Sun and shall not remove, alter,
or add to any Sun Trademarks.
Confidential 18 ATL Dev & Lic Agreement
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<PAGE> 19
EXHIBIT C
STATEMENT OF WORK
Confidential 19 ATL Dev & Lic Agreement
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<PAGE> 20
Revision 5 12/14/96
STATEMENT OF WORK BETWEEN
SUN MICROSYSTEMS AND ATL PRODUCTS
FOR THE SUN LIBRARY MONITOR
INTRODUCTION
This document details the statement of work between Sun Microsystems and ATL
Products for providing the Sun LibMON Version 1.0 software product. [ * ] The
LibMON software will initially be co-packaged with the ATL hardware tape
library which Sun will be OEMing [ * ]. This software will start shipping with
the customized tape library [ * ]
This document is divided into three sections covering product overview, key
activities and deliverables.
This document will become a referenced document in the contractual agreement
between Sun and ATL. It is the intent of both Sun and ATL to satisfy this
statement of work during the program development. However, it is recognized
that the specifics covered in this document may change as more information
becomes apparent during the development phase and testing phases of the
program. Should this occur, the changes will be communicated in the required
status reporting mechanisms and jointly approved in the functional
specifications.
* Confidential Treatment Requested for Redacted Portion
<PAGE> 21
Revision 5 12/14/96
SUN MICROSYSTEMS AND ATL PRODUCTS Confidential
1.0 PRODUCT OVERVIEW
1.1 FEATURES SUPPORTED IN VERSION 1.0 AS PART OF BASE PACKAGE
[ * ]
1.2 USER INTERFACE
[ * ]
1.3 EVENT NOTIFICATION
[ * ]
1.4 DOCUMENTATION
Delivered with User guide
Support of on-line User guide
Support of On-line help through JMAPI AVM Help
Hardcopy and on-line documentation to be offered. On-line help to be available
through JMAPI
1.5 LIBRARIES
Support of all ATL Hardware libraries
- Sun OEMed as well as standard ATL Libraries
1.6 SUN DIFFERENTAIATORS
[ * ]
2.0 STATEMENT OF WORK ACTIVITIES
2.1 ATL WORK/ACTIVITIES:
Design, code, and test LibMON to meet the functionality described in section
1.0.
Provide high level design documentation as defined in the deliverables section
for Sun's archives.
Perform testing to comply with standards mutually agreed to by Sun and ATL on
LibMON. Provide test reports and documentation as defined in ATL test
and integration plan.
Verify LibMON functionality and product specification on a "representative"
host platform, running Solaris versions 2.4, 2.5, 2.5.1, and 2.6 (when
available) with Netscape and Explorer browsers.
Develop and test Install package, conforming to Sun's requirements.
* Confidential Treatment Requested for Redacted Portion
Page 2 of 5 SUN MICROSYSTEMS AND ATL PRODUCTS Confidential
<PAGE> 22
Revision 5 12/14/96
Publications - Sun to provide publication templates , ATL to provide
publications for LibMON such as installation and user manuals per
Sun's templates. Sun to add cover sheet where applicable. The format
of these media: CD, electronic files, etc. will be mutually agreed
upon.
Provide training to Sun's trainers on the design, use and serviceability
aspects of LibMON 1.0.
Field service & support - supply necessary training and applicable
documentation which include but not limited to transfer of
information, installation, bring-up, service and diagnostic manuals,
user documentation, etc.
All the above to be performed to agreed upon specifications, test plans and
procedures, (detailed in Section 4.0) and schedule (detailed in
Section 5.0).
In the event that during or after the development phase of LibMON, it is
determined that LibMON fails to conform to these specifications or
intended functions, then ATL will (1) implement necessary design
changes, and (2) amend the test plans to test the changes and ensure
the correct operation of the functions that failed to conform.
Page 3 of 5 SUN MICROSYSTEMS AND ATL PRODUCTS Confidential
<PAGE> 23
Revision 5 12/14/96
2.2 SUN'S WORK/ACTIVITIES:
Provide ATL with JMAPI Style guide as well as contact in JMAPI engineering.
Have Sun Human Factors group review and provide feedback to ATL.
Assist ATL during testing and perform verification testing.
Provide copies of all Sun unique documentation and document templates that ATL
is required to comply with.
Provide ATL with Sun unique licensing requirements.
Provide ATL with Sun unique software install requirements.
Provide ATL with Sun product name.
Provide Internet Server requirements.
2.2.1 SUN PROVIDED EQUIPMENT LIST
This list reflects the list of equipment requested by ATL.
- As of 12/14/96, ATL is not requesting any equipment
EQUIPMENT REQUESTED DATE
3.0 DELIVERABLES
The dates reflect planning dates. Penalties for not complying is covered
within the contract.
<TABLE>
<CAPTION>
PLANNED
DELIVERABLE FROM TO DATE
- ----------- ---- -- ---------------
<S> <C> <C> <C>
[ * ] [ * ] [ * ] [ * ]
</TABLE>
4.0 APPLICABLE SPECIFICATIONS, TEST PLANS AND PROCEDURES
SUN PART NUMBER DOCUMENT TITLE
802-7709-10 JavaManagement API User Interface Style Guide
ATL PART NUMBER DOCUMENT TITLE
ATL to complete as necessary
INDUSTRY STANDARD SPECIFICATIONS
ANSI X3.131 Small Computer Systems Interface-2, SCSI-2
ANSI X3Tl 0/995D Information Technology - SCSI-3 Primary Commands
HP Tape Alert Commands
5.0 MAJOR PROJECT MILESTONES
MILESTONE DATE
[ * ] [ * ]
* Confidential Treatment Requested for Redacted Portion
Page 4 of 5 SUN MICROSYSTEMS AND ATL PRODUCTS Confidential
<PAGE> 24
Revision 5 12/14/96
6.0 FUTURE ACTIVITIES BEYOND THE FIRST RELEASE
Sun and ATL plan to continue enhancing the base product called out in this
Statement of Work. The specifics of these enhancements will be defined during
the development of this Version 1.0 product. [ * ]
As new versions of LibMON are released, new functionality will fall into one of
three catagories.
1. [ * ]
2. [ * ]
3. [ * ]
The attached Marketing Requirements Document entitled Web Storage Monitor,
Revision X3, from ATL outlines the features planned for the Add-on Modules.
The modules include the Application Module, the Device Module and the Service
Module.
As these changes occur, Sun and ATL will mutually agree to the testing levels
that ATL will need to perform.
* Confidential Treatment Requested for Redacted Portion
Page 5 of 5 SUN MICROSYSTEMS AND ATL PRODUCTS Confidential
<PAGE> 25
Market Requirements Document*
[*]
Revision: X3
Date: 11/5/96
A T L
P R O D U C T S
AN ODETICS COMPANY
ATL Products, Inc., 1515 South Manchester, Anaheim, CA 92802-2907
World-Wide Web URL: http://www.atip.com
ATL/Sun Confidential
* Confidential Treatment Requested for Pages 1-11 of Document
<PAGE> 26
EXHIBIT D
END-USER BINARY CODE LICENSE
SUN IS WILLING TO LICENSE THE ACCOMPANYING SOFTWARE TO YOU ONLY UPON THE
CONDITION THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS LICENSE AGREEMENT.
READ THE TERMS AND CONDITIONS OF THIS LICENSE CAREFULLY BEFORE OPENING THE
SOFTWARE MEDIA PACKAGE. BY OPENING THE SOFTWARE MEDIA PACKAGE, YOU AGREE TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT. IF YOU ARE NOT WILLING TO BE BOUND
BY THIS AGREEMENT, RETURN THE SOFTWARE UNUSED WITHIN FIFTEEN (15) DAYS OF
PURCHASE FOR A REFUND OF THE LICENSE FEE PAID.
1. LICENSE TO USE. Customer is granted a non-exclusive and
non-transferable license ("License") for the use of the accompanying binary
software in machine-readable form, together with accompanying documentation
("Software"), by the number of users and the class of computer hardware for
which the corresponding fee has been paid.
2. LICENSE TO DEVELOP. This License authorizes Customer to develop
software programs utilizing the Software. However, in the event that Customer
desires to develop software programs which incorporate portions of Software
("Developed Programs"), the following provisions apply, to the extent
applicable: Developed Programs are to have an application programming
interface that is the same as Software; fonts within Software are to remain
associated with their toolkit or server; Developed Programs may be used and
distributed, but only on computer equipment licensed to utilize Software,
unless an additional Licensee's License Agreement has been executed by Sun and
Customer; Customer is not licensed to develop printing applications or print,
unless Customer has secured a valid printing license; incorporation of portions
of Motif(R) in Developed Programs may require reporting of copies of Developed
Programs to Sun; and Customer agrees to indemnify, hold harmless and defend Sun
and its licensors from and against any claims or suits, including attorneys'
fees, which arise or result from distribution or use of Developed Programs to
the extent such claims or suits arise from the development performed by
Customer.
3. RESTRICTIONS. Software is copyrighted and title to all copies is
retained by Sun and/or its licensors. Customer shall not make copies of
Software, other than a single copy of Software for archival purposes and, if
applicable, Customer may, for its internal use only, print the number of copies
of on-line documentation for which the applicable fee has been paid, in which
event all proprietary rights notices on Software shall be reproduced and
applied. Except as specifically authorized in Paragraph 2 above or unless
enforcement of this provision is prohibited by applicable law, Customer shall
not modify, decompile, disassemble, decrypt, extract, or otherwise reverse
engineer Software. SOFTWARE IS NOT DESIGNED OR LICENSED FOR USE IN ON-LINE
CONTROL EQUIPMENT IN HAZARDOUS ENVIRONMENTS SUCH AS OPERATION OF NUCLEAR
FACILITIES, AIRCRAFT NAVIGATION OR CONTROL, OR DIRECT LIFE SUPPORT MACHINES.
4. CONFIDENTIALITY. Software is confidential and proprietary information
of Sun and/or its licensors. Customer agrees to take adequate steps to protect
Software from unauthorized disclosure or use.
5. LIMITED WARRANTY. Sun warrants that for a period of ninety (90) days
from the date of purchase, as evidenced by a copy of the receipt: (i) the media
on which Software is furnished will be free of defects in materials and
workmanship under normal use; and (ii) the Software contains the features
described in the Sun price list. Otherwise, the Software is provided "AS IS".
This limited warranty extends only to Customer as the original licensee.
Customer's exclusive remedy and Sun's entire liability under this limited
warranty will be at Sun's option to repair, replace, or refund the license fee
paid therefor.
6. DISCLAIMER OF WARRANTY. EXCEPT AS SPECIFIED IN THIS LICENSE, ALL
EXPRESS OR IMPLIED CONDITIONS, REPRESENTATIONS AND WARRANTIES, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT, ARE HEREBY EXCLUDED TO THE EXTENT ALLOWED BY APPLICABLE LAW.
7. LIMITATION OF LIABILITY. IN NO EVENT WILL SUN BE LIABLE FOR ANY LOST
REVENUE, PROFIT, OR DATA, OR FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL,
OR PUNITIVE DAMAGES HOWEVER CAUSED AND REGARDLESS OF THEORY OF LIABILITY
ARISING OUT OF THE USE OF OR INABILITY TO USE SOFTWARE, EVEN IF SUN HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. In no event shall Sun's liability
to Customer, whether in contract, tort (including negligence), or otherwise,
exceed the license fee paid by Customer for Software. The foregoing
limitations shall apply even if the above stated warranty fails of its
essential purpose.
8. TERMINATION. This License is effective until terminated. Customer
may terminate this License at any time by destroying all copies of Software
including any documentation. This License will terminate immediately without
notice from Sun if Customer fails to comply with any provision of this License.
Upon termination, Customer must destroy all copies of software.
Confidential ATL Dev & Lic Agreement
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<PAGE> 27
9. EXPORT REGULATIONS. Software, including technical data, is subject to
U.S. export control laws, including the U.S. Export Administration Act and its
associated regulations, and may be subject to export or import regulations in
other countries. Customer agrees to comply strictly with all such regulations
and acknowledges that it has the responsibility to obtain licenses to export,
re-export, or import Software.
10. U.S. GOVERNMENT RESTRICTED RIGHTS. If Customer is acquiring
technology on behalf of the U.S. Government, use, duplication or disclosure is
subject to restrictions of FAR 52.227-14(g)(2)(6/87) and FAR 52.227-19(6/87),
or DFAR 252.227-7015(b)(6/95) and DFAR 227.7202- 3(a).
11. GOVERNING LAW. This Agreement is made under, shall be governed by,
and construed in accordance with the laws of the State of California, U.S.A.,
excluding its choice of law provisions.
12. SEVERABILITY. If any of the above provisions are held to be in
violation of applicable law, void, or unenforceable in any jurisdiction, then
such provisions are herewith waived to the extent necessary for the License to
be otherwise enforceable in such jurisdiction. However, if in Sun's opinion
deletion of any provisions of the License by operation of this paragraph
unreasonably compromises the rights or liabilities of Sun or its licensors, Sun
reserves the right to terminate the License and refund the fee paid by Customer
as Customer's sole and exclusive remedy.
13. INTEGRATION. This Agreement is the entire agreement between Customer
and Sun relating to Software and: (i) supersedes all prior or contemporaneous
oral or written communications, proposals, and representations with respect to
its subject matter; and (ii) prevails over any conflicting or additional terms
of any quote, order, acknowledgement, or similar communication between the
parties during the term of this Agreement. No modification to this Agreement
will be binding, unless in writing and signed by a duly authorized
representative of each party.
Confidential ATL Dev & Lic Agreement
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<PAGE> 28
EXHIBIT E
ON-SITE EMPLOYEE CONFIDENTIALITY AGREEMENT
Effective Date: _______________________
Sun Microsystems, Inc., by and through its Sun Microsystems Computer Company
division ("Sun"), and the "Recipient" identified below agree that:
1. Recipient is identified as:_________________________________________
2. The Sun Confidential Information disclosed under this Agreement
("Confidential Information") is intended to include only information pertaining
to the [IDENTIFY TECHNOLOGY] which is the subject matter of the [IDENTIFY THE
RELATED AGREEMENT] ("Agreement") between Sun and [IDENTIFY RECIPIENT'S
EMPLOYER] and which is disclosed orally or in written or other tangible form
and identified as confidential or proprietary (or with words of similar
meaning), or should reasonably be understood to be confidential. This On-Site
Agreement does not provide any rights or privileges with respect to Sun
information not pertaining directly to the Confidential Information disclosed
under the Agreement ("Other Sun Information").
3. Confidential Information may be used by Recipient solely in connection
with and subject to the terms of the Agreement.
4. The term of this agreement is from the Effective Date until twelve
(12) months thereafter.
5. Recipient's obligations regarding Confidential Information survive the
termination of this On-Site Agreement until [HOW MANY YEARS?] (___) years after
the date of disclosure of the particular Confidential Information (except for
source code and Other Sun Information, which shall be protected perpetuity).
6. Confidential Information shall be used solely as permitted above and
shall not be disclosed to a third party other than as permitted under the
Agreement. Recipient agrees that he or she will not seek access to, receive,
use, or disclose to [RECIPIENT'S EMPLOYER] or any other party any Confidential
Information or Other Sun Information of Sun or its affiliates for which
Recipient does not have a need to know for the purposes of the Agreement.
Recipient shall hold Confidential Information in strict confidence and shall
provide Confidential Information (a) only to employees of [RECIPIENT'S
EMPLOYER] who are bound to keep the Confidential Information confidential, and
(b) only on a need-to-know basis. Other Sun Information which Recipient
obtains which Recipient did not need to know for the purposes of the Agreement
may not be disclosed even to [RECIPIENT'S EMPLOYER], nor retained or used by
Recipient for any purpose. Upon the earlier of termination of this On-Site
Agreement, the Agreement, or Sun's written request, Recipient shall cease use
of Confidential Information and return or destroy all Confidential Information.
7. This On-Site Agreement imposes no obligation upon Recipient with
respect to Confidential Information or Other Sun Information which Recipient
can establish by legally sufficient evidence: (a) was in the possession of, or
was known by, Recipient prior to its receipt from Sun, without an obligation to
maintain its confidentiality; (b) is or becomes generally known to the public
without violation of this Agreement; (c) is obtained by Recipient from a third
party, without an obligation to keep such information confidential; or (d) is
independently developed by Recipient without the use of Confidential
Information. Disclosure of Confidential Information is not prohibited if prior
notice is given to Sun and such disclosure is (a) compelled pursuant to a legal
proceeding, or (b) otherwise required by laws.
8. CONFIDENTIAL INFORMATION IS DELIVERED "AS IS," AND ALL REPRESENTATIONS
AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING FITNESS FOR A PARTICULAR PURPOSE,
MERCHANTABILITY, AND NON-INFRINGEMENT, ARE HEREBY DISCLAIMED.
9. Sun retains ownership of Confidential Information. Recipient does not
acquire any rights in Confidential Information, except the limited right to use
Confidential Information as described above.
10. Recipient agrees that any breach of this On-Site Agreement will result
in irreparable harm to Sun for which damages would be an inadequate remedy and,
therefore, in addition to its rights and remedies otherwise available at law,
Sun shall be entitled to equitable relief, including injunction, in the event
of such breach. Recipient waives any requirement for the posting of a bond or
other security in the event that Sun seeks such an injunction.
11. If any term oft his On-Site Agreement is found to be unenforceable,
then the remainder of this On-Site Agreement shall remain in full force and
effect, unless such a deletion would frustrate the intent of the parties, in
which case this On-Site Agreement shall terminate.
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12. Any action related to this On-Site Agreement will be governed by
California law, excluding the choice of law rules of any jurisdiction.
13. This On-Site Agreement constitutes the entire agreement between the
parties concerning its subject matter, except that (a) confidentiality
agreements executed by Recipient for purposes of obtaining entry to Sun
facilities may supplement but shall not supersede the terms of this On-Site
Agreement, and (b) this On-Site Agreement may supplement but shall not override
the terms of the Agreement. All additions or modifications to this On-Site
Agreement must be made in writing and must be signed by an authorized
representative of each party.
IN WITNESS WHEREOF, the parties have caused this On-Site Employee
Confidentiality Agreement ("On-Site Agreement") to be executed by their duly
authorized representatives.
<TABLE>
<S> <C>
SUN MICROSYSTEMS, INC., by Its division. RECIPIENT (ON-SITE EMPLOYEE)
SUN MICROSYSTEMS COMPUTER COMPANY
-----------------------------------------------------------
By: By:
------------------------------------------------------ ------------------------------------------------------
Name: Name:
---------------------------------------------------- ----------------------------------------------------
Title: Title:
--------------------------------------------------- ---------------------------------------------------
</TABLE>
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<PAGE> 30
EXHIBIT F
SUPPORT
DEFINITIONS
As used herein, the following terms have the following meanings. Capitalized
terms not defined shall have the meaning set forth in the main body of the
Agreement.
"Operating System" means Sun's Solaris 2.4 (or later)
operating system.
"Product" means the Developed Product, including the Library
Monitor Software and its related Add-on Modules and Sun Features, the Sun DLT
Library and Documentation.
"Release" means the addition by Developer of a previously
unincluded function or feature to the Product (designed sequentially by
Developer as "Release 1.0," "Release 2.0," etc.)
"Version" means the addition by Developer of a function or
feature of the Product, or any change made by Developer to the Product which
improves its performance, including all Patches and Bug Fixes made to the
Product since the last previous version (designated sequentially by Developer
as "Version 1.1," "Version 1.2," etc.). Each new Version will operate on the
same Operating System as the immediately preceding Version.
"Minor Version" means any minor change made by Developer to
the Product, including changes made for purposes of maintaining Operating
System and data base system comparability, error correction and work-arounds
(designated sequentially by Developer as "Version 1.1.1," "Version 1.1.2,"
etc.). Minor Versions will operate on the same Operating System as the
immediately preceding Version.
"Patches" means a sparse file patch package, including all bug
fixes required to be released (per Sun quality criteria) since the previous
Release, Version or Minor Version. Patches will operate on the same Operating
System as the Release, Version or Minor Version it modifies.
SUN SUPPORT SERVICES
Sun Support Service. Sun support will consist of technical assistance provided
by Developer support engineers to Sun's designated engineers for Sun's support
of the Product, for the Development Period and the period specified in the
Award Letter. Developer agrees to:
(a) Provide such support to a single Sun site for the
term stated above. Support for additional sites may be subject to an
additional fee. Basic support will be provided in accordance with the
provision entitled Basic Sun Support, below, and based upon the severity
accorded the defects in accordance with the Severity Matrix, Alert Flag, and
Severity Level Designation, as set forth in ESCALATION SEVERITY, below.
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(b) Provide Sun with Releases, Versions, Minor Versions
and Patches for the service term of this Agreement.
ESCALATION SEVERITY
Severity Number
The Severity number is determined through a matrix comprised of both the impact
to the customer's operations, and the importance of the level of the
functionality affected by the problem. The Severity number is used to indicate
the level of the technical problem and is not an indication of the political,
customer sensitivity, or business relationship aspects of the problem. The
Severity number ranges from 1 to 5 and should indicate the technical level of
the problem consistently through the escalation process from the customer to
Product Development.
SMI Severity Matrix
<TABLE>
<CAPTION>
Impact
Functionality Critical Significant Limited
<S> <C> <C>
Primary 1 2 3
Secondary 2 3 4
Non-essential 3 4 4
Severity Matrix - Assessment of Impact
</TABLE>
Critical: If system is down or effectively unusable as a result of the
problems. The bug causes critical impact on the customer's operations with no
workaround.
Examples include:
System hang (unable to save work in progress)
Data loss (e.g. messages dropped or work lost)
Functionality failure renders system ineffective
Vulnerability to a security breach
Significant: System is up and running, but the bug causes significant impact
and has no convenient workaround.
Examples include:
Impaired or broken functionality causing serious inconvenience
Frequent core dumps that do not cause data loss
Serious but predictable and manageable system failures
Significant performance degradation
Limited: System is up and running, and the bug causes only limited or
insignificant impact.
The user generally can still:
avoid using the defective functionality
operate with the functional limitations caused by the bug
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access needed functionality using an alternate interface
use a workaround without significant impact
Severity Matrix - Functionality
Primary
Functionality used to perform tasks considered to be essential to business
operations, project completion, or normal productivity of end-user.
Secondary
Functionality used to perform tasks considered important, but which are not
primary to immediate business operations.
Non-Essential
Functionality that is not important and infrequently
used.
SMI ESCALATION SEVERITY DEFINITION
Alert Flag Definition
For customer situations that require attention, resources, or activity in
addition to the normal technical processes, the Alert Flag is used to activate
increasing levels of visibility and management awareness. The Alert Flag uses
a RED, YELLOW, GREEN model, with the colors indicating increasing levels of
management awareness, monitoring activities, and reporting that should take
place. The Alert Flag is triggered by the responsible local service management
through the Escalation Management functions in each geography for Sun Service
or through the Business Unit Escalation management for other service providers.
The Alert Flag is independent of the Technical Severity Level, and may be
triggered for reasons of business impact to Sun, or customer relations issues,
or the need for application of additional resources.
Red
A Red Flag is set with concurrence of all escalation
levels and would trigger the following activities:
The escalation would appear on the management alert
report at the SMI level. All management
notifications and reporting triggered by a Yellow
Alert Flag would continue. Formal Activity Plans and
Status Reports would be published at the CTE and
Engineering Levels.
Yellow
The escalation would appear on the local and
Geography management alert reports for service and
sales.
Geography level escalation management activities
would be invoked.
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CTE and Engineering Levels would be notified of the
sensitivity level of the escalation.
Regular status monitoring and reporting would be
invoked at the Geography Level.
Green
A Green Flag would be used to indicate that a
previously Yellow or Red alert situation is basically
resolved, but requires some follow up with the
customer to ensure that the issue can be closed.
Severity Level Designation. Problems, defects and malfunctions in a Product
will be categorized as follows:
(a) Severity Level 1. Severity Level 1
represents a critical problem of primary
functionality.
(b) Severity Level 2. Severity Level 2
represents either a significant problem with
primary functionality or a critical problem
with secondary functionality.
(c) Severity Level 3. Severity Level 3
represents a limited problem condition in
which no loss of data occurs and which may be
circumvented or avoided on a temporary basis
by the Sun.
(d) Severity Level 4. Severity Level 4
represents limited problem conditions or
documentation errors or enhancement requests
which cover secondary or non-essential
functionality.
Basic Sun Support Services
For non-escalated bugs, fixes shall be provided as follows:
<TABLE>
<CAPTION>
Priority Fix Due
<S> <C>
1 Required within 90 calendar days, or next Release, Version, minor Version or Patch, whichever
is earlier
2 Required in next external (Beta, Gamma or FCS) Release, Version or Minor Version
3 Required in next FCS Release, Version or Minor Version
4 Desired in next FCS Release, Version or Minor Version
5 At Developer's convenience
</TABLE>
Escalation Sun Support Services. Developer will provide Sun with the following
Sun Support services from a central site selected by Developer:
(a) Telephone, E-Mail and Fax Support. Developer
will maintain and make available Sun telephone, UNIX electronic mail and fax
support. Developer's escalation telephone support service center will be
peopled by properly trained Developer personnel twenty- four (24) hours a day,
seven (7) days a week, and three-hundred-sixty-
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five (365) days per year. Developer will use its reasonable best efforts to
arrange for a qualified Developer support engineer or support manager to return
calls to Sun within two (2) hours of Sun's first call to Developer.
(b) Support Remedies. From receipt of a
documented escalation report from Sun of a Product error, defect or
malfunction, Developer shall respond with the required response (as defined
below) within the following time frames:
<TABLE>
<CAPTION>
Severity Level First Level Second Level Final Level
<S> <C> <C> <C>
1 2 hours ASAP, but in no event later than 90 calendar days
24 hours.
2 24 hours 10 calendar days 100 calendar days
3 2 calendar days 30 calendar days Next Version after the Patch
4 5 calendar days 35 calendar days Next Version after the Patch
Red 1 hour ASAP or less than 24 hours or
defined by daily action plan
Yellow dictated by severity level
Green dictated by severity level
</TABLE>
First level response means that Developer shall begin verifying and replicating
the reported problem within the time frame specified via telephone
communication or as otherwise appropriate under the circumstances.
Second Level response means that Developer shall provide a binary fix or
work-around within the specified time frame, which alleviates the difficulty
but has not yet been fully tested or incorporated in a Version.
Final Level response means that Developer shall incorporate the fix or
work-around into a properly packaged Release, Version, Minor Version or Patch.
(c) On-Site Assistance for Problem Escalation. Developer
will use its best reasonable efforts to make available to Sun on-site
consulting services to assist with problem escalation. Sun will pay
Developer's then current consulting rates for consulting in addition to all
reasonable travel expenses.
(d) Fix Acceptance. Sun shall have ten (10) business
days following receipt of any Second Level or Final Level fix to either notify
Developer of its acceptance of the fix or provide Developer with a written
report (including test results and test data concerning the problem) specifying
in reasonable detail all deficiencies requiring further response from Developer
according to a Sun assigned priority as set forth above. Failure by Sun to
provide such notice within ten (10) days shall be deemed to constitute
acceptance of the fix by Sun. Upon completion of the second fix, Developer
shall resubmit the fix to Sun to acceptance in accordance with this Section.
In the event that a
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resubmitted fix is still unacceptable to Sun, the parties shall meet in good
faith to establish a mutually acceptable action plan to address any remaining
deficiencies.
(e) Problem Reports. Developer shall provide a defined
method for reporting problems to Sun to minimize any delay in the transfer of
suspected defects for resolution.
(f) Problem Information. Developer will provide Sun with
problem notes and answers to commonly asked questions on an as available basis.
Sun will be responsible for disseminating this information to Sun's personnel.
(g) Support Documentation. Developer will provide, free
of charge, an electronic version of all commercially available support
documentation (including, but not limited to, installation,
programmer/developer, training materials and support manuals) that is readable
on Sun workstations, which Sun may copy and distribute to Sun's service
providers. This material will not, however, include training manuals and
documentation. In the event that Sun makes any modifications to, or derivative
works of, documentation provided by Developer hereunder, Sun shall remove all
Developer trademarks and/or copyright legends from such
modifications/derivative works unless such modifications/derivative works have
been approved in writing by Developer prior to distribution by Sun.
(h) Debugging Assistance. Low level debugging assistance
using Developer serial port interface. This assistance will be limited to
SMCC's Customer Technical Engineering (CTE) group.
ON-SITE SUPPORT SERVICES
Subject to payment of Developer's then current standard consulting rates and
the availability of Developer's support personnel, Developer will make on-site
service calls to Sun's facility. Sun will pay Developer's standard consulting
rates plus, reasonable travel and out-of-pocket expenses.
OTHER TERMS OF SERVICE SUPPORT
Sun Obligations. Sun will designate a team of three (3) support personnel, for
each site supported, as the principal point of contact for support. Sun may
change the identity of such personnel from time to time upon notice to
Developer. Sun will also use reasonable efforts to document and isolate
reported problems in the Product.
Final Level Fixes. Upon correcting an error, Developer will internally conduct
tests and performance measurements on the corrected Product. The final fix for
the reported error, including all relevant documentation, will be delivered by
Developer to Sun when complete. For purposes of this Section, a "Final Level
Fix" will consist of the final form of the fix for a reported error in a new
update or Version of the Product, including Documentation.
New Versions. Developer will promptly deliver new Versions to Sun as soon as
commercially available.
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<PAGE> 36
Reports. Developer will provide Sun with a report of the status of all
outstanding Severity Level 1 and Severity Level 2 errors reported by any of
Developer's customers for the Product.
Loaner Equipment. Sun may provide Developer with one (1) complete set of the
computer hardware on which Sun and its customers will operate the Product
("Designated Hardware") reasonably necessary for Developer to replicate and fix
reported errors. Sun may provide such Designated Hardware to Developer under
Sun's standard equipment loan agreement. Sun understands and agrees that
Developer will provide support services hereunder only to the extent that a
reported error can be replicated on the Designated Hardware, or if Sun does not
provide Developer with such hardware, to the extent that a reported error can
be replicated on Developer hardware (and related software). If Sun provides
Developer with Designated Hardware, Sun will provide regular system updates and
maintenance on Designated Hardware to keep equipment up to current technology
levels.
Prior Release Support. Developer will provide hotline phone support and
Patches and Bug Fixes for the prior Version of the Product for twelve (1 2)
months after a new Version of the Product becomes available on the Designated
Platform.
END-OF-LIFE (EOL) SUPPORT
Developer will provide Sun with product support including
responding to all escalated calls from Sun and providing fixes and error
corrections for the duration of the service life of the Products. The service
life is defined as product support provided by Developer to Sun from
commencement of the Products' out-of-warranty period through a period of not
less than five (5) years after the last delivery date of Products to Sun.
During the first two years of service life, Developer will provide full product
support. During the third year of service life, Developer will provide
escalation support only. During the fourth and fifth year of service life,
Developer will provide product support on a time and materials basis only.
Developer shall notify Sun of a planned EOL announcement of its Products at
least three (3) months prior to such announcement. If Developer desires to
assign or delegate its obligations for EOL product support of Products to a
third party company, Sun must qualify the product support capability of a third
party company and give its written approval of the assignment to said third
party before Developer may transition the support, which approval shall not be
unreasonably withheld.
TRAINING
Developer shall make available to Sun written training
materials including instructor guide, lab setup instructions for "hands on"
laboratory work, student guide and presentation materials.
At Sun's request, Developer shall provide training on-site at
selected Sun facilities at a fee of $1,000 per day. Such training shall
include "hands on" laboratory work. Sun shall (i) reimburse Developer for
travel and living expenses incurred by Developer's personnel to the extent that
such expenses are reasonable and arise solely and directly from the training
being performed at other than a Developer facility, and (ii) make available
adequate facilities and equipment reasonably required for such training.
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<PAGE> 37
EXHIBIT G
AWARD LETTER
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<PAGE> 38
AWARD LETTER
December 16, 1996
Mark Spowart
ATL Products, Inc.,
an Odetics company
1515 South Manchester Avenue
Anaheim, CA 92802-2907
Dear Mark.
Sun is pleased to notify you that ATL Products, Inc. ("Supplier") has been
selected as a supplier of certain DLT tape library products ("Product") subject
to your agreement to the following terms ("Agreement"):
1. PRICING: Product description and pricing is set forth in Exhibit A.
Prices are exclusive of freight and taxes. Currency: U.S. dollars.
2. FORECAST: Sun shall use its reasonable efforts to provide Supplier
with a six (6) month rolling forecast of its intended purchases
updated monthly. Such forecast is for Supplier's convenience only and
shall in no way create an obligation on Sun's part to meet such
forecast.
3. LEADTIME: Initial order: thirty (30) calendar days. Subsequent
orders: twenty-one (21) calendar days. The parties agree to
negotiate in good faith a leadtime reduction plan to reduce the
leadtime to ten (10) calendar days to support Sun's configure-to-order
program.
4. PAYMENT TERMS: net thirty (30) days after receipt of product by Sun.
5. SHIPPING POINT: F.O.B. Supplier's U.S. facility in Anaheim, CA.
6. RESCHEDULING: Sun may, from time to time, reschedule delivery of all
or part of any purchase order at no charge, up to ninety (90) days
after the agreed delivery date.
7. CANCELLATION:
Sun may, from time to time, cancel all or any part of a purchase order
prior to shipment of the Product which is subject of the purchase
order. Upon receipt of a notice of the cancellation, Supplier shall
use its best efforts promptly to locate customers or alternate uses
for the canceled Products. With respect to any remaining Product, Sun
and Supplier shall negotiate reasonable cancellation charges based on
Supplier's actual costs (as supported by adequate documentation
provided by Supplier). Supplier shall itemize its unrecovered costs
and expenses and deliver to Sun a statement thereof within thirty (30)
days after the effective date of cancellation. For the purposes of
this Agreement, actual costs are defined as the costs of unique
materials which: (i) have been procured specifically for Product
built for Sun based on Sun's purchase orders accepted by Supplier, and
(ii) cannot be used by Supplier. Sun shall not be responsible for any
cancellation costs or expenses not included in the statement of costs
and expenses as provided herein. Sun may take the Product under the
terms of this Agreement in lieu of paying cancellation charges.
Confidential ATL Dev & Lic Agreement
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<PAGE> 39
Payment by Sun of the cancellation charges agreed to by Sun and
Supplier shall constitute a full compromise and settlement of all
claims of Supplier for loss, expense or damages arising out of Sun's
cancellation of the purchase order.
8. UPSIDE SUPPORT: "Upside" is defined as a maximum of twenty-five
percent (25%) beyond Sun's forecast for the current month which
Supplier commits to manufacture and deliver to Sun, upon Sun's written
request, at no additional cost to Sun, within twenty-one (21) calendar
days after such request. The parties agree that the turnaround time
for Upside will be reduced to ten (10) calendar days at such time that
the parties commence the configure-to-order program referred to in
Section 3 above.
9. EXTRAORDINARY TRANSPORTATION FOR LATE DELIVERIES: If it should be
reasonably expected that a shipment of Product will not be delivered
on the agreed delivery date, upon Sun's request Supplier shall, at its
expense, use any extraordinary transportation to deliver Product at
the earliest possible date.
10. QUALITY: Supplier shall deliver Product(s) which conforms to
(Sun/Supplier)'s specifications ("Product Specification(s)") attached
as Exhibit D and shall comply with Supplier's Quality Program attached
hereto as Exhibit C. The quantity of Product(s) which falls to
conform to the Product Specification at the time of delivery to Sun or
during the term of the warranty shall not exceed the Defects Per
Million ("DPNF") levels in Exhibit C.
Sun shall not be required to accept any Product which is not qualified
by Sun for use in Sun's products.
11. WARRANTY: The warranty period is five (5) years for the base Product
and two (2) years for tape drives from the date of Sun's acceptance of
Product. Sun's acceptance period is approximately thirty (30) days
from receipt of Product.
12. UNEXPECTED FAILURES: The terms and conditions which are applicable in
the event an unexpected failure of Product occurs are set forth in
Exhibit E attached hereto.
13. SUN-UNIQUE COMPONENTS: Sun-unique Components include, but are not
limited to, Sun specific Product color, Sun logo, the look of the
graphic user interface (GUI) displayed on the control panel (refer to
the Product Specification), DLTprops software, Sun labels and
packaging.
14. CUSTOMER SUPPORT: During the term of this Agreement, and thereafter
for the period of time set out in Exhibit B, Supplier will provide
warranty and non-warranty customer service and support for Product as
set forth in Exhibit B, attached hereto.
15. LOCAL TECHNICAL SUPPORT: Supplier shall provide local technical
support to Sun's worldwide factory locations and product distribution
centers.
16. ENGINEERING SUPPORT: Supplier shall provide the level of local
engineering support to Sun's qualification engineering team, currently
located in Menlo Park, CA, which Sun deems necessary to support the
program.
17. EARLY ACCESS UNITS
To support the quantity of units that Sun will be shipping to
customers in the U.S., Supplier will provide onsite installation,
maintenance and repair service, including all parts and labor for such
units. All repair calls for such units will be made through Sun and
then forwarded to Supplier for action as needed.
Service fees, including all costs of parts, labor and travel to the
end user site, are as set forth below:
Next day service: $250 per unit per month (prorated, depending upon
when in the month the unit is installed and service is subsequently
required).
2
<PAGE> 40
Supplier will perform installation services, if requested, at $500 per
unit installed.
18. NOTICES: Sun and Supplier shall each assign an individual to
administer this Agreement throughout its term.
<TABLE>
<S> <C>
Sun's Administrator shall be: Supplier's Administrator shall be:
Bob Simonelli Richard Speyer
Sun Microsystems, Inc., ATL Products, Inc.
2550 Garcia Avenue (mailing address), an Odetics company
NVS UCHL04-108 1515 South Manchester Avenue
Mountain View, CA 94043 Anaheim, CA, 92802-2907
Ph: (508) 442-2569 Ph: (714) 780-7707
Fax: (508) 250-5572 Fax: (714) 780-7799
</TABLE>
Each party shall inform the Administrator of the other in writing of a
change of administrator or such Administrator's address or telephone
number.
19. SURVIVAL OF TERMS: The parties further agree that the rights and
obligations set forth in Sections 11 and 12 and Exhibits B and C shall
survive the termination of this Agreement for any reason and
enforcement thereof pursuant to this Section shall not be subject to
any conditions precedent.
20. EXHIBITS: The following is the list of exhibits and Attachments which
are attached hereto and incorporated herein by this reference as if
set forth in full:
<TABLE>
<S> <C>
Exhibit A - Product Description and Pricing Exhibit C - Supplier's Quality Program
Exhibit B - Customer Support Provisions Exhibit D - Product Specification
Exhibit E - Unexpected Failures
</TABLE>
Please indicate your agreement to these terms by signing both copies in the
space provided below and returning to my attention. Upon execution of this
Agreement by Sun I will return an original to you. Thank you.
Sincerely,
<TABLE>
<S> <C>
Bob Simonelli
Commodity Manager
Sun Microsystems, Inc. ATL Products, Inc., an Odetics company
- ------------------------------------------- -----------------------------------------------------------
By By
- ------------------------------------------- -----------------------------------------------------------
Name Name
- ------------------------------------------- -----------------------------------------------------------
Title Title
- ------------------------------------------- -----------------------------------------------------------
Date Date
</TABLE>
3
