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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 1997
Data I/O Corporation
(Exact name of registrant as specified in its charter)
Washington
(State of other jurisdiction of incorporation)
0-10394 91-0864123
(Commission File Number) (IRS Employer Identification No.)
10525 Willows Road N.E., Redmond, WA 98073-9746
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (425) 881-6444
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of 31 Pages
Exhibit Index at Page 8
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 12, 1997, Data I/O Corporation ("Registrant" or "Data I/O"), MINC
Incorporated, a Colorado corporation and MINC Washington Corp., a Colorado
corporation (collectively "MINC"), entered into a master agreement (the "Master
Agreement") pursuant to which MINC acquired from Data I/O certain assets and
license rights for the software products Synario, ABEL and ECS (the "Products").
As part of the transaction, Data I/O transferred to MINC the day to day
operation of most of the former Synario Division ("Division") of Data I/O,
including the sale and distribution of the Products as well as software
development, manufacturing and marketing. MINC has agreed to perform certain
product development and support services under many of the OEM and source code
license agreements previously entered into by the Division. Most Division
employees have been hired by MINC to support these functions.
Data I/O received $100,000 from MINC, and MINC will assume various obligations
to perform or provide software development, maintenance, support and training
services related to the Products. Under the terms of the Master Agreement,
Data I/O retains certain OEM, source code and product licensing rights from
which it will receive income through December 31, 1999, when MINC, subject to
satisfying certain conditions, will obtain title to the Division's Products.
Data I/O estimates that it will receive revenues in the range of $1.5 to $2
million relating to these retained rights, most of which are estimated to occur
during the next twelve months.
As a result of this transaction, Data I/O expects to record charges against
earnings of approximately $1.5 million in the fourth quarter of 1997, primarily
related to certain prepaid costs and intangibles, accrual of severance costs,
and other transaction related costs.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
( a ) Financial statements of businesses acquired.
Not Applicable
( b ) Pro forma financial information
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
1) Pro Forma Condensed Consolidated Balance Sheet:
As of September 25, 1997..................... PAGE 5
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2) Pro Forma Condensed Consolidated Statement of Operations:
Year Ended December 26, 1996 ................ PAGE 6
Nine Months Ended September 25, 1997......... PAGE 7
The Pro Forma Condensed Consolidated Balance Sheet of Registrant as of September
25, 1997 reflects the financial position of Registrant after giving effect to
the disposition of the assets and assumes the disposition took place on
September 24, 1997. The Pro Form Condensed Consolidated Statements of
Operations for the fiscal year ended December 26, 1996, and the nine months
ended September 25, 1997 assume that the disposition occurred on December 26,
1995, and are based on the operations of Registrant for the year ended December
26, 1996 and nine months ended September 25, 1997.
The unaudited pro forma condensed consolidated financial statements have been
prepared by Registrant based upon assumptions deemed proper by it and which give
effect only to the adjustments directly resulting from this disposition. The
unaudited pro forma condensed consolidated financial statements presented herein
are shown for illustrative purposes only and are not necessarily indicative of
the future financial position or future results of operations of Registrant, or
of the financial position or results of operations of Registrant that would have
actually occurred had the transaction been in effect as of the date or for the
period presented. In addition, it should be noted that Registrant's financial
statements will reflect the disposition only from November 12, 1997, the closing
date.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of Registrant.
( c ) EXHIBITS
2.1 Master Agreement, by and between Data I/O Corporation, a Washington
corporation, Minc, Incorporated, a Colorado corporation, and Minc
Washington Corp., a Colorado corporation dated November 12, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Data I/O Corporation
November 26, 1997 By /s/Alan J. Beauchamp
--------------------------------------
Alan J. Beauchamp
Vice President - Finance and Administration
Chief Financial Officer
Secretary and Treasurer
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PRO FORMA FINANCIAL INFORMATION
DATA I/O CORPORATION
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 25, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands) Pro Forma Adjustments
------------------------------------
Historical Synario Other Pro Forma
----------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS (a)
Current Assets
Cash and cash equivalents $4,815 $100 (b) $4,915
Short term investments 14,776 14,776
Accounts receivable (net of allowance) 13,013 $1,605 1,605 (c) 13,013
Inventories 8,160 144 8,016
Deferred income taxes 910 910
Other current assets 1,280 574 100 (c) 806
---------------------------------------------------------------------
Total Current Assets 42,954 2,323 1,805 42,436
Property, plant and equipment (net) 3,835 178 150 (c) 3,807
Other assets 2,745 303 25 (c) 2,467
---------------------------------------------------------------------
Total Assets 49,534 $2,804 $1,980 $48,710
---------------------------------------------------------------------
---------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S
EQUITY
Current Liabilities
Accounts payable $3,221 $156 156 (c) $3,221
Accrued compensation 3,954 191 491 (d) 4,254
Deferred revenue 5,071 791 791 (c) 5,071
Other accrued liabilities 4,505 1,261 1,661 (c) 4,905
Income taxes payable 1,316 1,316
Notes payable 2,121 1,500 1500 (d) 2,121
---------------------------------------------------------------------
Total Current Liabilities 20,008 3,899 4,599 20,708
Long Term Other Payables 546 546
Deferred Gain on Sale of Property 3,166 3,166
Total Stockholders Equity 25,814 (1,095) (2,619) 24,290
---------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $49,534 $2,804 $1,980 $48,710
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
(a) To eliminate the assets and liabilities included in or charged off in
connection with the balance sheet associated with the Synario Division as
of September 25, 1997.
(b) To reflect $100,000 cash proceeds.
(c) To reflect retained accounts receivable, prepaid current assets, equipment,
intangibles, accounts payable, deferred revenue, and notes payable retained
by the Company.
(s) To reflect accrued transaction costs, accrued charges and liabilities
retained by the Company.
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Exhibit 2.1
MASTER AGREEMENT
This MASTER AGREEMENT is effective as of November 12, 1997, by and between
Data I/O Corporation, a Washington corporation ("Data I/O"), and Minc
Incorporated, a Colorado corporation and Minc Washington Corp., a Colorado
corporation (collectively, "Minc").
RECITALS
A. Data I/O, through its Synario Division, is engaged in the business
of developing, manufacturing, marketing, supporting and distributing the
following computer software products: Synario, ABEL and ECS (as more fully
defined in Section 2.1 herein, the "Software").
B. Minc desires to license from Data I/O, and ultimately purchase from
Data I/O, the Software and certain trademarks associated therewith, to purchase
certain other assets of Data I/O, and perform certain obligations of Data I/O
relating to the Software.
C. Data I/O desires to license to Minc, and ultimately sell to Minc,
the Software and certain trademarks associated therewith, and to sell certain
other assets of Data I/O to Minc, and, as a condition to such license and
purchase, to have Minc perform certain obligations of Data I/O related to the
Software, all as expressly set forth herein.
NOW THEREFORE, the parties agree as follows:
AGREEMENT
1. TRANSFER OF CERTAIN ASSETS; GRANT OF SOURCE CODE LICENSES.
1.1. TRANSFER OF CERTAIN ASSETS. Subject to the terms and conditions of
this Agreement, at the First Closing (as defined in Section 4 below), Data I/O
shall sell, assign, grant and transfer to Minc, and Minc shall purchase and
accept from Data I/O, all of Data I/O's right, title and interest in and to the
following assets (the "Certain Assets"):
(i) the furniture, supplies, equipment and other items of
tangible personal property identified on Schedule 1.1(i) (the "Tangible
Assets");
(ii) the inventory identified on Schedule 1.1(ii) (the
"Inventory"); and
(iii) the customer data base, bug data base, lead generation
information and Synario Division information contained in associated data bases
relating exclusively to the Software and identified on Schedule 1.1(iii).
1.2. GRANT OF NON-EXCLUSIVE LICENSE. Subject to the terms and conditions
of this Agreement, at the First Closing, Data I/O and Minc shall enter into a
Non-Exclusive Source
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Code and Trademark License Agreement in the form attached hereto as Exhibit 1.2
(the "Non-Exclusive License").
1.3. GRANT OF EXCLUSIVE LICENSE. Subject to the terms and conditions of
this Agreement, on such date as the conditions set forth in Section 5 hereof are
satisfied (or promptly thereafter), Data I/O and Minc shall enter into an
Exclusive Source Code and Trademark License Agreement in the form attached
hereto as Exhibit 1.3 (the "Exclusive License"), which agreement shall supersede
in all respects the Non-Exclusive License.
2. SALE OF SOFTWARE.
2.1. TRANSFER OF SOFTWARE. Subject to the terms and conditions of this
Agreement, at the Second Closing (as defined in Section 6 below), Data I/O
shall, for no additional consideration, sell, assign, grant and transfer to
Minc, and Minc shall purchase and accept from Data I/O, all of Data I/O's right,
title and interest in and to the following assets:
(i) the computer software programs known as Synario, ABEL and
ECS described in Schedule 2.1(i), including those features, enhancements,
derivative works and extensions thereof currently in development, and all
works-in-process (the "Software"), and all software programming technology
regarding the Software, including without limitation, source code, source
documentation, source listings and annotations (together with the Software, the
"Products") as described in Schedule 2.1(i), but excluding any third party
software or other materials owned by third parties (the "Third Party Software");
and
(ii) the trademarks, trade names and service marks, and
registrations and applications for such trademarks, trade names, service marks
owned by Data I/O and used exclusively in connection with the Products that are
listed on Schedule 2.1(ii) (the "Trademarks"); and the copyrights, and
registrations and applications for such copyrights, and other intellectual
properties, owned by Data I/O and used exclusively in connection with the
Products that are listed on Schedule 2.1(ii), (collectively, the "Intellectual
Property").
3. PURCHASE PRICE; PAYMENT TERMS.
3.1. PURCHASE PRICE. In consideration of the transfer of the Certain
Assets, the Non-Exclusive License and the other rights transferred to Minc
hereunder, Minc shall pay to Data I/O the non-refundable amount of One Hundred
Thousand Dollars ($100,000) (the "Purchase Price").
3.2. PAYMENT OF PURCHASE PRICE. At the First Closing, Minc shall pay to
Data I/O the Purchase Price by delivery of a cashier's check or wire transfer of
immediately available funds to an account designated by Data I/O.
4. FIRST CLOSING.
4.1. TIME AND PLACE OF FIRST CLOSING. The closing of the sale and
purchase of the Certain Assets and the execution of the Non-Exclusive License
(the "First Closing") shall take
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place in person or via facsimile at 12 p.m. Pacific time, at the offices of Data
I/O, 10525 Willows Road, N.E., Redmond, Washington on November 12, 1997.
4.2. ITEMS TO BE DELIVERED AT THE FIRST CLOSING.
(a) ITEMS TO BE DELIVERED TO MINC BY DATA I/O. At the First
Closing, Data I/O shall deliver or cause to be delivered to Minc: (i) an
executed bill of sale and assignment in the form attached hereto as Exhibit
4.2(a) to effect the transfer of all of Data I/O's right, title and interest in
and to the Certain Assets to Minc; (ii) one complete copy of each of the
Products, including source code, object code and work-in-process, transmitted to
Minc electronically or in such other format as Minc may reasonably request;
(iii) an executed counterpart of the Non-Exclusive License; (iv) a copy of an
executed certificate of its secretary or assistant secretary certifying that
resolutions of the Board of Directors of Data I/O authorizing the execution,
delivery, and performance of this Agreement by Data I/O were duly adopted and
are in full force and effect as of the date of the First Closing; and (v)
Synario Internet access to Minc as set forth in Schedule 4.2(a).
(b) ITEMS TO BE DELIVERED TO DATA I/O BY MINC. At the First
Closing, Minc shall deliver or cause to be delivered to Data I/O: (i) the
cashier's check or wire transfer referred to in Section 3.1; (ii) resale sales
tax certificates as requested by Data I/O containing all required information
(iii) an executed counterpart of the Non-Exclusive License; and (iv) a copy of
an executed certificate of its secretary or assistant secretary certifying that
resolutions of the Board of Directors of Minc authorizing the execution,
delivery, and performance of this Agreement by Minc were duly adopted and are in
full force and effect as of the date of the First Closing.
4.3. CONDITIONS TO THE FIRST CLOSING.
(a) CONDITIONS PRECEDENT TO OBLIGATION OF MINC. The obligation
of Minc to consummate the transactions contemplated to occur at the First
Closing under this Agreement is subject to the fulfillment, prior to or at the
Closing, of each of the following conditions (any or all of which may be waived
solely by Minc):
(i) all representations and warranties of Data I/O
shall be true and correct as of the date of the First Closing with the same
effect as though made again at and as of such date, with such exceptions as do
not in the aggregate have a material adverse effect on Data I/O's ability to
perform its obligations under this Agreement or on the Products;
(ii) Data I/O shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Data I/O prior to or at the First Closing;
(iii) Minc shall have received, in form and substance
satisfactory to Minc and its counsel, each and every other closing document
required to be delivered to it at the First Closing; and
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(iv) Upon execution of this Agreement, Data I/O shall
have delivered to Minc one (1) complete copy of each of the Products, including
source code and object code and work-in-process, electronically or in such other
format as Minc may reasonably request.
(b) CONDITIONS PRECEDENT TO OBLIGATION OF DATA I/O. The
obligation of Data I/O to consummate the transactions contemplated to occur at
the First Closing under this Agreement is subject to the fulfillment, prior to
or at the First Closing, of each of the following conditions (any or all of
which may be waived solely by Data I/O):
(i) all representations and warranties of Minc shall
be true and correct as of the date of the First Closing with the same effect as
though those representations and warranties had been made at and as of such
date, with such exceptions as do not in the aggregate have a material adverse
effect on Minc's ability to perform its obligations under this Agreement;
(ii) Minc shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by it prior to or at the First Closing; and
(iii) Data I/O shall have received, in form and
substance satisfactory to Data I/O and its counsel, each and every other closing
document required to be delivered to it at the First Closing.
4.4. CLOSING COSTS. All sales, use or similar taxes, of any nature
whatsoever, applicable to, or resulting from, the sale and purchase of the
Certain Assets shall be paid by Minc.
4.5. FURTHER ASSURANCES. On and after the date of the First Closing,
each party shall execute all certificates, instruments and documents and take
all actions reasonably requested by the other party to effectuate the purposes
of this Agreement and to consummate and evidence the consummation of the
transactions contemplated to occur as part of the First Closing.
5. EXECUTION OF EXCLUSIVE LICENSE.
5.1. EXECUTION OF EXCLUSIVE LICENSE.
(a) The execution of the Exclusive License shall take place at
such place and time as the parties shall agree, within ten (10) days after Minc
has satisfied the conditions set forth in Section 5.2, and has delivered to Data
I/O a certificate in the form attached hereto as Exhibit 5.1 certifying that all
conditions of Minc required to be satisfied prior to the execution of the
Exclusive License have been fulfilled. If Minc fails to satisfy all of the
conditions set forth in Section 5.2 by the date which is one year following the
date of the First Closing, or if Data I/O receives notice of Minc's failure to
satisfy any of such conditions from any customer, Data I/O will notify Minc in
writing and Minc shall have thirty (30) days from the date of its receipt of
such notice to cure such failure. If Minc does not cure such failure within
said thirty (30) day period, (i) Minc shall provide to Data I/O on a consulting
basis any Minc engineers as requested by Data I/O to perform said obligations,
(ii) Minc's right and Data I/O's obligation to enter into
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the Exclusive License shall cease, subject to Section 5.1(b) below and (iii) the
Non-Exclusive License shall continue in full force and effect in accordance with
its terms. Data I/O will reimburse Minc for the actual, documented salary costs
of the Minc engineers used to fulfill the obligations of Minc as described in
this Section 5.
(b) In the event that Minc has failed to satisfy the Technical
Support Obligations (as defined in Section 5.2 (a) below), but has otherwise
satisfied the conditions set forth in Section 5.2, and has not cured such
failure in accordance with Section 5.1(a) above, Data I/O shall nonetheless
grant Minc the Exclusive License if Minc, as a condition precedent to such
grant, agrees to pay all of the internal and external cost and expenses incurred
by Data I/O to fulfill the Technical Support Obligations (including without
limitation the cost of any refunds made by or any amounts not received by Data
I/O in connection therewith), and agrees to indemnify, defend and hold Data I/O
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including reasonable attorneys' fees, incurred by Data I/O in
connection with Minc's failure to fulfill the Technical Support Obligations, or
Data I/O's fulfillment of the Technical Support Obligations. Data I/O shall
have the sole and exclusive right to defend any claim indemnified hereunder or
to determine whether any claim indemnified hereunder shall be contested. In the
event of any default by Minc of the payment or indemnification obligations
described in this Section 5.1(b), the Exclusive License shall immediately
terminate.
(c) Notwithstanding the execution of the Exclusive License, Data
I/O shall retain the perpetual, royalty-free, non-exclusive right to use for
internal product development purposes the Synario Product and the royalty-free,
non-exclusive right until December 31, 1999 to license, distribute and sell the
object code versions of the ECS and ABEL products to any end users and to only
the OEMs identified in Schedule 5.2(d) hereto.
5.2. CONDITIONS PRECEDENT TO THE EXECUTION OF THE EXCLUSIVE LICENSE. The
obligations of Data I/O to execute the Exclusive License is subject to the
fulfillment, prior to or at the time of such execution, of each of the following
conditions (any or all of which may be waived solely by Data I/O):
(a) Minc shall have used its best efforts to deliver the 32 bit
and network licensing versions of Synario Version 3.1 (henceforth collectively
referred to as "Version 4.0") by March 24, 1998 and shall have completed all of
the telephone and technical support obligations under various source code
agreements previously entered into by Data I/O, as such obligations are more
specifically set forth in Schedule 5.2(a) hereto (collectively referred to
herein as the "Technical Support Obligations");
(b) Minc shall have completed all training required by the
Source Code Agreements (other than training related to the 16 bit version of the
Products, which shall be the responsibility of Data I/O), as more specifically
set forth in Schedule 5.2(a) hereto (the "Training Obligations");
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(c) All payments due to Data I/O under the Source Code
Agreements as more specifically set forth in Schedule 5.2(c) shall have been
made, unless the nonpayment is unrelated to any action or inaction by Minc; and
(d) Minc shall be current in all OEM maintenance obligations and
have fulfilled all end user maintenance obligations to certain Data I/O
customers for the period until the date of execution of the Exclusive License
Agreement as specifically set forth in Schedule 5.2(d).
6. SECOND CLOSING.
6.1. TIME AND PLACE OF SECOND CLOSING. Subject to the terms and
conditions set forth herein, all right, title and interest of Data I/O in and to
the Products and the Intellectual Property shall be transferred to Minc at 11:00
a.m., Mountain time, at the principal offices of Minc on December 31, 1999 (the
"Second Closing"). The Second Closing shall take place when Minc has delivered
to Data I/O a certificate in the form attached hereto as Exhibit 6.1(a)
certifying that all conditions of Minc required to be satisfied prior to the
Second Closing have been fulfilled (the "Second Closing Certificate"), and when
Data I/O transfers to Minc the following: (i) the executed bill of sale and
assignment in the form attached hereto as Exhibit 6.1(b), dated as of the date
of the Second Closing, to effect the transfer to Minc of all of Data I/O's
right, title and interest in and to (1) the Products and the Intellectual
Property (except that Data I/O shall retain a perpetual, royalty-free
non-exclusive right to use for internal product development purposes the Synario
product) and (2) to the extent such agreements are then in effect, the OEM
Agreements (as hereinafter defined); and (ii) the executed Trademark Assignment
in the form attached hereto as Exhibit 6.1(c). In the event that Minc has
delivered the Second Closing Certificate to Data I/O on or before December 31,
1999, and Data I/O fails to consummate the Second Closing and fails to notify
Minc in writing that it deems the conditions to the Second Closing not to have
been timely satisfied, on or before January 10, 2000, the Second Closing shall
immediately take place, and all right, title and interest in and to the Products
and the Intellectual Property shall be immediately transferred to Minc in
accordance with the terms of this Agreement.
6.2. CONDITIONS TO THE SECOND CLOSING.
(a) CONDITIONS PRECEDENT TO OBLIGATION OF MINC. The obligation
of Minc to consummate the purchase of the Products and Intellectual Property
under this Agreement is subject to the fulfillment, prior to or at the Second
Closing, of each of the following conditions (any or all of which may be waived
solely by Minc):
(i) Data I/O shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Data I/O prior to or at the Second Closing;
and
(ii) Minc shall have received, in form and substance
satisfactory to Minc and its counsel, each and every other closing document
required to be delivered to it at the Second Closing.
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(b) CONDITIONS PRECEDENT TO OBLIGATIONS OF DATA I/O. The
obligations of Data I/O to consummate the sale of the Products and the
Intellectual Property under this Agreement is subject to the fulfillment, prior
to or at the Second Closing, of each of the following conditions (any or all of
which may be waived solely by Data I/O):
(i) all of the conditions precedent to the execution
of the Exclusive License described in Section 5.2 above shall have been
satisfied;
(ii) Minc shall have used its reasonable best efforts
to sell the Synopsys FPGA Express product through January 15, 1998, and shall
have paid Data I/O promptly for all sales resulting from orders received by it
for the Synopsys FPGA Express Product on or prior to January 15, 1998, net of
shipping charges and sales commissions at such rates as are set forth in
Schedule 6.2(b)(ii) attached hereto. (The parties agree that Minc shall be
appointed as an authorized Data I/O distributor of the Synopsys FPGA Express
product as described in Schedule 6.2(b)(ii));
(iii) Minc shall have performed all obligations on
behalf of Data I/O pursuant to various ABEL and ECS OEM Agreements (the "OEM
Agreements") as more specifically set forth in Schedule 5.2(d) hereto; provided,
however, that in the event of any conflict between the obligations as set forth
in Schedule 5.2(d) and the obligations as described in the OEM Agreements, the
OEM Agreements shall control;
(iv) Minc shall have retained the Frontline products as
the only integrated Verilog simulator in Synario for sale by Minc until June 30,
1998, and shall have paid to Data I/O, on a monthly basis, the difference
between the standard OEM price and the discounted prepaid price per copy, as
more specifically set forth in Schedule 6.2(b)(iv) (The parties agree that Minc
shall be appointed as an authorized Data I/O distributor of the Frontline
products as described in Schedule 6.2(b)(iv));
6.3. DATA I/O'S FAILURE TO CLOSE. If Minc has complied with all of the
conditions precedent to the Second Closing and the Second Closing has not
occurred on or before January 10, 2000, Minc may seek all available remedies
against Data I/O for such failure to complete the Second Closing and to transfer
all rights, title and interests to the Software and the Intellectual Property,
subject to the limitations contained in this Agreement.
6.4. COSTS. All sales, use, or similar taxes or duties, of any nature
whatsoever, applicable to, or resulting from, the sale and purchase of the
Products and Intellectual Property shall be paid by Minc.
6.5. FURTHER ASSURANCES. On and after the date of the Second Closing,
each party shall execute all certificates, instruments and documents and take
all actions reasonably requested by the other party to effectuate the purposes
of this Agreement and to consummate and evidence the consummation of the
transactions contemplated to occur as part of the Second Closing.
7. REPRESENTATIONS AND WARRANTIES OF DATA I/O.
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Data I/O represents and warrants to Minc as follows:
7.1. ORGANIZATION, STANDING AND AUTHORITY OF DATA I/O. Data I/O is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington and has full corporate power and authority to enter
into and perform this Agreement.
7.2. AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
of this Agreement by Data I/O have been duly authorized by all necessary
corporate action of Data I/O, and this Agreement constitutes the valid and
binding obligation of Data I/O enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
7.3. NO CONFLICT; CONSENTS. The execution, delivery and performance of
this Agreement by Data I/O will not (i) conflict with its articles of
incorporation or by-laws; (ii) conflict with, or result in the breach or
termination of, or constitute a default under, any lease, agreement, commitment
or other instrument, or any order, judgment or decree, to which Data I/O is a
party or by which any of its properties is bound, except for any conflicts,
breaches, terminations or defaults that would not in the aggregate have a
material adverse effect on Data I/O's ability to consummate the transactions
contemplated hereby; (iii) violate any law or regulation applicable to Data I/O,
except for such violations as would not in the aggregate have a material adverse
effect on Data I/O's ability to consummate the transactions contemplated hereby;
or (iv) result in the creation of any lien, charge or encumbrance upon any of
the Certain Assets or the Products. No consent, approval or authorization of,
or designation, declaration or filing with, any governmental authority is
required on the part of Data I/O in connection with the execution, delivery and
performance of this Agreement.
7.4. TITLE TO ASSETS. Data I/O has good title to the Certain Assets and
the Products, free and clear of any and all liens, claims and encumbrances other
than (i) minor imperfections of title, if any, that are not substantial in
character, amount or extent and do not materially detract from the value of the
property subject thereto, and (ii) taxes and general and special assessments not
in default and payable without penalty or interest.
7.5. CONDITION OF CERTAIN ASSETS. The Inventory is of a quantity and
quality usable in the ordinary course of business. The Tangible Assets are
useful in the conduct of the business of the Synario Division and are in good
condition for Data I/O's purposes, except for (i) normal wear and tear and (ii)
obsolete items or items below standard quality as to which appropriate provision
has been made on the books of Data I/O in accordance with generally accepted
accounting principles.
7.6. PROPRIETARY RIGHTS. Schedule 2.1(ii) lists all patents, copyrights,
and trade and service marks and names, issued or reissued to Data I/O or
registered, applied for or pending under Data I/O's name or assigned to it as of
the date hereof, and that are included in the Products, along with the
registration numbers, dates of issuance and names of the inventors or
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authors of such patents, marks, names and copyrights. To the best of Data I/O's
knowledge, none of the Products or the Intellectual Property infringes in any
material respect any patent, copyright, trademark or trade secret right of any
third party. Data I/O makes no representation or warranty with respect to any
Third Party Software.
7.7. LITIGATION; COMPLIANCE WITH LAWS. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best of
Data I/O's knowledge, threatened that enjoin, restrain, condition or prohibit
consummation of this Agreement or any of the transactions contemplated herein,
or which, if adversely determined, would have a material adverse effect upon the
Products. Data I/O is not in violation of any applicable law, regulation,
ordinance, or any other applicable requirement of any governmental body or
court, including, without limitation, antitrust, environmental and securities
laws, which violation would have a material adverse effect upon the Products,
and no notice has been received by Data I/O alleging any such violation.
7.8. BROKERS. Except for Needham & Company, Inc., neither Data I/O nor
any director, officer, agent or employee acting on behalf of Data I/O has
retained any broker or finder in connection with the transactions contemplated
in this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF MINC.
Minc represents and warrants to Data I/O as follows:
8.1. MINC'S ORGANIZATION. Minc Incorporated and Minc Washington Corp.
are corporations duly organized, validly existing and in good standing under the
law of the State of Colorado and have the full corporate power and authority to
enter into and to perform this Agreement.
8.2. AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
of this Agreement by Minc have been duly authorized by all necessary corporate
action of Minc and this Agreement constitutes the valid and binding obligation
of Minc enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
8.3. NO CONFLICT; CONSENTS. The execution, delivery and performance of
this Agreement by Minc will not (i) conflict with its articles of incorporation
or by-laws; (ii) conflict with, or result in the breach or termination of, or
constitute a default under, any lease, agreement, commitment or other
instrument, or any order, judgment or decree, to which Minc is a party or by
which any of its properties is bound, except for any conflicts, breaches,
terminations or defaults that would not in the aggregate have a material adverse
effect on Minc's ability to consummate the transactions contemplated hereby; or
(iii) violate any law or regulation applicable to Minc. No consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority is required on the part of Minc in connection with the execution,
delivery and performance of this Agreement.
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8.4. LITIGATION. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Minc's knowledge,
threatened that question the validity of this Agreement or any action taken or
to be taken by Minc in connection with this Agreement or that, if adversely
determined, would have a material adverse effect upon Minc's ability to perform
its obligations under this Agreement.
8.5. FINANCIAL RESOURCES. Minc has the financial resources necessary to
fully perform its obligations under this Agreement, including without
limitation, the financial ability to perform all of the conditions and covenants
described in Sections 5.2 (a), (b) and (d) and 6.2(b).
8.6. BROKERS. Neither Minc nor any director, officer, agent or employee
acting on behalf of Minc has retained any broker or finder in connection with
the transactions contemplated in this Agreement.
9. ADDITIONAL AGREEMENTS OF THE PARTIES.
9.1. OFFER OF EMPLOYMENT. Effective as of the date of the First
Closing, Minc shall offer employment to no less than twenty (20) employees of
Data I/O who are employed exclusively in Data I/O's Synario Division.
9.2. OFFER OF SUB-LEASE. Until December 31, 1997 and subject to the
approval of Data I/O's landlord, Data I/O shall allow Minc to use the facility
space and the customer data base systems currently used by the Synario Division.
Effective as of January 1, 1998, Data I/O shall offer Minc a sub-lease of 10,000
square feet of such space at a rate of $1.05 per square foot for a period not to
exceed sixty (60) days (the "Sublease Term"), on the terms set forth in Exhibit
9.2 attached hereto. If requested by Minc, Data I/O may, if it so determines in
its sole discretion, extend the Sublease Term.
9.3. USE AND OFFER OF SALE OF COMPUTER EQUIPMENT. Until the end of the
Sublease Term, Data I/O shall allow Minc to use the computer equipment
identified on Schedule 9.3 and assigned to each Data I/O employee hired by Minc
pursuant to Section 9.1 hereof. Data I/O shall offer such equipment to Minc for
purchase at the end of the Sublease Term, at the fair market value set forth in
Schedule 9.3 hereto. If the parties are unable to agree on the fair market
value of such equipment, Data I/O's obligation to offer such equipment for sale
to Minc shall immediately cease, and such equipment shall be left at the Data
I/O facility space at the end of the Sublease Term.
9.4. TRANSFER OF INSOURCING OEM AGREEMENTS. Data I/O shall use
commercially reasonable efforts to cause certain insourcing OEM agreements as
set forth in Schedule 9.4 hereto ("Insourcing OEM Agreements"), at Minc's
option, to be transferred and assigned to Minc, if permissible, as promptly as
possible following the First Closing. If Minc does not obtain the Exclusive
License pursuant to the provisions of Section 5 for any reason, Minc shall use
commercially reasonable efforts to transfer and assign any such agreements that
had been transferred and/or assigned to Minc back to Data I/O. To the extent
any Insourcing OEM
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Agreement is assigned to Minc, Minc agrees to assume all royalty payment and
other obligations thereunder.
9.5. FINANCIAL INCENTIVES TO KEY ENGINEERS. Data I/O shall pay financial
incentives (in such amount and manner as set forth in Schedule 9.5 hereto) to
those Data I/O employees listed in Schedule 9.5 to facilitate completion of the
16 and 32 bit training and delivery of Version 4.0.
9.6. ADDITIONAL TRAINING OR SUPPORT AND PAYMENTS TO MINC. Minc shall
provide such additional training or support as requested by certain Data I/O
customers under certain existing Data I/O Source Code Agreements (other than 16
bit training) as more specifically set forth in Schedule 9.6 attached hereto and
at the rates specified in such Schedule 9.6, and Data I/O shall pay to Minc on a
monthly basis amounts collected from such customers for such additional training
or support.
9.7. DATA I/O SALES OF SOURCE CODE AND OBJECT CODE. Data I/O will not
license or sell the source code for the Products to any electronic design
automation or integrated circuit competitors of Minc (including but not limited
to those companies listed in Schedule 9.7 hereto), unless and until Minc has
failed to timely satisfy the conditions set forth in Sections 5.2 and 6.2(b)
above, and has not cured such failure in accordance with the terms of this
Agreement. Until December 31, 1999, Data I/O may license, distribute, market
and sell the object code versions of the ECS and ABEL products only to any
end-users and to the OEMs identified on Schedule 5.2(d), and shall direct such
customers to Minc for maintenance services.
9.8. COOPERATION. From the date of this Agreement to and including the
date of the Second Closing, each party shall cooperate with the other party and
such other party's counsel and accountants in connection with any steps required
to be taken as part of its obligations under this Agreement. Each party shall
use its best efforts to cause all conditions to the parties' obligations under
this Agreement to be satisfied and to obtain all consents and approvals
necessary for the due and punctual performance of this Agreement and for the
satisfaction of the conditions hereof.
9.9. ADVICE OF CLAIMS. From the date of this Agreement to and including
the date of the Second Closing, each party shall promptly advise the other of
the commencement or notice of any material litigation or proceeding affecting
the Products of which it has knowledge.
9.10. NOTICE BY MINC. From the date of this Agreement to and including
the date of the Second Closing, Minc shall promptly advise Data I/O of any
material adverse change in, or any event (other than one generally known to the
public) that is reasonably foreseeable which may have a material adverse effect
on, Minc or that would impair Minc's ability to perform its obligations under
this Agreement.
9.11. PUBLICITY. Except as required by law or regulation, neither party
shall issue any press release or public announcement of any kind concerning this
Agreement or the transactions contemplated hereby without the prior written
consent of the other, which consent shall not be unreasonably withheld.
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9.12. MUTUAL PRESERVATION OF RECORDS.
(a) Minc agrees that it shall preserve and keep the records
relating to the Products and the performance of its obligations hereunder for a
period of three (3) years from the date of the First Closing, or for any longer
period as may be required by any government agency or ongoing litigation, and
shall make such records available to Data I/O as may be reasonably required by
Data I/O in connection with, among other things, any insurance claims by, legal
proceedings against or governmental investigations of Data I/O, any tax
examination of or preparation of a tax return by Data I/O, or any investigation
by Data I/O to determine if the conditions precedent described in Section 5.2 or
6.2 have been fulfilled by Minc. In the event Minc wishes to destroy such
records after that time, it shall first give 90 days prior written notice to
Data I/O and Data I/O shall have the right at its option and expense, upon prior
written notice given to Minc within that 90 day period, to take possession of
the records within 180 days after the date of Data I/O's notice to Minc.
(b) Data I/O agrees that it shall preserve and keep the records
relating to the Products and the performance of its obligations hereunder for a
period of three (3) years from the date of the First Closing, or for any longer
period as may be required by any government agency or ongoing litigation, and
shall make such records available to Minc as may be reasonably required by Minc
in connection with, among other things, any insurance claims by, legal
proceedings against or governmental investigations of Minc, any tax examination
of or preparation of a tax return by Minc, or any investigation by Minc to
determine if the conditions precedent described in Section 6.2(a) have been
fulfilled by Data I/O. In the event Data I/O wishes to destroy such records
after that time, it shall first give 90 days prior written notice to Minc and
Minc shall have the right at its option and expense, upon prior written notice
given to Data I/O within that 90 day period, to take possession of the records
within 180 days after the date of Minc's notice to Data I/O.
10. AUDIT.
10.1. AUDIT BY DATA I/O. Data I/O may, not more than once annually during
the three (3) year period following the First Closing, cause an independent
audit to be made of the books and records of Minc which are relevant to verify
the accuracy of the payments to be made to Data I/O under this Agreement. Any
such audit shall be conducted at regular business hours at Minc's facilities, in
a reasonable manner so as not to interfere with Minc's normal business
activities. Data I/O will bear the costs and expenses of the audit unless it
reveals an underpayment of 10% or more, in which case Minc shall bear such costs
and expenses.
10.2. AUDIT BY MINC. Minc may, not more than once annually during the
three (3) year period following the First Closing, cause an independent audit to
be made of the books and records of Data I/O which are relevant to verify the
accuracy of the payments to be made to Minc under this Agreement. Any such
audit shall be conducted at regular business hours at Data I/O's facilities, in
a reasonable manner so as not to interfere with Data I/O's normal business
activities. Minc will bear the costs and expenses of the audit unless it reveals
an underpayment of 10% or more, in which case Data I/O shall bear such costs and
expenses
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11. RETAINED RIGHTS AND OBLIGATIONS OF DATA I/O.
11.1. NON-LICENSED PRODUCTS. Data I/O retains the right to license ABEL
and ECS in accordance with Section 9.7 above.
11.2. LICENSE OF THE PRODUCTS. If all of the conditions to the Exclusive
License are not satisfied or waived by the dates set forth in Section 5 above,
including the relevant cure provisions, Data I/O may sell or license all or any
part of the Products or Intellectual Property, including without limitation,
source code, to any other party without any obligation to Minc.
11.3. REVENUE RIGHTS. Data I/O shall retain all rights to any and all
revenue under the OEM Agreements and the Source Code Agreements as are set forth
specifically in Schedule 11.3 attached hereto for the periods specified in such
Schedule.
11.4. RECEIVABLES. Data I/O shall retain all rights to any and all
receivables arising from the operation of the Synario Division prior to the
First Closing.
11.5. MAINTENANCE RESERVES. Data I/O shall retain all rights in and to
the deferred maintenance revenue reserves identified on Schedule 11.5.
11.6. PAYABLES; OBLIGATIONS TO EMPLOYEES. Data I/O shall retain all
obligations for payables arising from the operation of the Synario Division
prior to the First Closing, including without limitation (a) amounts owed to
employees of the Synario Division with respect to periods prior to the First
Closing, (b) financial incentives to certain employees of the Synario Division
as described in Schedule 9.5 hereto, (c) any amounts owed pursuant to employment
or consulting agreements with any Data I/O employees or consultants, (d) any
commissions to Data I/O salespersons accrued prior to the First Closing., and
(e) any obligations to pay Synopsys, Inc. incurred prior to the First Closing.
11.7. CAD/CAM OBLIGATIONS. Data I/O shall retain all obligations arising
under that certain Asset Purchase Agreement dated as of December 31, 1992
between Data I/O, CAD/CAM Group, Inc., Michael J. Mendelsohn and Peter C. Niday,
except for any ongoing royalties related to products licensed by Minc after the
date of the First Closing, which are described more fully in Schedule 11.7
hereto and which shall be the obligation of Minc.
11.8. SYNOPSYS OBLIGATIONS. Data I/O shall retain all obligations arising
under that certain agreement dated as of January 24, 1997 between Data I/O and
Synopsys, Inc., and Minc shall have no obligations under such agreement except
for the reasonable best efforts required by Section 6.2(b)(ii).
11.9. ALL OTHER RIGHTS. All other rights not specifically granted to Minc
in this Agreement, the Non-Exclusive License or the Exclusive License are
retained by Data I/O.
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12. INDEMNIFICATION AND RELATED MATTERS.
12.1. INDEMNIFICATION.
(a) Data I/O agrees to indemnify, defend and hold Minc harmless
from and against any and all liabilities, losses, damages, costs and expenses,
including reasonable attorneys' fees, incurred by Minc resulting from (i) a
breach of any of the representations, warranties, covenants or agreements made
by Data I/O in this Agreement, (ii) all liabilities and obligations of Data I/O
that are not expressly assumed by Minc under the terms of this Agreement, (iii)
any allegation or claim by any third party that the use, copying, marketing or
other exploitation by Data I/O or its customers of any of the Products prior to
the date of the First Closing (or such later date as set forth in the
Non-Exclusive License or the Exclusive License) infringes in any material
respect any United States-based patent, copyright, trademark or trade secret
rights of any person not a party hereto, or (iv) the conduct of the business of
the Synario Division, or any occurrence in connection with the Products, prior
to the date of the First Closing (other than the liabilities which Minc has
specifically assumed under the terms of this Agreement) ("Data I/O's Indemnified
Liabilities"); provided, however, that Data I/O shall not have any liability
under this Section 12.1(a) until Data I/O's liabilities exceed in the aggregate
$10,000, and then only to the extent of such excess; provided, however, that the
aggregate amount of Data I/O's liabilities under this Section 12.1(a) shall in
no event exceed $250,000. Any amounts payable by Data I/O pursuant to this
Section 12.1(a) shall be net of insurance proceeds, if any, received by Minc
in respect of Data I/O's Indemnified Liabilities.
(b) Minc agrees to indemnify, defend and hold Data I/O harmless
from and against any and all liabilities, losses, damages, costs and expenses,
including reasonable attorneys' fees, incurred by Data I/O resulting from (i) a
breach of any of the representations, warranties, covenants or agreements made
by Minc in this Agreement, (ii) any allegation or claim by any third party that
any modification made by or for Minc to the Products, or the use, copying,
marketing or other exploitation by Minc or its customers, distributors,
successors or assigns of such modification, infringes in any material respect
any United States-based patent, copyright, trademark or trade secret rights of
any person not a party hereto, (iii) the performance of Minc's obligations
hereunder after the First Closing, or (iv) the conduct of Minc's business, or
any occurrence in connection with the Products, after the Second Closing.
12.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DETERMINATION OF
DAMAGES. All representations and warranties of Data I/O or Minc contained in
this Agreement or any written statement, certificate, instrument, schedule or
other document delivered pursuant hereto shall survive the First Closing until
the expiration of one year from the date of the First Closing and any claim
based upon said representations and warranties shall thereupon be of no further
force and effect, except to the extent the claiming party shall have asserted in
writing a specific claim prior to the expiration of such rights, in which event
the other party shall remain liable with respect to such claim. In calculating
the damage to Minc or Data I/O for any breach of warranty or misrepresentation,
(a) Data I/O or Minc, as applicable, shall receive credit for any reduction in
tax liability as a result of the facts giving rise to the claim for damages and
(b) no amount shall be included for special or consequential damages. Minc
acknowledges and agrees that it has
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been furnished with or given adequate access to such information about the
Certain Assets as it shall have requested and that it has made its own
investigation into, and based thereon it has formed an independent judgment
concerning, the Certain Assets. It is therefore expressly understood and agreed
that, except as otherwise specifically set forth Sections 7.4 and 7.5, Minc
accepts the condition of the Certain Assets "AS IS, WHERE IS" and Data I/O makes
no representations, warranties or guarantees as to the condition, size, extent,
quantity, type or value of the Certain Assets.
12.3. CLAIMS PROCEDURE. If a party (the "Indemnified Party") is
threatened in writing with any claim, or any claim is presented in writing to or
any action or proceeding formally commenced against such party, which may give
rise to the right of indemnification hereunder (a "Claim"), the Indemnified
Party shall promptly give written notice thereof (specifying in reasonable
detail the basis for the Claim and, to the extent known, the amount thereof) to
the other party (the "Indemnifying Party"). The Indemnifying Party shall have
the right, at its sole cost and expense, to participate, and, to the extent the
Indemnifying Party so desires, assume the defense of such Claim with counsel
mutually satisfactory to the parties upon prompt notice to the Indemnified Party
of its intent to defend such Claim. If the Indemnified Party requests in
writing that such Claim not be contested, then it shall not be contested but
shall not be covered by the indemnities provided herein. The Indemnifying Party
may settle a Claim which it has duly elected to contest without the consent of
the Indemnified Party unless such settlement will have a material adverse effect
upon the Indemnified Party, in which case such Claim shall be settled only with
the consent of the Indemnified Party. In the event that the Indemnified Party
unreasonably declines to consent to such settlement, then the Indemnified Party
shall have no right to indemnification beyond the amount of the proposed
settlement. The Indemnified Party shall cooperate with the Indemnifying Party
in the defense of any Claim, including, without limitation, by making records
available to the Indemnifying Party and its legal counsel and permitting
interviews, depositions and testimony at trial of the Indemnified Party's
employees. The Indemnifying Party shall keep the Indemnified Party fully
informed regarding the progress and status of any Claim. In the event the
Indemnified Party fails to follow the claim procedure specified in this Section
12.3 with respect to a Claim by any third party against the Indemnified Party,
such failure shall not relieve the Indemnifying Party from liability hereunder
except and solely to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure.
12.4. LIMITATION ON LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER WITH
RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES OR LOST PROFITS. DATA I/O SHALL HAVE NO
LIABILITY FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000).
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13. CONFIDENTIALITY.
13.1. PROPRIETARY INFORMATION. Each party (for purposes of this Section
13, the "Receiving Party") acknowledges that it will have access to confidential
and proprietary information ("Proprietary Information") of the other (for
purposes of this Section 13, the "Disclosing Party"), including without
limitation, Proprietary Information regarding the Products and financial and
marketing data, and financial information about the Disclosing Party disclosed
pursuant to this Agreement. Notwithstanding anything to the contrary contained
in this Agreement, Proprietary Information shall not include information which
is (a) available to the public other than by breach of this Agreement by the
Receiving Party, (b) otherwise rightfully received by the Receiving Party or its
employees from a third party without obligations of confidentiality to the
Disclosing Party, (c) independently developed, without incorporation of
Proprietary Information, by employees of the Receiving Party, (d) independently
developed by the Receiving Party or by employees having no access to the
Proprietary Information or (e) disclosed by the Disclosing Party to a third
party without restrictions.
13.2. HELD IN CONFIDENCE. All such Proprietary Information shall be held
in confidence and the Receiving Party agrees to refrain from copying, using,
transferring, disclosing or exploiting any such Proprietary Information of the
Disclosing Party and to take all reasonable actions to protect the Proprietary
Information in the same manner that a reasonable person protects its own
Proprietary Information, including but not limited to, limiting access to the
Proprietary Information to those employees or third parties who reasonably
require such information and who agree to keep such information confidential.
The Receiving Party will alert persons permitted such access of the proprietary
and confidential nature of such Proprietary Information by confidentiality
labels and agreements; and to notify the other without delay and in writing of
any unauthorized access to such Proprietary Information. The Receiving shall
not, directly or indirectly, use, copy, disclose, transfer, permit access to or
exploit in any manner such Proprietary Information, except with the prior
written consent of the Disclosing Party.
13.3. FAILURE TO CLOSE. If the parties do not consummate the transactions
contemplated herein, the obligations of the parties contained in this Section 13
shall survive, and all Proprietary Information given to a Receiving Party by the
other (and all copies thereof) shall be promptly returned to the Disclosing
Party, and the Receiving Party shall make no further use of such Proprietary
Information. If the parties do consummate the transactions contemplated herein,
then: (a) with respect to Data I/O's Proprietary Information remaining as
Data I/O's property after the Second Closing, the agreements of this Section 13
shall survive, and all documents and other tangible media pertaining to such
information (and all copies thereof) given to Minc by Data I/O shall be promptly
returned to Data I/O, and Minc shall make no further use of such Proprietary
Information, and (b) with respect to Minc's Proprietary Information, the
agreements of this Section 13 shall survive and all documents and other tangible
media pertaining to such information (and all copies thereof) given to Data I/O
shall be promptly returned to Minc, and Data I/O shall make no further use of
such Proprietary Information.
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14. MISCELLANEOUS.
14.1. NOTICES. All notices, demands and other communications called for
or required by this Agreement shall be in writing and shall be addressed to the
parties at their respective addresses stated below or to such other address as a
party may subsequently designate by ten (10) days' advance written notice to the
other parties. Communications hereunder shall be deemed to have been received
(i) upon delivery in person, (ii) five (5) days after mailing by U.S. certified
mail, return receipt requested and postage prepaid, (iii) the second business
day after depositing it with a commercial overnight carrier which provides
written verification of delivery or (iv) the day of transmission by
telefacsimile if sent before 2:00 p.m. recipient's' time provided that a copy of
such notice is sent on the same day by U.S. certified mail, return receipt
requested and postage prepaid, with an indication that the original was sent by
facsimile and the date of its transmittal:
To: Data I/O Corporation
Attention: President
10525 Willows Road Northeast
P.O. Box 97046
Redmond, WA 98073-9746
Phone: (425) 881-6444
Facsimile: (425) 881-2917
cc: General Counsel
To: Minc Incorporated or Minc Washington Corp.
Attention: Chief Executive Officer/President
6755 Earl Drive
Colorado Springs, CO 80918-1039
Phone: 719-590-1155
Facsimile: 719-590-7330
cc: Charles J.Friedman, Esq.
The Citadel Building, Suite 470
3200 Cherry Creek South Drive
Denver, CO. 80209
Telephone: 303-733-9700
Facsimile: 303-733-0706
14.2. FULL UNDERSTANDING. In executing this Agreement, each member of
each party fully, completely and unconditionally acknowledges and agrees that it
(a) has had an equal opportunity to participate in drafting of this Agreement,
(b) has consulted with and had the advice and counsel of a duly licensed and
competent attorney and that it has executed this Agreement after independent
investigation, voluntarily and without fraud, duress or undue influence, (c)
expressly consents that this Agreement be given full force and effect according
to each and every of its express terms and provisions and (d) agrees that no
ambiguity shall be construed against any party based upon a claim that such
party drafted the applicable language.
<PAGE>
14.3. ENTIRE AGREEMENT. This Agreement and all schedules and exhibits
hereto contain all of the terms and conditions agreed upon by the parties
relating to the subject matter hereof and supersede and cancel all prior
agreements, negotiations, correspondence, undertakings, communications and
understandings of the parties, whether written or oral, respecting that subject
matter. In the event of a conflict between this Agreement and the Schedules or
Exhibits to this Agreement, this Agreement shall control.
14.4. MODIFICATION. No waiver or modification of this Agreement or any
provision contained herein shall be valid unless in writing and duly executed by
all parties hereto.
14.5. NO WAIVER. Failure or delay on the part of any party in exercising
any rights, power or privileges under this Agreement shall not be deemed a
waiver of any exercise of any right, power or privilege.
14.6. CAPTIONS AND CONSTRUCTION. Captions in this Agreement are for the
convenience of the reader and are not to be considered in the interpretation of
the terms.
14.7. SURVIVAL. Neither the investigation by a party or the acceptance of
delivery of property hereunder shall constitute a waiver of any covenant,
representation, warranty, agreement, obligation or undertaking of a party
hereunder, and the same shall survive and continue after the date hereof.
14.8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington, without regard to its
conflict of laws principles. The parties agree that the exclusive jurisdiction
and venue of any lawsuit between them arising under this Agreement or the
transactions contemplated herein shall be the Superior Court of Washington for
King County, or the United States District Court for the Western District of
Washington at Seattle, and each of the parties hereby irrevocably agrees and
submits itself to the exclusive jurisdiction and venue of such courts for the
purposes of such lawsuit.
14.9. EXPENSES. Each of the parties shall pay its respective expenses,
costs and fees (including without limitation, attorneys' and accountants' fees)
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.
14.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each of the parties and either original or facsimile counterparts have
been delivered to the other party.
14.11. INVALID PROVISIONS. If any one or more provisions of this
Agreement, or the applicability of any such provision to a specific situation,
shall be held invalid or unenforceable, such provision shall be modified to the
minimum extent necessary to make it or its application valid and enforceable,
and the validity and enforceability of all other provisions of this Agreement
and all other applications of any such provisions shall not be affected thereby.
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14.12. ATTORNEYS' FEES. If legal proceedings are brought to enforce or
interpret any provision of this Agreement, the most prevailing party shall be
awarded its reasonable attorneys' fees and costs in addition to any other relief
or remedy which may be available.
14.13. BINDING EFFECT; ASSIGNMENT. Neither party shall assign or delegate
or in any way transfer any rights, interests or obligations hereunder without
the prior written consent of the other party; provided, however, that either
party may assign its rights, interests or obligations hereunder without the
prior written consent of the other to any entity controlling, controlled by or
under common control with such party (a "Control Party") or in connection with a
merger, consolidation or sale of all or substantially all of its assets,
provided that such successor expressly assumes the obligations of the assigning
party hereunder, and, in the case of an assignment by Minc to any party other
than a Control Party, that Data I/O is given thirty days' prior written notice
of such assignment and that Data I/O determines in its sole discretion that such
party has the financial ability to fulfill Minc's obligations hereunder. This
Agreement shall be binding upon and inure to the benefit of each of Minc,
Data I/O and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first set forth above.
DATA I/O CORPORATION
By: /s/William C. Erxleben
-----------------------------
Name: William C. Erxleben
Title: President/CEO
MINC INCORPORATED
By: /s/Robert A. Jensen
-----------------------------
Name: Robert A. Jensen
Title: CEO
MINC WASHINGTON CORP.
BY: /s/ROBERT A. JENSEN
-----------------------------
NAME: ROBERT A. JENSEN
TITLE: CEO
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SCHEDULES
- ---------
- ---------
1.1(i) Tangible Assets
1.1(ii) Inventory
1.1(iii) Database Information
2.1(i) Products and Third Party Software
2.1(ii) Intellectual Property
4.2(a) Internet Access to Minc
5.2(a) Specific Minc Technical Support and Training Obligations
5.2(c) Payments to be Made to Data I/O Under Source Code Agreements
5.2(d) Specific Obligations to certain Data I/O Customers
6.2(b)(ii) Sales Commissions for Synopsys FPGA Express Sales by Minc and
Terms
6.2(b)(iv) Frontline Price Schedule and Terms
9.3 Computer Equipment
9.4 List of InSourcing OEM Agreements
9.5 Financial Incentives for Data I/O Engineers
9.6 Additional Training and Support And Payments to
Minc
9.7 List of EDA and IC Companies
11.3 Revenues to Which Data I/O is Entitled Under Certain Agreements
11.5 Data I/O's Deferred Maintenance Revenue Reserve
11.7 CAD/CAM Obligations and Royalties
Exhibits
- --------
1.2 Non-Exclusive License
1.3 Exclusive License
4.2(a) Bill of Sale and Assignment for the Certain Assets
5.1 Form of Certificate for Exclusive License
6.1(a) Form of Certificate for Second Closing
6.1(b) Bill of Sale and Assignment for Intellectual Property and
Products
6.1(c) Trademark Assignment
9.2 Sub Lease
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LIST OF OMITTED SCHEDULES AND OTHER ATTACHMENTS FROM EXHIBIT 2.1
The following schedules and other attachments have been omitted from
Exhibit 2.1 pursuant to item 601(b)(2) of Regulation S-K. Data I/O Corporation
agrees to furnish supplementally to the Securities and Exchange Commission upon
its request a copy of any of the following omitted items.
SCHEDULE 1.1(I) - list of tangible assets sold by Data I/O Corporation (the
"Company") to Minc Incorporated and Minc Washington Corp. (collectively, "Minc")
SCHEDULE 1.1(II) - list of product inventory sold by the Company to Minc
SCHEDULE 1.1(III) - list of customer sales lead generation information, Synario
projects and database customers assigned by the Company to Minc.
SCHEDULE 2.1(I) - description of software licensed to Minc.
SCHEDULE 2.1(II) - list of intellectual property transferred by the Company to
Minc.
SCHEDULE 4.2(A) - description of internet access to be provided by the Company
to Minc and internet domain names transferred by the Company to Minc.
SCHEDULE 5.2(A) - description of training and technical support to be provided
by the Company to Minc.
SCHEDULE 5.2(C) - list of payments to be made by customers to the Company under
existing source code agreements.
SCHEDULE 5.2(D) - list of Minc's obligations to the Company's OEM and end-user
customers under existing agreements.
SCHEDULE 6.2(B)(II) - description of sales commissions and terms for Minc's sale
of the Synopsys FPGA Express product.
SCHEDULE 6.2(B)(IV) - terms of Minc's appointment as a distributor of Frontline
products
SCHEDULE 9.3 - list of computer equipment offered for sale by the Company to
Minc at a later date.
SCHEDULE 9.4 - list of the Company's existing in-sourcing OEM agreements.
SCHEDULE 9.5 - description of financial incentives to be provided to the
Company's software engineers.
SCHEDULE 9.6 - list of additional training and support services to be provided
by Minc to the Company's customers under existing source code agreements.
SCHEDULE 9.7 - list of companies to which the Company agrees not to license or
sell the source code for any of the software products listed on Schedule 2.1(i)
SCHEDULE 11.3 - list of revenue sources to which the Company is entitled under
existing agreements.
SCHEDULE 11.5 - list of revenues the Company has deferred but invoiced through
November 11, 1997.
SCHEDULE 11.7 - list of royalty obligations related to products acquired by the
Company from CAD/CAM Group, Inc. assumed by Minc.
EXHIBIT 1.2 - Form of Non-Exclusive Source Code License Agreement by and among
the Company and Minc.
EXHIBIT 1.3 - Form of Exclusive Source Code License Agreement by and among the
Company and Minc.
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EXHIBIT 4.2(A) - Bill of Sale and Assignment dated as of November 12, 1997 by
and among the Company and Minc.
EXHIBIT 5.1 - Form of Exclusive License Certificate from Minc.
EXHIBIT 6.1(A) - Form of Second Closing Certificate from Minc.
EXHIBIT 6.1(B) - Form of Bill of Sale and Assignment by and among the Company
and Minc for the Second Closing
EXHIBIT 6.1(C) - Form of Assignment of Trademarks by and among the Company and
Minc.
EXHIBIT 9.2 - Form of Sublease by and among the Company and Minc.
31
