SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(1)
(Amendment No.)*
CENTENNIAL TECHNOLOGIES, INC.
--------------------------------------------
(Name of Issuer)
Common Stock
--------------------------------------------
(Title of Class of Securities)
151392107
--------------------------------------------
(CUSIP Number)
F. Thomas Dunlap
Vice President, General Counsel and Secretary
Intel Corporation
2200 Mission College Boulevard
Santa Clara, CA 95052
Telephone: (408) 765-8080
--------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 29, 1999
--------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D and is filing this schedule because of Rule 13d-
1 (e), 13d-1 (f) or 13d-1 (g), check the following box [ ].
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 (the "Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 13 Pages
The Exhibit Index is on Page 13
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 2 of 13 Pages
1. NAME OF REPORTING PERSON: INTEL CORPORATION
S.S. or I.R.S. IDENTIFICATION NO. OF 94-1672743
ABOVE PERSON:
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A (a)[]
GROUP** (b)[]
3. SEC USE ONLY
4. SOURCE OF FUNDS: OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) []
6. CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE
7. SOLE VOTING POWER: 600,000
NUMBER OF
SHARES 8. SHARED VOTING POWER: N/A
BENEFICIALLY
OWNED BY EACH 9. SOLE DISPOSITIVE POWER: 600,000
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER: N/A
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON: 600,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES** []
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 16.4%
(11):
14. TYPE OF REPORTING PERSON: CO
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 3 of 13 Pages
ITEM 1. Security and Issuer.
(a) Name of Principal Executive Offices of Issuer:
Centennial Technologies, Inc.
7 Lopez Road
Wilmington, Massachusetts 01887
(b) Title of Class of Equity Securities:
Common Stock
ITEM 2. Identity and Background.
(a) Name of Person Filing:
Intel Corporation (the "Reporting Person")
(b) Address of Principal Business Office:
2200 Mission College Boulevard
Santa Clara, CA 95052-8119
(c) Principal Business:
Manufacturer of microcomputer components,
modules and systems.
(d) Criminal Proceedings:
During the last five years, neither the
Reporting Person nor any executive officer or
director of the Reporting Person has been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, neither the
Reporting Person nor any executive officer or
director of the Reporting Person has been party
to any civil proceeding of a judicial or
administrative body of competent jurisdiction
as a result of which such person was or is
subject to any judgment, decree or final order
enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or
State securities laws or finding any violation
with respect to such laws.
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 4 of 13 Pages
(f) Place of Organization:
Delaware
Attached hereto as Appendix A is information required
by this Item 2 with respect to the executive officers
and directors of the Reporting Person. All such
individuals are U.S. citizens, except as otherwise
indicated on Appendix A.
ITEM 3. Source and Amount of Funds or Other Consideration.
(a) Source of Funds:
The Shares (as defined in Item 4) were issued
to the Reporting Person as part of the
consideration paid by the Issuer for the
purchase of the assets of the Reporting
Person's Flash Products Division pursuant to
the terms of the Asset Purchase Agreement (as
defined in Item 4). Under the terms of the
Asset Purchase Agreement, the Reporting Person
also received from the Issuer: (i) cash in the
amount of Two Million Dollars ($2,000,000);
(ii) a subordinated promissory note in the
principal amount of Four Million Dollars
($4,000,000); and (iii) the right to receive a
future cash payment of up to Four Million Five
Hundred Thousand Dollars ($4,500,000) upon the
satisfaction of certain conditions set forth in
the Asset Purchase Agreement.
(b) Amount of Funds:
See Item 3(a).
ITEM 4. Purpose of the Transaction.
Pursuant to an Asset Purchase Agreement, dated
December 29, 1999, between the Reporting Person and
the Issuer (the "Asset Purchase Agreement"), the
Issuer agreed, among other things, to issue 60,000
shares of Issuer's Series B Convertible Preferred
Stock, par value $.01 per share (the "Shares"). The
Shares are convertible, at the holder's option, at any
time or from time to time, into a number of fully paid
and nonassessable shares of Common Stock at a ratio of
ten (10) shares of Common Stock of the Issuer for each
Share.
The Reporting Person will hold the Shares as an
investment. Depending on the Reporting Person's
evaluation of market conditions, market price,
alternative investment opportunities, liquidity needs
and other factors, the Reporting Person will from time
to time explore opportunities for liquidating all or a
portion of the Shares, on a converted basis, as
applicable, through one or more sales pursuant to
public or private offerings or otherwise. In such
event, the Reporting Person may determine to retain
some portion of the Shares, or any shares of Common
Stock into which any Shares may be converted, as an
investment.
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 5 of 13 Pages
ITEM 5. Interest in Securities of the Issuer.
The information contained in Item 4 is incorporated
herein by this reference.
(a) Number of Shares
Beneficially Owned: 600,000(1)
Right to Acquire: 600,000(1)
Percent of Class: 16.4%(1)
(b) Sole Power to Vote, Direct
the Vote of, or Dispose of
Shares: 600,000(1)
(c) Recent Transactions: See Item 4.
(d) Rights with Respect to
Dividends or Sales
Proceeds: N/A
(e) Date of Cessation of Five
Percent Beneficial
Ownership: N/A
(1) The Reporting Person beneficially owns 60,000
shares of Series B Convertible Preferred Stock of the
Issuer that are convertible at any time into shares of
Common Stock of the Issuer, where each share of Series
B Convertible Preferred Stock is convertible into 10
shares of Common Stock. The number of shares of
Common Stock beneficially owned by the Reporting
Person would constitute 16.4% of the total number of
outstanding shares of Common Stock of the Issuer if
such shares of Series B Convertible Preferred Stock
were converted in full.
ITEM 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
Pursuant to a Rights Agreement, dated December 29,
1999, between the Reporting Person and the Issuer (the
"Rights Agreement"), the Reporting Person has, under
certain circumstances, various rights related to
registration of the shares of Common Stock into which
the Shares are convertible pursuant to certain demand,
piggyback and shelf registration rights granted to the
Reporting Person. The Rights Agreement also provides
that, under certain circumstances, the Issuer may
purchase certain of the Reporting Person's Shares
pursuant to a right of first offer if the Reporting
Person desires to sell those Shares to a third party.
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 6 of 13 Pages
ITEM 7. Material to be Filed as Exhibits.
Exhibit 1 Asset Purchase Agreement, dated December
29, 1999, between Intel Corporation and
Centennial Technologies, Inc.
Exhibit 2 Rights Agreement, dated December 29, 1999,
between Intel Corporation and Centennial
Technologies, Inc.
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 7 of 13 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated as of January 10, 2000.
INTEL CORPORATION
By: /s/F. Thomas Dunlap, Jr.
-------------------------
F. Thomas Dunlap, Jr.
Vice President, General
Counsel and Secretary
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 8 of 13 Pages
APPENDIX A
DIRECTORS
The following is a list of all Directors of Intel Corporation and
certain other information with respect to each Director. All
Directors are United States citizens except as indicated below.
Name: Craig R. Barrett
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal President and Chief Executive Officer
Occupation:
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: John Browne
Business BP Amoco p.l.c., Britannic House, 1 Finsbury
Address: Circus, London EC2M 7BA
Principal Group Chief Executive
Occupation:
Name, principal The BP Amoco p.l.c., an integrated oil
business and company.
address of Britannic House, 1 Finsbury Circus
corporation or London EC2M 7BA
other
organization in
which employment
is conducted:
Citizenship: British
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 9 of 13 Pages
Name: Winston H. Chen
Business Paramitas Foundation, 3945 Freedom Circle,
Address: Suite 760, Santa Clara, CA 95054
Principal Chairman
Occupation:
Name, principal Paramitas Foundation, a charitable foundation.
business and 3945 Freedom Circle, Suite 760
address of Santa Clara, CA 95054
corporation or
other
organization in
which employment
is conducted:
Name: Andrew S. Grove
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal Chairman of the Board of Directors
Occupation:
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: D. James Guzy
Business 1340 Arbor Road, Menlo Park, CA 94025
Address:
Principal Chairman
Occupation:
Name, principal The Arbor Company, a limited partnership
business and engaged in the electronics and computer
address of industry.
corporation or 1340 Arbor Road
other Menlo Park, CA 94025
organization in
which employment
is conducted:
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 10 of 13 Pages
Name: Gordon E. Moore
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal Chairman Emeritus of the Board of Directors
Occupation:
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: David S. Pottruck
Business 101 Montgomery Street, San Francisco, CA 94104
Address:
Principal President and Co-Chief Executive Officer
Occupation:
Name, principal The Charles Schwab Corporation, an investment
business and company
address of 101 Montgomery Street
corporation or San Francisco, CA 94104
other
organization in
which employment
is conducted:
Name: Jane E. Shaw
Business 1310 Orleans Drive, Sunnyvale, CA 94089
Address:
Principal Chairman and Chief Executive Officer
Occupation:
Name, principal AeroGen, Inc., a private company specializing
business and in controlled delivery of drugs to the lungs
address of 1310 Orleans Drive
corporation or Sunnyvale, CA 94089
other
organization in
which employment
is conducted:
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 11 of 13 Pages
Name: Leslie L. Vadasz
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal Senior Vice President, Director, Corporate
Occupation: Business Development
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: David B. Yoffie
Business Harvard Business School, Morgan Hall 215,
Address: Soldiers Field Road, Boston, MA 02163
Principal Max and Doris Starr Professor of International
Occupation: Business Administration
Name, principal Harvard Business School, an educational
business and institution.
address of Harvard Business School
corporation or Morgan Hall 215,Soldiers Field Road
other Boston, MA 02163
organization in
which employment
is conducted:
Name: Charles E. Young
Business 10920 Wilshire Boulevard, Suite 1835, Los
Address: Angeles, CA 90024
Principal A. Chancellor Emeritus
Occupation:
B. Interim President
Name, principal A. University of California at Los Angeles,
business and an educational institution.
address of 10920 Wilshire Boulevard, Suite 1835
corporation or Los Angeles, CA 90024
other
organization in B. University of Florida
which employment 226 Tigert Hall
is conducted: PO Box 113150
Gainesville, FL 32610
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 12 of 13 Pages
EXECUTIVE OFFICERS
The following is a list of all executive officers of Intel
Corporation excluding executive officers who are also directors.
Unless otherwise indicated, each officer's business address is
2200 Mission College Boulevard, Santa Clara, California 95052-
8119, which address is Intel Corporation's business address.
Name: Paul S. Otellini
Title: Executive Vice President, General Manager, Intel
Architecture Business Group
Name: Gerhard H. Parker
Title: Executive Vice President, General Manager, New
Business Group
Name: Andy D. Bryant
Title: Senior Vice President, Chief Financial Officer and
Enterprise Services Officer
Name: Sean M. Maloney
Title: Senior Vice President, Director, Sales and Marketing
Group
Name: Michael R. Splinter
Title: Senior Vice President, General Manager, Technology
and Manufacturing Group
Name: Albert Y. C. Yu
Title: Senior Vice President, General Manager,
Microprocessor Products Group
Name: F. Thomas Dunlap, Jr.
Title: Vice President, General Counsel and Secretary
Name: Arvind Sodhani
Title: Vice President, Treasurer
<PAGE>
CUSIP NO. 151392107 Schedule 13D Page 13 of 13 Pages
EXHIBIT INDEX
Exhibit No. Document
- ----------- --------
Exhibit 1 Asset Purchase Agreement, dated December 29,
1999, between Intel Corporation and Centennial
Technologies, Inc.
Exhibit 2 Rights Agreement, dated December 29, 1999,
between Intel Corporation and Centennial
Technologies, Inc.
<PAGE>
CONFIDENTIAL
EXHIBIT 1
ASSET PURCHASE AGREEMENT
By and Between
CENTENNIAL TECHNOLOGIES, INC.
and
INTEL CORPORATION
Dated as of December 29, 1999
<PAGE> i
CONFIDENTIAL
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.01. Definitions 1
1.02. Index of Other Defined Terms 5
ARTICLE II PURCHASE AND SALE 6
2.01. Purchased Assets 6
2.02. Excluded Assets 7
2.03. Assumption of Liabilities 7
2.04. Excluded Liabilities 8
2.05. Assignment of Contracts and Rights 8
2.06. Purchase Price 8
2.07. Closing 10
2.08. Employee Matters 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 11
3.01. Existence and Good Standing 11
3.02. Authorization and Enforceability 11
3.03. Governmental or Other Authorization 11
3.04. Non-Contravention 11
3.05. Financial Information; Undisclosed 12
Liabilities; Books and Records
3.06. Absence of Certain Changes 12
3.07. Properties: Material Leases; Tangible 13
Assets
3.08. Inventories 13
3.09. Litigation 14
3.10. Contracts 14
3.11. Required Consents 14
3.12. Compliance with Applicable Laws 15
3.13. Advisory Fees 15
3.14. Tax Matters 15
3.15. Product Warranties 15
3.16. Customers 15
3.17. Investment Representations 15
3.18. Intellectual Property 16
3.19. License Agreements 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 17
4.01. Existence and Good Standing 17
4.02. Authorization and Enforceability 17
4.03. Governmental or Other Authorization 17
4.04. Non-Contravention 18
4.05. Capitalization 18
4.06. Valid Issuance 18
4.07. Litigation 19
4.08. Compliance with Applicable Laws 19
4.09. SEC Documents 19
<PAGE> ii CONFIDENTIAL
4.10. Absence of Changes Since Balance Sheet Date 20
4.11. Intellectual Property 20
4.12. Advisory Fees 21
4.13. Purchaser Rights Agreement 21
ARTICLE V COVENANTS OF SELLER 21
5.01. Access to Information 21
5.02. Customer Introductions 21
5.03. Post-Closing Transition Services 22
5.04. Non-Competition 22
ARTICLE VI SELLER LICENSE 22
6.01. Grant of License 22
6.02. No Other Rights 22
6.03. No Implied Obligation 23
6.04. No Implied Warranties 23
ARTICLE VII COVENANTS OF PURCHASER 23
7.01. Compliance with Terms of Governmental 23
Approvals and Consents
7.02. Use of Marks 24
7.03. Audit Rights 24
ARTICLE VIII COVENANTS OF ALL PARTIES 24
8.01. Further Assurances 24
8.02. Public Announcements 24
8.03. Tax Matters 25
8.04. Allocation of Purchase Price 27
8.05. Confidentiality 27
8.06. Waiver of Bulk Sales Laws 27
ARTICLE IX CONDITIONS TO CLOSING 27
9.01. Conditions to Obligations of Purchaser 27
9.02. Conditions to Obligations of Seller 29
ARTICLE X INDEMNIFICATION 30
Section 10.1. General Survival 30
Section 10.2. Indemnification 31
Section 10.3. Manner of Indemnification 32
Section 10.4. Third-Party Claims 32
Section 10.5. Exclusive Remedy 33
ARTICLE XI MISCELLANEOUS 33
11.01. Notices 33
11.02. Amendments; Waivers 35
11.03. Expenses 35
11.04. Successors and Assigns 35
11.05. Governing Law 35
<PAGE> iii CONFIDENTIAL
11.06. Counterparts; Effectiveness 35
11.07. Entire Agreement 36
11.08. Captions 36
11.09. Severability 36
11.10. Construction 36
11.11. Dispute Resolution 36
11.12. Submission to Jurisdiction; Waiver of Jury 37
Trial
11.13. Meaning of Include and Including 38
11.14. Cumulative Remedies 38
11.15. Third Party Beneficiaries 38
11.16. Specific Performance 38
11.17. Survival 38
<PAGE> iv CONFIDENTIAL
EXHIBITS
Exhibit 1.01A Form of Assignment and Assumption Agreement
Exhibit 1.01B Form of Bill of Sale
Exhibit 2.06A Form of Certificate of Designation of
Series B Preferred Stock
Exhibit 3.05 Financial Information
Exhibit 3.10 Form of Customer Contract
Exhibit 9.01 Matters to be Covered by Opinion of Legal
Counsel to Seller
Exhibit 9.02 Matters to be Covered by Opinion of Legal
Counsel to Purchaser
SCHEDULES
Schedule 1.01A Seller Individuals With Knowledge
Schedule 1.01B Purchaser Individuals With Knowledge
Schedule 2.01(a) Inventory
Schedule 2.01(c) Equipment
Schedule 2.01(d) Backlog
Schedule 2.01(e) Designs and Documentation
Schedule 2.01(f) Assumed Contracts
Schedule 2.02(b) Excluded Contracts Relating to the Business
Schedule 3.03 Seller Approvals
Schedule 3.04 Non-Contravention Exceptions
Schedule 3.06 Ordinary Course Exceptions
Schedule 3.19 License Agreements
Schedule 3.10 Contracts
Schedule 3.11(a) Permits and Approvals
Schedule 3.11(b) Required Contractual Consents
Schedule 3.15 Product Warranties
Schedule 3.16 Customers
Schedule 4.03 Purchaser Approvals
Schedule 4.04 Non-Contravention Exceptions
Schedule 4.07 Litigation
Schedule 4.10 Ordinary Course Exceptions
Schedule 8.04 Allocation of Purchase Price
Schedule 9.01(b) Required Seller Closing Consents
Schedule 9.02(b) Required Purchaser Closing Consents
<PAGE> 1 CONFIDENTIAL
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of December 29,
1999 (the "Agreement"), is by and between Intel Corporation, a
Delaware corporation ("Seller") and Centennial Technologies,
Inc., a Delaware corporation ("Purchaser"). All capitalized
terms have the meanings ascribed to such terms in Article I or as
otherwise defined herein.
W I T N E S S E T H:
WHEREAS, Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller the assets of the Business;
WHEREAS, Purchaser desires to license from Seller, and
Seller desires to license to Purchaser, certain Intellectual
Property rights not included in the Purchased Assets;
WHEREAS, Purchaser and Seller are entering into a Supply
Agreement and a Rights Agreement simultaneously herewith; and
WHEREAS, in connection with the sale of the Purchased Assets
to Purchaser by Seller, Seller has agreed to enter into a non-
competition agreement in favor of Purchaser.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual representations, warranties, covenants and agreements
hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. The following terms, as used herein, have
the following meanings:
"Acquisition Documents" means this Agreement, the
Rights Agreement, the Supply Agreement, the Bill of Sale, the
Assignment and Assumption Agreement, the Transition Services
Agreement, the Note and the Security Agreement and any other
document or agreement executed in connection with any of the
foregoing, together with any Exhibits and Schedules thereto, and
in each case as modified, amended, supplemented, restated or
renewed from time to time.
"Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such other Person.
"Applicable Law" means, with respect to any Person, any
federal, state, local or foreign statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree or other requirement of
any Governmental Authority applicable to such Person or any of
its Affiliates or ERISA Affiliates or any of their respective
properties, assets, officers, directors, employees, consultants
or agents.
<PAGE> 2 CONFIDENTIAL
"Assignment and Assumption Agreement" means that
certain Assignment and Assumption Agreement dated as of the
Closing Date, to be entered into by Purchaser and Seller, in
substantially the form attached hereto as Exhibit 1.01A.
"Associate" or "Associated With" means, when used to
indicate a relationship with any Person, (a) any other Person of
which such first Person is an officer, director or partner or is,
directly or indirectly, the beneficial owner of ten percent (10%)
or more of any class of equity securities, partnership or
membership interests or other comparable ownership interests
issued by such other Person, (b) any trust or other estate in
which such first Person has a ten percent (10%) or more
beneficial interest or as to which such first Person serves as
trustee or in a similar fiduciary capacity and (c) any relative
or spouse of such first Person who has the same home as such
first Person.
"Bill of Sale" means that certain Bill of Sale dated as
of the Closing Date, to be executed by Seller in favor of
Purchaser, in substantially the form attached hereto as Exhibit
1.01B.
"Business" means the flash memory card business of
Seller, which produces and sells flash memory cards, including
the PCMCIA card families (Series 2, Value Series 100 and 200) and
the Miniature card families (Series 100 and 200), as heretofore
or currently conducted by Seller, including all standard and
custom products.
"Business Day" means each day other than a Saturday,
Sunday or other day on which commercial banks in San Francisco,
California or Boston, Massachusetts are authorized or required by
law to close.
"Closing Date" means the date of the Closing.
"Contracts" means all contracts, agreements, options,
leases, licenses, sales and purchase orders, commitments and
other instruments of any kind, whether written or oral, to which
Seller is a party or is otherwise bound.
"Damages" means all demands, claims, actions or causes
of action, assessments, losses, damages (whether direct or
indirect but excluding consequential damages), deficiencies,
costs, expenses, Liabilities, judgments, settlements, awards,
fines, response costs, sanctions, Taxes, penalties, charges and
amounts paid in settlement, including reasonable out-of-pocket
costs, fees and expenses (including costs, fees and expenses of
attorneys, accountants and auditors and other agents of, or other
Persons retained by, such Person).
"Equipment" means all machinery, jigs and fixtures used
in connection with the Business.
"GAAP" means generally accepted accounting principles
in the United States of America applied on a consistent basis.
"Governmental Approval" means an authorization,
consent, approval, permit or license issued by, or a registration
or filing with, or notice to, or waiver from, any Governmental
Authority.
<PAGE> 3 CONFIDENTIAL
"Governmental Authority" means any foreign or domestic
federal, territorial, state or local governmental authority,
quasi-governmental authority, instrumentality, court, government
or self-regulatory organization, commission, tribunal or
organization or any regulatory, administrative or other agency,
or any political or other subdivision, department or branch of
any of the foregoing.
"Intellectual Property" means intellectual property
rights arising from or in respect of the following, whether
protected, created or arising under the laws of the United States
or any other jurisdiction:
(1) copyrights and registrations and applications
therefor (collectively, "Copyrights") and mask work rights; and
(2) know-how, inventions, discoveries, concepts,
ideas, methods, processes, designs, formulae, technical data,
drawings, specifications, data bases and other proprietary and
confidential information, including customer lists, in each case
excluding any rights in respect of any of the foregoing that
comprise or are protected by Copyrights, mask work rights or
Patents (collectively, "Trade Secrets"); and
(3) patents and applications therefor, including
continuation, divisional, continuation-in-part, or reissue patent
applications and patents issuing thereon (collectively,
"Patents").
"IRS" means the Internal Revenue Service.
"Knowledge" means, with respect to any Person, the
actual knowledge of such Person, after reasonable inquiry.
Without limiting the generality of the foregoing, with respect to
any Person that is a corporation, limited liability company,
partnership or other business entity, actual knowledge shall be
deemed to include the actual knowledge of all directors,
officers, partners and members of any such Person; provided that
with respect to Seller, actual knowledge shall be deemed to be
the actual knowledge of the individuals identified on Schedule
1.01A; provided, further that with respect to Purchaser, actual
knowledge shall be deemed to be the actual knowledge of the
individuals identified on Schedule 1.01B.
"Liability" means, with respect to any Person, any
liability or obligation of such Person of any kind, character or
description, whether known or unknown, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise and
whether or not the same is required to be accrued on the
financial statements of such Person.
"Lien" means, with respect to any asset, any mortgage,
title defect or objection, lien, pledge, charge, security
interest, encumbrance or hypothecation in respect of such asset.
"Material Adverse Effect" means, with respect to any
Person, any circumstance of, change in, or effect on, or group of
such circumstances of, changes in or effects on, the operations,
financial condition, earnings, or results of operations,
prospects, assets or Liabilities of the Person, that results in
or would reasonably be expected to result in, a material adverse
<PAGE> 4 CONFIDENTIAL
effect on, or a material adverse change in, the operations,
financial condition, earnings, results of operations, prospects,
assets or Liabilities of such Person.
"Permitted Liens" means (a) Liens for Taxes or
governmental assessments, charges or claims the payment of which
is not yet due and (b) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other similar
Persons and other Liens imposed by Applicable Law incurred in the
ordinary course of business for sums not yet delinquent or
immaterial in amount and being contested in good faith.
"Person" means an individual, corporation, partnership,
association, limited liability company, trust, estate or other
similar business entity or organization, including a Governmental
Authority.
"Post-Closing Tax Period" means any Tax period (or
portion thereof) ending after the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or
portion thereof) ending on or before the close of business on the
Closing Date.
"Products" means flash memory components and cards
manufactured, distributed or sold by the Business.
"Seller License" means that certain license, granted by
Seller to Purchaser in accordance with the terms of Article VI of
this Agreement.
"Subsidiary" means, with respect to any Person, (a) any
corporation as to which more than fifty percent (50%) of the
outstanding stock having ordinary voting rights or power (and
excluding stock having voting rights only upon the occurrence of
a contingency unless and until such contingency occurs and such
rights may be exercised) is owned or controlled, directly or
indirectly, by such Person and/or by one or more of such Person's
direct or indirect Subsidiaries and (b) any partnership, joint
venture or other similar relationship between such Person (or any
Subsidiary thereof) and any other Person (whether pursuant to a
written agreement or otherwise).
"Supply Agreement" means that certain Supply Agreement
of even date herewith, by and between Seller and Purchaser.
"Taxes" means (a) all foreign, federal, state, local
and other net income, gross income, gross receipts, sales, use,
ad valorem, value added, intangible, unitary, capital gain,
transfer, franchise, profits, license, lease, service, service
use, withholding, backup withholding, payroll, employment,
estimated, excise, severance, stamp, occupation, premium,
property, prohibited transactions, windfall or excess profits,
customs, duties or other taxes, fees, assessments or charges of
any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts with respect
thereto, (b) any Liability for payment of amounts described in
clause (a) whether as a result of transferee Liability, of being
a member of an Affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation of law and
(c) any Liability for the payment of amounts described in clause
(a) or (b) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or
<PAGE> 5 CONFIDENTIAL
implied agreement to indemnify any other person for Taxes; and
the term "Tax" means any one of the foregoing Taxes.
"Tax Returns" means all returns, declarations, reports,
statements, information statement, forms or other documents filed
or required to be filed with respect to any Tax.
"Transition Services Agreement" means that certain
Transition Services Agreement dated as of the Closing Date,
executed by Seller and Purchaser.
"Tort Claim" means any claim, on any grounds or basis,
under any statute or common law, for personal injury, wrongful
death, defamation, property damage, product liability, wrongful
interference with economic interests or other tortious conduct of
a Person (whether or not Liability is predicated on negligence,
intentional or reckless conduct, breach of contract or strict
liability).
1.02 Index of Other Defined Terms. In addition to these
terms defined above, the following terms shall have the
respective meanings given thereto in the sections indicated
below:
Defined Term Section
- ------------ -------
Agreement Preamble
Assumed Contracts Section 2.01(f)
Assumed Liabilities Section 2.03
Audited Financial Information Section 5.05
Audited Purchaser Financial Section 4.09(b)
Statements
Balance Sheet Date Section 4.09(b)
Cisco Section 2.06(a)
Certificate of Designation Section 2.07(c)
Closing Section 2.07
CNDA Section 5.01
Common Stock Section 4.05
Contingent Consideration Section 2.06(a)
Customer Contract Section 3.10(a)
Exchange Act Section 4.09(b)
Excluded Assets Section 2.02
Excluded Liabilities Section 2.03
Financial Information Date Section 3.05(a)
Financial Information Section 3.05(a)
Floor Section 10.2(d)
Indemnitee Section 10.2(b)
Indemnitor Section 10.2(b)
Inventory Section 2.01(a)
Losses Section 10.2(c)
Measurement Period Section 2.06(a)
Non-Competition Period Section 5.04
Notice of Claim Section 10.3(b)
Proceedings Section 3.09
<PAGE> 6 CONFIDENTIAL
Purchase Price Section 2.06(a)
Purchased Assets Section 2.01
Purchased Intellectual Property Section 3.18(a)
Purchaser Preamble
Purchaser Approvals Section 4.03
Purchaser Indemnitees Section 10.2(a)
Required Contractual Consent Section 3.11(b)
Retained Marks Section 7.02
Sales Tax Section 8.03(e)
SEC Section 4.09(a)
SEC Documents Section 4.09(a)
Securities Act Section 3.17(a)
Seller Preamble
Seller Approvals Section 3.03
Seller Indemnitees Section 10.2(b)
Series B Preferred Stock Section 2.06(a)
ARTICLE II
PURCHASE AND SALE
2.01 Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Purchaser agrees to
purchase from Seller, and Seller agrees to sell, transfer, assign
and deliver to Purchaser, free and clear of all Liens other than
Permitted Liens, the assets, properties and business of the
Business, of every kind and description, wherever located,
tangible or intangible, owned, held, licensed, leased or
otherwise used in connection with the Business and specified
herein, as the same shall exist on the Closing Date
(collectively, the "Purchased Assets"). Without limiting the
generality of the foregoing, the Purchased Assets shall include
all of Seller's right, title and interest in, to and under:
(a) all items of inventory relating to the Business
(the "Inventory"), including all raw materials, finished goods
and work-in-process, as listed on Schedule 2.01(a);
(b) all collateral materials, manuals, promotional
materials, sales materials, display materials and product
information materials used in the operation of the Business;
(c) all of the fixed and other tangible personal
property used in connection with the operation of the Business
and all Equipment, all as described on Schedule 2.01(c);
(d) all backlog of the Business, as set forth on
Schedule 2.01(d);
(e) all board designs, tooling, fixtures, layouts,
schematics and product manufacturing documentation owned by
Seller and used in connection with the Business, as listed on
Schedule 2.01(e);
(f) all contracts listed on Schedule 2.01(f) (the
"Assumed Contracts"); and
(g) all Products.
<PAGE> 7 CONFIDENTIAL
2.02 Excluded Assets. Subject to Section 2.01, Purchaser
and Seller expressly understand and agree that all assets of
Seller, other than those listed above (the "Excluded Assets")
shall be excluded from the Purchased Assets, including but not
limited to:
(a) all assets, tangible or intangible, real or
personal, that are not specifically identified in Section 2.01
and listed on the Schedules thereto;
(b) all Contracts that are not Assumed Contracts,
including the Contracts relating to the Business listed on
Schedule 2.02(b);
(c) the minute books, stock ledgers, accounting
records and Tax Returns of Seller, provided that Purchaser shall
have reasonable access to and be provided with copies of all
accounting records and Tax Returns relating to the Business
pursuant to Section 5.01;
(d) all cash and accounts receivable related to the
Business;
(e) all employee benefit plans;
(f) all insurance contracts in effect as of the date
of this Agreement insuring the Purchased Assets; and
(g) all leasehold or ownership interests in real
property or any improvements thereon.
2.03 Assumption of Liabilities. Upon the terms and subject
to the conditions of this Agreement, effective at the time of
Closing, Purchaser agrees to assume all Liabilities: (a) arising
out of the Assumed Contracts; (b) relating to any warranty or
similar claims with respect to any Inventory purchased by
Purchaser hereunder; and (c) arising out of Purchaser's operation
of the Business and ownership of the Purchased Assets following
the Closing, but, in the case of this clause (c), only to the
extent such Liabilities first accrue after the Closing Date and
are a result of actions taken or omitted to be taken by Purchaser
following the Closing (the "Assumed Liabilities"). The
assumption of said Liabilities by Purchaser shall not enlarge any
rights of third parties under contracts or arrangements with
Seller and nothing herein shall prevent Purchaser from contesting
in good faith with any third party any of said Liabilities. All
other Liabilities are referred to herein as "Excluded
Liabilities".
2.04 Excluded Liabilities. Except for those Liabilities
expressly assumed by Purchaser pursuant to Section 2.03 and
Section 8.03, the Purchaser shall not assume and shall not be
liable for, and Seller shall retain and remain solely liable for
and obligated to discharge and indemnify and hold Purchaser
harmless for, all of the debts, expenses, contracts, agreements,
commitments, obligations and other Liabilities of any nature
whatsoever of Seller, the Business or the Purchased Assets
through and on the Closing Date, whether known or unknown,
accrued or not accrued, fixed or contingent, including the
following:
(a) Breaches of Contracts. Any Liability for breaches
by Seller or any Affiliates of Seller prior to the Closing Date
of any instrument, purchase order or Contract or any Liability
for payments or amounts due under any instrument, purchase order
or Contract on or prior to the Closing Date;
<PAGE> 8 CONFIDENTIAL
(b) Taxes. Except as otherwise provided in Section
8.03, any Liability for Taxes attributable to or imposed upon
Seller or any Affiliates of Seller, or attributable to or imposed
upon the Business or the Purchased Assets for any period (or
portion thereof) through the Closing Date;
(c) Indebtedness. Any Liability for or in respect of
any loan or other indebtedness for money borrowed of Seller or
any Affiliates or Associates of Seller on or prior to the Closing
Date; and
(d) Employee Obligations. Any Liability that may arise
or have arisen from the employment of employees with, or the
termination of their employment by, Seller on or prior to the
Closing Date, including, without limitation, accrued vacation
pay, holiday pay, sick pay, bonuses earned, and/or pensions or
profit sharing.
2.05 Assignment of Contracts and Rights. Anything in this
Agreement or any other Acquisition Document to the contrary
notwithstanding, this Agreement shall not constitute an agreement
to assign any Purchased Asset or any claim or right or any
benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a party thereto, would
constitute a breach or other contravention thereof or in any way
adversely affect the rights of Purchaser or Seller thereunder.
2.06 Purchase Price.
(a) The aggregate purchase price payable by Purchaser
to Seller for the Purchased Assets (the "Purchase Price") shall
consist of: (i) sixty thousand (60,000) shares of Purchaser's
Series B Preferred Stock, having rights, preferences and
privileges as set forth in the Certificate of Designation of
Series B Preferred Stock attached as Exhibit 2.06A to this
Agreement (the "Series B Preferred Stock"); (ii) cash in the
amount of two million dollars ($2,000,000); (iii) a subordinated
promissory note in the principal amount of four million dollars
($4,000,000), secured by the collateral set forth in Exhibit A to
the Security Agreement; and (iv) a future payment of up to four
million five hundred thousand dollars ($4,500,000) in cash (the
"Contingent Consideration"), if Cisco Corporation ("Cisco")
orders at least one hundred thousand (100,000) flash cards for
shipment during the period, net of any quantities originally
scheduled for shipment during the Measurement Period cancelled by
Cisco for its convenience, between the one hundred eighty-fifth
(185th) day and the three hundred sixty-fifth (365th) day after
the Closing Date (the "Measurement Period").
(b) The Contingent Consideration shall be payable in
cash within thirty (30) days after the one-year anniversary of
the Closing Date. The Contingent Consideration shall be payable
based upon flash cards ordered for shipment during the
Measurement Period. If the quantity of flash cards ordered for
shipment during the Measurement Period is less than thirty
thousand (30,000), no Contingent Consideration shall be payable.
If at least thirty thousand (30,000) flash cards are ordered for
shipment during the Measurement Period then the amount of the
Contingent Consideration payable shall be equal to four million
five hundred thousand dollars ($4,500,000) multiplied by a
fraction, the numerator of which shall be the number of flash
cards over thirty thousand (30,000) actually ordered for shipment
and the denominator shall be seventy thousand (70,000).
<PAGE> 9 CONFIDENTIAL
(c) Seller and Purchaser have agreed that the Business
should be transferred to Purchaser with a "Normal Inventory"
which the parties have agreed is an inventory as defined below
with a value of approximately Five Million Two Hundred Ten
Thousand Dollars ($5,210,000) and have agreed that the Purchase
Price should be adjusted for certain fluctuations in the Normal
Inventory. For purposes of this paragraph 2.06(c), "Normal
Inventory" means all finished goods related to the Business owned
by Seller at Seller's facilities, any finished goods in transit
between XeTel and Seller for which Seller has paid XeTel, any
finished goods at XeTel for which Seller has paid XeTel, and any
components related to the Business and owned by Seller and
consigned to XeTel at XeTel's facilities or in transit from
Seller to XeTel, valued using the same valuation methods as
Seller used at the end of September 1999, including reserves,
costing, percentage complete for work-in-process and other
standards. The term "Normal Inventory" does not include raw
materials, work-in-process or finished goods which Purchaser
would have to pay a third party for after the Closing Date.
Commencing on the Termination Date, as defined in the Transition
Services Agreement, Purchaser shall perform a physical inventory
and test of the Normal Inventory and shall allow a representative
of Seller to be present at all times. If it is determined (with
such determination to be made no later than ninety (90) days
following the Termination Date) that the actual value of the
Normal Inventory as of the Closing Date is less than Five Million
Sixty Thousand Dollars ($5,060,000), then Seller shall, within
thirty (30) days, pay the difference between the actual value of
the Normal Inventory and Five Million Sixty Thousand Dollars
($5,060,000) to Purchaser; provided, however, that if the actual
value of the Normal Inventory as of the Closing Date is less than
Three Million Sixty Thousand Dollars ($3,060,000), at Seller's
option, (i) Seller shall pay Two Million Dollars ($2,000,000) to
Purchaser, and (ii) Seller and Purchaser shall amend the Note to
reduce Purchaser's obligations thereunder by the difference
between the actual value of the Normal Inventory and Three
Million Sixty Thousand Dollars ($3,060,000). If it is determined
that the actual value of the Normal Inventory as of the Closing
Date is greater than Five Million Three Hundred Sixty Thousand
Dollars ($5,360,000), then Purchaser shall, within thirty (30)
days, pay the difference between the actual value of the Normal
Inventory and Five Million Three Hundred Sixty Thousand Dollars
($5,360,000) to Seller. No payment shall be made by either party
if the actual value of the Normal Inventory as of the Closing
Date is between Five Million Sixty Thousand Dollars ($5,060,000)
and Five Million Three Hundred Sixty Thousand Dollars
($5,360,000). Any dispute concerning the physical inventory,
testing methods or valuation procedures shall be resolved in
accordance with the provisions of this Agreement. The provisions
of this Section 2.06(c) shall provide the exclusive remedy with
respect to fluctuations in the value of the Normal Inventory.
2.07 Closing. The closing of the purchase and sale of the
Purchased Assets hereunder (the "Closing") shall take place at
the offices of Gibson, Dunn & Crutcher LLP, 1530 Page Mill Road,
Palo Alto, California, as soon as possible, but in no event later
than five (5) days after satisfaction of the conditions set forth
in Article IX, or at such other time or place as the parties may
agree. At the Closing:
(a) Seller shall deliver to Purchaser the Bill of Sale
and such other endorsements, consents, assignments, instruments
of conveyance and transfer documents (including the Assignment
and Assumption Agreement) as Purchaser may reasonably request to
vest in Purchaser all right, title and interest in, to and under
the Purchased Assets and the Business. Simultaneously with the
consummation of the transactions contemplated hereby,
<PAGE> 10 CONFIDENTIAL
Seller, through its officers, agents and employees, will put
Purchaser into full possession and enjoyment of all tangible
Purchased Assets, terms FOB Seller. Seller shall pay all costs
for packing the Purchased Assets for shipping to the Purchaser's
headquarters in Wilmington, Massachusetts. Purchaser shall pay
all costs for shipping the Purchased Assets to the Purchaser's
headquarters in Wilmington, Massachusetts.
(b) Seller and Purchaser shall execute and deliver the
Assignment and Assumption Agreement;
(c) Purchaser shall file the Certificate of
Designation of Series B Preferred Stock attached as Exhibit 2.06A
to this Agreement (the "Certificate of Designation") with the
Secretary of State of the State of Delaware;
(d) Seller and Purchaser shall execute and deliver the
Rights Agreement, the Supply Agreement and the Transition
Services Agreement; and
(e) Purchaser shall pay the Purchase Price to Seller,
through a wire transfer of the cash portion of the Purchase Price
(other than the Contingent Consideration), delivery of a
certificate representing the Series B Preferred Stock, and
delivery of the Note, the Security Agreement and appropriate UCC-
1 financing statements.
2.08 Employee Matters. No employees of Seller will be
transferred to Purchaser in connection with the transactions
contemplated by this Agreement and the Acquisition Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement
and to consummate the transactions contemplated herein, Seller
represents and warrants to Purchaser as follows:
3.01 Existence and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and
authority required to carry on its business as now conducted and
to own and operate the businesses as now owned and operated by it
(including the Business). Seller is qualified to conduct
business in each state or states where the failure to be so
qualified, whether singly or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. Copies of
Seller's Certificate of Incorporation as amended to date,
certified by the Secretary of State of the State of Delaware and
of Seller's by-laws as amended to date, certified by Seller's
Assistant Secretary, have been delivered to Purchaser and all
such copies are complete and correct and no amendments thereto
are pending. Seller is not in violation of any term of its
Certificate of Incorporation or by-laws.
3.02 Authorization and Enforceability. The execution,
delivery and performance by Seller of this Agreement and the
other Acquisition Documents, and the consummation of the
transactions contemplated hereby and thereby, are within Seller's
powers and have been duly authorized by all necessary corporate
action on its part. This Agreement, the Rights Agreement
<PAGE> 11 CONFIDENTIAL
and the Supply Agreement have been and, when executed at the
Closing, the other Acquisition Documents will have been, duly and
validly executed by Seller and, assuming the due execution and
delivery of this Agreement and the other Acquisition Documents to
which it is a party by Purchaser, as applicable, will constitute
legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, subject
to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally or to general principles of equity.
3.03 Governmental or Other Authorization. Except as set
forth on Schedule 3.03, the execution, delivery and performance
by Seller of this Agreement and the other Acquisition Documents,
and the consummation by it of the transactions contemplated
hereby and thereby, require no Governmental Approval from any
Governmental Authority or any consent, waiver or approval of any
other Person (such required consents and approvals, the "Seller
Approvals").
3.04 Non-Contravention. Except as set forth on Schedule
3.04, the execution, delivery and performance of this Agreement
and the other Acquisition Documents by Seller, and the
consummation of the transactions contemplated hereby and thereby,
do not and will not (a) contravene or conflict with the
certificate of incorporation or bylaws of Seller, (b) assuming
receipt of the Seller Approvals that are Governmental Approvals,
contravene or conflict with or constitute a material violation of
any provision of any Applicable Law binding upon or applicable to
Seller, the Purchased Assets or the Business or (c) assuming
receipt of the Seller Approvals that are not Governmental
Approvals and of the Required Contractual Consents, constitute a
default under, give rise to any right of termination,
cancellation, modification, or acceleration of, or to a loss of
any material benefit to which the Business is entitled, or result
in the creation or imposition of any Lien on the Purchased Assets
(other than Permitted Liens), or any permit relating to the
Business or by which Seller, any of the Purchased Assets or the
Business may be bound or materially affected.
3.05 Financial Information; Undisclosed Liabilities; Books
and Records.
(a) Attached hereto as Exhibit 3.05 is financial data
and other financial information of the Business as of December
25, 1999 (the "Financial Information Date") and for the twenty-
four (24) month period then ended (collectively, the "Financial
Information"). The Financial Information has been prepared
internally by Seller and has not been audited by any independent
certified public accountants or auditors.
(b) The Financial Information has been prepared based
on the books and records of Seller and includes items accounted
for in accordance with GAAP consistent with the methods used for
the purpose of preparing the accounting for such items in
connection with the Seller's financial statements for prior
periods and presents fairly the financial condition and results
of operations of the Business as of the dates indicated or for
the periods indicated.
3.06 Absence of Certain Changes. Except as set forth on
Schedule 3.06, since the Financial Information Date, the Business
has been conducted in the ordinary course consistent with past
practice, and there has not been:
<PAGE> 12 CONFIDENTIAL
(a) any event, occurrence, state of circumstances or
facts or change in the Business that has had or that may be
reasonably expected to have, either alone or together, a Material
Adverse Effect on the Business;
(b) any change in any Liabilities of Seller that has
had, or that may be reasonably expected to have, a Material
Adverse Effect on the Business;
(c) any creation, assumption or sufferance of (whether
by action or omission) the existence of any Lien on any of the
Purchased Assets, other than Permitted Liens;
(d) any waiver, amendment, termination or cancellation
of any Assumed Contract or any relinquishment of any material
rights thereunder by Seller, other than, in each such case,
actions taken in the ordinary course of business consistent with
past practice that are not material with respect to any such
Assumed Contract;
(e) any change by Seller in its accounting principles,
methods or practices or in the manner it keeps its accounting
books and records relating to the Business, except any such
change required by a change in GAAP;
(f) any sale, assignment, transfer, lease or other
disposition of or agreement to sell, assign, transfer, lease or
otherwise dispose of, any Purchased Asset, other than sales of
Inventory in the ordinary course of business consistent with past
practice;
(g) any material damage, destruction or other casualty
loss with respect to any Purchased Asset or any other material
asset or property owned, leased or otherwise used by Seller in
the Business, whether or not covered by insurance;
(h) any adverse business or regulatory condition
presently existing or threatened in connection with the Business
or the Purchased Assets;
(i) any write-down or write-up of the value of any
inventory of the Business or of the Purchased Assets;
(j) any change in Seller's pricing, delivery or other
terms to any customer of Products;
(k) any material change or amendment to, or any waiver
of any material right under a material contract, license or
arrangement which the Business or the Purchased Assets is bound
by or subject to, except for changes, amendments or waivers that
are expressly provided for or disclosed in this Agreement;
(l) any other Business-related transaction entered
into by Seller other than transactions in the ordinary course of
business; or
(m) any agreement or understanding, whether in writing
or otherwise, for Seller to take any of the actions specified in
paragraphs (a) through (l) above.
<PAGE> 13 CONFIDENTIAL
3.07 Personal Property. Seller has good and marketable
title to all of its tangible personal property and assets that
are Purchased Assets. None of such personal property or assets
is subject to any mortgage, pledge, lien, conditional sale
agreement, security agreement, encumbrance or other charge.
Except for inventory and as otherwise specified on Schedule
2.01(c), all of such personal property and assets are in good
operating condition and repair (subject, only in the case of the
property listed on Schedules 2.01(c) and 2.01(e), to normal wear
and tear), are adequate for the uses to which they are put.
Other than inventory, no material personal properties or assets
necessary for the conduct of the Business in substantially the
same manner as the Business has heretofore been conducted are in
need of replacement, maintenance or repair except, only in the
case of the property listed on Schedules 2.01(c) and 2.01(e), for
routine replacement, maintenance and repair. Schedule 2.01(c)
sets forth a correct and complete list of all Equipment owned by
Seller and used in connection with the Business.
3.08 Inventories. Schedule 2.01(a) sets forth all
inventories of raw materials, work-in-process and finished goods
included in the Purchased Assets as of the Closing Date. The
value at which Inventories are carried in the Financial
Information reflect the normal inventory valuation policy of
Seller in accordance with GAAP and on a basis consistent with
that of preceding periods. All finished goods inventory is free
from defects, is in good operating condition and meets all
applicable product specifications, requirements and performance
criteria. Except as disclosed in Schedule 2.01(a), said
inventories do not include items which are below standard quality
or have become obsolete, slow moving or unsaleable (except at
prices less than cost) through regular distribution channels in
the ordinary course of the Business as conducted by Seller.
Since October 31, 1999, no inventory items have been sold or
disposed of except through sales in the ordinary course of
business.
3.09 Litigation. There are no actions, suits, claims,
charges, hearings, arbitrations, audits, proceedings (public or
private) or, to the Knowledge of Seller, investigations
(collectively, "Proceedings") that have been brought or initiated
by or against any Governmental Authority or any other Person, or
are pending or, to the Knowledge of Seller, threatened (a) by or
against Seller relating to any of the Purchased Assets or the
Business or (b) that seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement or any of the other
Acquisition Documents. There are no existing orders, judgments
or decrees of any Governmental Authority relating to the Business
or any of the Purchased Assets.
3.10 Contracts.
(a) Schedule 3.10 lists each contract, agreement,
lease, license, or commitment (other than contracts with
distributors of the products), written or oral, including,
without limitation, Seller's contracts with its customers (the
"Customer Contracts"), requiring payments in excess of $25,000
annually and related exclusively to the Business to which Seller
is a party or by which the assets of the Business are bound.
True and complete copies of each of such contracts have been
delivered to Purchaser.
(b) Each Assumed Contract is a legal, valid and
binding obligation of Seller and, to the Knowledge of Seller,
each other Person who is a party thereto, enforceable against
Seller and each such Person in accordance with its terms, and
neither Seller nor, to the Knowledge of Seller, any other party
thereto is in material default thereunder.
<PAGE> 14 CONFIDENTIAL
(c) Except for sales where the terms and conditions
are determined to be made, in whole or in part, upon the terms
and conditions contained in a customer's purchase order and
supporting documents, all sales to be made by Purchaser with
respect to the Business pursuant to the Assumed Contracts for any
period beginning after July 1, 2000 will be made pursuant to
standard terms and conditions set forth in the Form of Customer
Contract attached to this Agreement as Exhibit 3.10 without
material modification as to assignability, return rights,
discounts, volume incentives or other material modifications.
3.11 Required Consents.
(a) Schedule 3.11(a) sets forth all approvals,
authorizations, certificates, consents, licenses, orders and
permits and other similar authorizations of all Governmental
Authorities (and all other Persons) necessary for the operation
of the Business in substantially the same manner as currently
operated by Seller. Seller holds all material Permits and
approvals of Governmental Authorities necessary for the lawful
conduct of the Business.
(b) Schedule 3.11(b) lists each contract with respect
to which the consent of the other party or parties thereto must
be obtained by Seller by virtue of the execution and delivery of
this Agreement and the other Acquisition Documents, or the
consummation of the transactions contemplated hereby and thereby
to avoid the loss of any material benefit under, or any material
modification to, any such contract ("Required Contractual
Consent").
3.12 Compliance with Applicable Laws. Seller has no
Knowledge that it has not complied in all material respects with
any Applicable Laws relating to the Business or the Purchased
Assets, except where the failure to comply would not, singly or
in the aggregate, have a Material Adverse Effect on the Business.
Seller is not subject to any order, writ, injunction or decree of
any Governmental Authority relating to the Business or the
Purchased Assets.
3.13 Advisory Fees. There is no investment banker, broker,
finder or other intermediary or advisor that has been retained by
or is authorized to act on behalf of Seller, who might be
entitled to any fee, commission or reimbursement of expenses from
Seller, or any Affiliate or Associate of Seller, upon
consummation of the transactions contemplated by this Agreement.
3.14 Tax Matters. Seller has filed on a timely basis all
Tax Returns required to have been filed by it with respect to the
Business or the Purchased Assets and has paid on a timely basis
all Taxes required to be shown thereon as due. Seller has not
received any notice that it is or may be subject to additional
Tax with respect to the Business or the Purchased Assets There
are no Liens for Taxes (other than for current Taxes not yet due
and payable) upon any of the Purchased Assets.
3.15 Product Warranties. Schedule 3.15 sets forth copies of
Seller's standard Product warranties currently in effect with
respect to the Products. To the Knowledge of Seller, no Tort
Claims, claims with respect to Product warranties or facts upon
which a claim of such nature could be based exist or are
threatened.
3.16 Customers. Schedule 3.16 sets forth all customers of
the Business as conducted by Seller. The accounts of all such
customers with Seller are in good standing and all Customer
<PAGE> 15 CONFIDENTIAL
Contracts are valid contracts entered into in the ordinary course
of business. To the Knowledge of Seller, Seller has not received
written notice from any of the customers listed on Schedule 3.16
indicating that they intend to stop purchasing flash cards from
Seller. Seller has not been paid nor does it hold deposits
relating to any Customer Contract.
3.17 Investment Representations.
(a) Purchase for Own Account. The Series B Preferred
Stock is being acquired for investment for Seller's own account,
not as a nominee or agent, and not with a view to the public
resale or distribution thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and
Seller has no present intention of selling, granting any
participation in, or otherwise distributing the same. Seller
also represents that it has not been formed for the specific
purpose of acquiring the Series B Preferred Stock.
(b) Investment Experience. Seller understands that
the acquisition of the Series B Preferred Stock involves
substantial risk. Seller has experience as an investor in
securities of companies and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment in the
Series B Preferred Stock and has such knowledge and experience in
financial or business matters that it is capable of evaluating
the merits and risks of this investment in the Series B Preferred
Stock and protecting its own interests in connection with this
investment.
(c) Accredited Investor Status. Seller is an
"accredited investor" within the meaning of Regulation D
promulgated under the Securities Act.
(d) Restricted Securities. Seller understands that
the Series B Preferred Stock and the Common Stock issued upon
conversion thereof are characterized as "restricted securities"
under the Securities Act, inasmuch as they are being acquired
from Purchaser in a transaction not involving a public offering
and that under the Securities Act and applicable regulations
thereunder such securities may be resold without registration
under the Securities Act only in certain limited circumstances.
Seller is familiar with Rule 144 of the Securities Act, as
presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
(e) Legends. Seller agrees that the certificates for
the Series B Preferred Stock and the Common Stock issuable upon
conversion thereof may bear a legend in substantially the
following form:
"The shares represented by this
certificate have not been registered under
the Securities Act of 1933 or with any
state securities commission, and may not be
transferred or disposed of by the holder in
the absence of a registration statement
which is effective under the Securities Act
of 1933 and applicable state laws and
rules, or, unless, immediately prior to the
time set for transfer, such transfer may be
effected without violation of the
Securities Act of 1933 and other applicable
state laws and rules."
<PAGE> 16 CONFIDENTIAL
In addition, Seller agrees that Purchaser may place
stop transfer orders with its transfer agents with respect to
such certificates. The appropriate portion of the legend and the
stop transfer orders will be removed promptly upon delivery to
Purchaser of such satisfactory evidence as reasonably may be
reasonably required by Purchaser that such legend or stop orders
are not required to ensure compliance with the Securities Act.
3.18 Intellectual Property.
(a) Ownership or Right to Use. Except as set forth on
Schedule 3.18(a), Seller has sole title to and owns the items
listed on Schedule 2.01(e) to this Agreement (the "Purchased
Intellectual Property").
(b) No Infringement. Seller's flash products division
operations counsel has not received any written communications
alleging that the Purchased Intellectual Property violates or
infringes any Intellectual Property of any other Person.
3.19 License Agreements. Schedule 3.19 sets forth, to the
best of Seller's Knowledge, all parties to whom Seller has
granted a license to any Purchased Intellectual Property owned by
Seller that is specific to the Business. True and complete
copies of each of the license agreements referenced in this
Section 3.19 have been provided to Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and
to consummate the transactions contemplated herein, Purchaser
hereby represents and warrants to Seller as follows:
4.01 Existence and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all corporate
power and authority required to carry on its business as now
conducted and to own and operate its businesses as now owned and
operated by it. Purchaser is qualified to conduct business in
each state or states where the failure to be so qualified,
whether singly or in the aggregate, could reasonably be expected
to have a Material Adverse Effect. Purchaser has heretofore
delivered to Seller complete and correct copies of its
certificate of incorporation and bylaws as currently in effect.
4.02 Authorization and Enforceability. The execution,
delivery and performance by Purchaser of this Agreement and the
other Acquisition Documents, and the consummation of the
transactions contemplated hereby and thereby, are within
Purchaser's powers and have been duly authorized by all necessary
corporate action on its part. This Agreement, the Rights
Agreement and the Supply Agreement have been and, when executed
at the Closing, the other Acquisition Documents to which it is a
party will have been, duly and validly executed by Purchaser,
and, assuming the due execution and delivery of this Agreement
and the other Acquisition Documents by Seller, will constitute
legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms,
subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally or to general principles of equity.
<PAGE> 17 CONFIDENTIAL
4.03 Governmental or Other Authorization. Except as set
forth on Schedule 4.03, the execution, delivery and performance
by Purchaser of this Agreement and the other Acquisition
Documents to which it is a party, and the consummation by it,
respectively, of the transactions contemplated hereby and
thereby, require no Governmental Approval from any Governmental
Authority or any consent, waiver or approval of any other Person
(such required consents and approvals, the "Purchaser
Approvals").
4.04 Non-Contravention. Except as set forth on Schedule
4.04, the execution, delivery and performance of this Agreement
and the other Acquisition Documents by Purchaser, where
applicable, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (a) contravene or
conflict with the certificate of incorporation or bylaws of
Purchaser, (b) assuming receipt of the Purchaser Approvals that
are Governmental Approvals, contravene or conflict with or
constitute a material violation of any provision of any
Applicable Law binding upon or applicable to Purchaser,
respectively, or (c) assuming receipt of the Purchaser Approvals
that are not Governmental Approvals, contravene or constitute a
default under any material agreement to which Purchaser is a
party.
4.05 Capitalization. The capitalization of Purchaser,
without giving effect to the transactions contemplated by this
Agreement, is as follows. The authorized stock of Purchaser
consists only of 6,250,000 shares of Common Stock, par value $.01
per share, (the "Common Stock") of which 3,167,529 shares were
issued and outstanding as of December 15, 1999, and 1,000,000
shares of preferred stock, par value $.01 per share, none of
which is issued or outstanding on the date hereof. All such
shares of Common Stock have been duly authorized, and all such
issued and outstanding shares of Common Stock have been validly
issued, are fully paid and nonassessable and are free and clear
of all liens, claims and encumbrances, other than any liens,
claims or encumbrances created by or imposed upon the holders
thereof. As of the date hereof, Purchaser also has reserved
1,787,500 shares of Common Stock for issuance upon exercise of
options or other stock awards granted to officers, directors,
employees or independent contractors or Affiliates of Purchaser
under Purchaser's employee benefit or incentive plans. As of
December 15, 1999, of the shares of Common Stock reserved for
issuance upon exercise of options, 1,311,974 shares remained
subject to outstanding options and 475,526 shares were reserved
for future grants. All shares of Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in SEC Documents, there are
no other equity securities, options, warrants, calls, rights,
commitments or agreements of any character to which Purchaser is
a party or by which it is bound obligating Purchaser to issue,
deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of the
capital stock of Purchaser or obligating Purchaser to grant,
extend or enter into any such equity security, option, warrant,
call, right, commitment or agreement.
4.06 Valid Issuance of Stock.
(a) Valid Issuance. The Series B Preferred Stock will
be, upon delivery of the consideration specified herein by
Seller, duly authorized, validly issued, fully paid and non-
assessable. The Common Stock issuable upon conversion of the
Series B Preferred Stock has
<PAGE> 18 CONFIDENTIAL
been duly reserved for issuance and, when issued upon conversion
of the Series B Preferred Stock will be duly authorized, validly
issued, fully paid and non-assessable.
(b) Compliance with Securities Laws. Assuming the
correctness of the representations made by Seller in Section 3.17
hereof, the Series B Preferred Stock will be issued to Seller in
compliance with applicable exemptions from (i) the registration
and prospectus delivery requirements of the Securities Act and
(ii) the registration and qualification requirements of all
applicable securities laws of the states of the United States.
4.07 Litigation. Except as disclosed in SEC Documents or as
set forth on Schedule 4.07, there are no Proceedings pending or,
to Purchaser's Knowledge, threatened: (a) against Purchaser, its
respective activities, properties or assets, that Purchaser
believes is reasonably likely to have a Material Adverse Effect;
or (b) that seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement. Neither Purchaser
nor any of its Subsidiaries is a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.
4.08 Compliance with Applicable Laws. To Purchaser's
Knowledge, it has complied in all material respects with any
Applicable Laws relating to its business and properties, except
where the failure to comply would not, singly or in the
aggregate, have a Material Adverse Effect. Except as disclosed
in SEC Documents, Purchaser is not subject to any order, writ,
injunction or decree of any Governmental Authority relating to
its business or properties.
4.09 SEC Documents.
(a) Reports. Purchaser has furnished to Seller prior
to the date hereof a complete and correct list of all
registration statements, reports and proxy statements filed by
Purchaser with the Securities and Exchange Commission (the "SEC")
on or after March 31, 1999 (Purchaser's Annual Report on Form 10-
K for the fiscal year ended March 31, 1999, its Quarterly Reports
on Form 10-Q for the quarterly periods ended June 26, 1999 and
September 25, 1999 and all such other registration statements,
reports and proxy statements are collectively referred to herein
as the "SEC Documents"). Each of the SEC Documents, as of the
respective date thereof (or if amended or superseded by a filing
prior to the Closing Date, then on the date of such filing), did
not, and each of the registration statements, reports and proxy
statements filed by Purchaser with the SEC after the date hereof
and prior to the Closing will not, as of the date thereof (or if
amended or superseded by a filing after the date of this
Agreement, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
Purchaser is not a party to any material contract, agreement or
other arrangement that was required to have been filed as an
exhibit to the SEC Documents that was not so filed.
(b) Financial Statements. Purchaser has provided
Seller with copies of its audited financial statements (the
"Audited Purchaser Financial Statements") for the fiscal year
ended March 31, 1999, and its unaudited financial statements for
the six-month period ended September 25, 1999 (the "Balance Sheet
Date"). Since the Balance Sheet Date, Purchaser has duly filed
with the SEC all registration statements, reports and proxy
statements required to be
<PAGE> 19 CONFIDENTIAL
filed by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the Securities Act. The audited and
unaudited consolidated financial statements of Purchaser included
in the SEC Documents filed prior to the date hereof fairly
present, in conformity with GAAP (except, in the case of the Form
10-Q's, as may otherwise be permitted by Form 10-Q) applied on a
consistent basis (except as otherwise may be stated in the notes
thereto), the consolidated financial position of Purchaser and
its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject to normal year-end audit adjustments
in the case of unaudited interim financial statements).
4.10 Absence of Certain Changes Since Balance Sheet Date.
Except as set forth on Schedule 4.10, since the Balance Sheet
Date, the business and operations of Purchaser have been
conducted in the ordinary course consistent with past practice,
and there has not been:
(a) any declaration, setting aside or payment of any
dividend or other distribution of the assets of Purchaser with
respect to any shares of capital stock of Purchaser or any
repurchase, redemption or other acquisition by Purchaser or any
Subsidiary of any outstanding shares of Purchaser's capital
stock;
(b) any damage, destruction or loss, whether or not
covered by insurance, except for such occurrences, individually
and collectively, that are not material to Purchaser;
(c) any waiver by Purchaser of a valuable right or of
a material debt owed to it, except for such waivers, individually
and collectively, that are not material;
(d) any material change or amendment to, or any waiver
of any material right under a material contract, license or
arrangement which Purchaser or any of its assets or properties is
bound by or subject to, except for changes, amendments or waivers
that are expressly provided for or disclosed in this Agreement;
(e) any change by Purchaser in its accounting
principles, methods or practices or in the manner it keeps its
accounting books and records, except any such change required by
a change in GAAP; or
(f) any other event or condition of any character,
except for such events and conditions that have not resulted, and
could not reasonably be expected to result, either individually
or collectively, in a Material Adverse Effect.
4.11 Intellectual Property.
(a) Ownership or Right to Use. Purchaser has sole
title to and owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents or patent applications,
software, know-how, registered or unregistered trademarks and
service marks and any applications therefor, registered or
unregistered copyrights, trade names, and any applications
therefor, trade secrets or other confidential or proprietary
information necessary to enable Purchaser and its Subsidiaries to
carry on their respective businesses as currently conducted,
except where any deficiency, or group of deficiencies, would not
have a Material Adverse Effect.
<PAGE> 20 CONFIDENTIAL
(b) No Infringement. Purchaser's general counsel has
not received any written communications alleging that Purchaser
(or any of its employees or consultants) has violated or
infringed, any Intellectual Property of any other Person.
4.12 Advisory Fees. There is no investment banker, broker,
finder or other intermediary or advisor that has been retained by
or is authorized to act on behalf of Purchaser, who might be
entitled to any fee, commission or reimbursement of expenses from
Purchaser or its Affiliates or Associates, upon consummation of
the transactions contemplated by this Agreement.
4.13 Purchaser Rights Agreement. Purchaser has taken all
necessary action to ensure that neither its entering into this
Agreement, nor the consummation of the transactions contemplated
hereby, will cause the "Rights" to become exercisable, cause
Seller to become an "Acquiring Person" or cause there to occur a
"Triggering Event" or a "Distribution Date" (as such terms are
defined in Purchaser's Stockholder Rights Agreement dated as of
March 16, 1999). The Board of Directors of Purchaser has taken
all actions required to be taken by it so that the restrictions
contained in Section 203 of the Delaware General Corporation Law
or other similar statute or regulation of any other jurisdiction
applicable to the transactions contemplated hereby, will not
apply to the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby.
ARTICLE V
COVENANTS OF SELLER
5.01 Access to Information. Seller agrees to provide to
Purchaser and its authorized agents (including its attorneys and
accountants and auditors) reasonable access to the offices,
properties, books and records of Seller relating to the Business
and the Purchased Assets, upon reasonable prior notice, in order
to conduct a review of the Purchased Assets and the Business.
Seller shall, and shall cause its employees, agents and
representatives to, reasonably cooperate with such examination
and shall make full and complete disclosure to Purchaser and
their representatives of all facts relating to the Purchased
Assets and the Business, including the business, operations,
prospects, condition (financial or otherwise) of the Business.
Each of the parties hereto will hold, and will cause its
consultants and advisers to hold, in confidence all documents and
information furnished to it by or on behalf of another party to
this Agreement in connection with the transactions contemplated
by this Agreement pursuant to the terms of that certain Corporate
Nondisclosure Agreement Number 4433777 entered into between
Seller and Purchaser dated September 30, 1999 (the "CNDA").
5.02 Transition; Customer Introductions. As soon as
possible after the execution of this Agreement, Seller shall,
subject to receipt of any required consent of the applicable
customer, accompany representatives of Purchaser on joint visits
to the five most important flash memory card customers of the
Business for the purpose of explaining the proposed transfer of
ownership of the Business.
5.03 Post-Closing Transition Services. Seller shall provide
certain services to Purchaser after the Closing Date as set forth
in the Transition Services Agreement.
<PAGE> 21 CONFIDENTIAL
5.04 Non-Competition. As a material inducement and
consideration for Purchaser to enter into the transactions
contemplated in the Purchase Agreement and the other Acquisition
Documents and the agreements made therein, Seller agrees that for
a period of three (3) years following the Closing Date (the "Non-
Competition Period"), neither Seller nor its Subsidiaries shall
manufacture, distribute or sell PCMCIA or Miniature flash memory
cards. Notwithstanding the foregoing, Seller may make
acquisitions of Persons that may compete with the Business so
long as the revenues from competing activities are less than
twenty percent (20%) of the reported revenues of such Person for
its most recently completed fiscal year.
5.05 Audited Financial Information. Within sixty (60)
days after the Closing Date and at Seller's cost and expense up
to $55,000, Seller shall prepare and deliver, or cause to be
prepared and delivered, to Purchaser the audited financial
information, including a manually signed accountants' report from
nationally recognized independent certified public accountants,
required to be filed by Purchaser with the SEC pursuant to Item 7
of Form 8-K (the "Audited Financial Information"). The Audited
Financial Information will be prepared based on the books and
records of Seller and will include items accounted for in
accordance with GAAP consistent with the methods used for the
purpose of preparing the accounting for such items in connection
with the Seller's financial statements for prior periods and will
present fairly the financial condition and results of operations
of the Business as of the dates indicated or for the periods
indicated.
5.06 Future Licenses. From and after the Closing Date,
Seller shall not grant any license to any Purchased Intellectual
Property.
ARTICLE VI
SELLER LICENSE
6.01 Grant of License. Seller hereby grants to Purchaser,
subject to existing licenses of Seller and its Subsidiaries, a
non-exclusive, worldwide, fully paid-up, perpetual (except upon a
material breach of the provisions of this Article VI) license to
any and all Intellectual Property owned by Seller solely and only
to the extent necessary to make, have made, use, sell, offer to
sell and import Products. Purchaser may not grant sublicenses
hereunder. The license granted is assignable only in connection
the sale, by merger, sale of assets or similar transaction, of
the entire business of Purchaser and only with the written
consent of Seller, which consent shall not be unreasonably
withheld.
6.02 No Other Rights. No other rights are granted
hereunder, by implication, estoppel, statute or otherwise, except
as expressly provided herein. Specifically, (a) except as
expressly provided herein, nothing in the license granted
hereunder or otherwise contained in this Agreement shall
expressly or by implication, estoppel or otherwise give Purchaser
any right to license Seller's Intellectual Property to others and
(b) no license or immunity is granted by Seller directly or by
implication, estoppel or otherwise to any third parties acquiring
items from Purchaser for the combination of Products with other
items or for the use of such combination.
6.03 No Implied Obligation. Nothing contained in this
Article VI shall be construed as: (a) a warranty or
representation by Seller as to the validity, enforceability or
scope of any
<PAGE> 22 CONFIDENTIAL
class or type of patents; (b) a warranty or representation that
any manufacture, sale, lease, use or other disposition of
Products hereunder will be free from infringement of any patents
or other intellectual property rights of others; (c) an agreement
to bring or prosecute proceedings against third parties for
infringement or misappropriation of any Intellectual Property
rights or conferring any right to bring or prosecute proceedings
against third parties for infringement or misappropriation of any
Intellectual Property rights; (d) conferring any right to use in
advertising, publicity, or otherwise, any trademark, trade name
or names, or any contraction, abbreviation or simulation thereof,
of Seller; (e) an obligation to furnish any technical information
or know-how; or (f) requiring Seller to defend any proceeding
brought by a third party challenging or concerning the validity
of any licensed Intellectual Property.
6.04 No Implied Warranties or Consequential Damages.
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY,
PURCHASER HEREBY DISCLAIMS ANY IMPLIED WARRANTIES WITH RESPECT TO
THE LICENSED INTELLECTUAL PROPERTY HEREUNDER, INCLUDING WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR NON-INFRINGEMENT. IN NO EVENT SHALL SELLER
BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, PUNITIVE,
OR SPECIAL DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION,
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS
OF BUSINESS INFORMATION, AND THE LIKE, ARISING OUT OF THE LICENSE
GRANTED HEREUNDER OR THE USE OF OR INABILITY TO USE THE LICENSED
INTELLECTUAL PROPERTY, OR ANY CONFIDENTIAL INFORMATION, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser agrees that:
7.01 Compliance with Terms of Governmental Approvals and
Consents. From and after the Closing Date, Purchaser shall
comply at its own expense with all conditions and requirements
imposed on Purchaser prior to the Closing as set forth in (a) the
Purchaser Approvals that are Governmental Approvals, to the
extent necessary such that all such Governmental Approvals will
remain in full force and effect assuming, if applicable,
continued compliance of the terms thereof by Seller and (b) all
Purchaser Approvals of Persons other than Governmental
Authorities, to the extent necessary such that all such consents
and approvals will remain effective and enforceable against the
Persons giving such consents and approvals, assuming, if
applicable, continued compliance with the terms thereof by
Seller.
7.02 Use of Marks. Notwithstanding any other provision
herein, no interest in or right to use the name "Intel" or any
derivation thereof or any other trademarks, service marks or
tradenames of Seller (the "Retained Marks") is being transferred
to Purchaser pursuant to the transactions contemplated by this
Agreement. Purchaser agrees not to use any materials bearing
Retained Marks or sell, transfer or ship any Inventory or
Products bearing Retained Marks (a) unless requested to do so by
Seller, (b) to the extent displayed on any of the Purchased
Assets at
<PAGE> 23 CONFIDENTIAL
the Closing Date or (c) as required under Assumed Contracts with
customers until such time as Purchaser shall have qualified the
use of its logo, trademark or tradenames with each such customer.
7.03 Audit Rights. Purchaser shall make available to an
independent public accounting firm engaged by Seller, upon
reasonable prior written notice from Seller on or before the
first anniversary of the Closing, the books and records of
Purchaser that relate to sales of Flash memory products for
purposes of verifying the amount, if any, of the Contingent
Consideration which is due and payable to Seller hereunder. If
any such audit reveals an underpayment by Purchaser, Purchaser
shall promptly pay the amount of such underpayment, and, if the
amount thereof exceeds five percent (5%) of the total Contingent
Consideration due to Seller, Purchaser shall reimburse Seller for
the aggregate amount of all fees and expenses incurred by Seller
in connection with such audit.
ARTICLE VIII
COVENANTS OF ALL PARTIES
8.01 Further Assurances. Each party hereto agrees from time
to time after the Closing at the request of the other party and
without further consideration to execute and deliver such other
documents, certificates, agreements and other writings and to
take such other commercially reasonable actions as may be
reasonably necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this
Agreement and the other Acquisition Documents. Notwithstanding
the foregoing, no party hereto shall have any obligation to
expend any funds or to incur any other obligation in connection
with the consummation of the transactions contemplated hereby
(including, by way of illustration only, any payment in
connection with obtaining the Required Contractual Consents or
Purchaser Approvals) other than normal out-of-pocket expenses
(such as fees of counsel, accountants and auditors) reasonably
necessary to consummate such transactions.
8.02 Public Announcements. Neither Purchaser nor Seller
shall issue any press release or otherwise make any public
statements with respect to the transactions contemplated by this
Agreement and the other Acquisition Documents, without the prior
consent of Purchaser (in the case of Seller) or Seller (in the
case of Purchaser), except as may be required by Applicable Law,
or by the rules and regulations of, or pursuant to any agreement
with, the Nasdaq National Market. If any party determines, with
the advice of counsel, that it is required by Applicable Law to
make this Agreement, the other Acquisition Documents or any terms
hereof or thereof public, it shall, a reasonable time before
making any public disclosure, consult with the other parties
regarding such disclosure and seek confidential treatment for
such terms or portions of this Agreement or other Acquisition
Documents as may be requested by the other parties. The parties
agree there shall be no public announcement of this Agreement or
the other Acquisition Documents or the transactions contemplated
hereby or thereby except as may be required by Applicable Law or
as mutually agreed by the parties. The parties agree to announce
this Agreement or the other Acquisition Documents or the
transactions contemplated hereby or thereby to Seller's
employees, customers, vendors and strategic partners at such time
and in such form as is mutually agreed upon by the parties.
<PAGE> 24 CONFIDENTIAL
8.03 Tax Matters.
(a) Cooperation. From and after the Closing Date, the
parties hereto agree to furnish or cause to be furnished to one
another, upon request, as promptly as practicable, such
information and assistance relating to the Purchased Assets and
the Business as is reasonably necessary for the filing of all Tax
Returns, and making of any election related to Taxes, the
preparation for any audit by any taxing authority, and the
prosecution or defense of any claim or Proceeding relating to any
Tax Return. The parties hereto shall cooperate with each other
in the conduct of any audit or other Proceeding related to Taxes
involving the Business and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry
out the intent of this Section 8.03(a).
(b) Allocation of Property Taxes. All personal
property taxes and similar ad valorem obligations levied with
respect to the Purchased Assets for a taxable period that
includes (but does not end on) the Closing Date shall be
apportioned between Seller and Purchaser as of the Closing Date
based on the number of days of such taxable period included in
the Pre-Closing Tax Period and the number of days of such taxable
period included in the Post-Closing Tax Period. Seller shall be
liable for the proportionate amount of such Taxes that is
attributable to the Pre-Closing Tax Period, and Purchaser shall
be liable for the proportionate amount of such Taxes that is
attributable to the Post-Closing Tax Period. Within a reasonable
period after the Closing, Seller and Purchaser shall present a
statement to the other setting forth the amount of reimbursement
to which each is entitled under this Section 8.03(b), together
with such supporting evidence as is reasonably necessary to
calculate the proration amount. The proration amount shall be
paid by the party owing it to the other within ten (l0) days
after delivery of such statement. Thereafter, Seller shall
notify Purchaser upon receipt of any bill for personal property
taxes relating to the Purchased Assets, part or all of which are
attributable to the Post-Closing Tax Period, and shall promptly
deliver such bill to Purchaser who shall pay the same to the
appropriate taxing authority, provided that if such bill covers
any part of the Pre-Closing Tax Period, Seller shall also remit
prior to the due date of assessment to Purchaser payment for the
proportionate amount of such bill that is attributable to the Pre-
Closing Tax Period. In the event that either Seller or Purchaser
shall thereafter make a payment for which it is entitled to
reimbursement under this Section 8.03(b), the other party shall
make such reimbursement promptly, but in no event later than
thirty (30) days after the presentation of a statement setting
forth the amount of reimbursement to which the presenting party
is entitled along with such supporting evidence as is reasonably
necessary to calculate the amount of reimbursement. Any payment
required under this Section 8.03(b) and not made when due shall
bear interest at the rate of ten percent (10%) per annum.
(c) Other Taxes. To the extent that there are any
Taxes attributable to the Purchased Assets or the Business other
than those treated specifically in Section 8.03(b), (d) and (e),
this Section 8.03(c) shall apply. Seller shall prepare and file
(or cause to be prepared and filed) on a timely basis (to the
extent not filed on or before the date of this Agreement) all Tax
Returns for all taxable periods ending on or before the Closing
Date, shall (subject to Section 8.03(e)), pay all Taxes shown to
be due on such Tax Returns, and shall indemnify and hold
Purchaser harmless against, from and in respect of (i) all Taxes
of Seller attributable to the Purchased Assets or the operation
of the Business (the "Seller Taxes") for all taxable periods (or
any portion thereof) which end on or before the Closing Date, and
(ii) with respect to any taxable
<PAGE> 25 CONFIDENTIAL
period commencing before the Closing Date and ending on the
Closing Date, all Seller Taxes attributable to the Pre-Closing
Period. For purposes of this Agreement, the portion of any Tax
that is attributable to the Pre-Closing Period shall be (i) in
the case of a Tax that is not based on net income, gross income,
premiums or gross receipts, the total amount of such Tax for the
Period in question multiplied by a fraction, the numerator of
which is the number of days in the Pre-Closing Period, and the
denominator of which is the total number of days in such taxable
period, and (ii) in the gross income, premiums or gross receipts,
the Tax that would be due with respect to the Pre-Closing Period
if such Pre-Closing Period were a separate taxable period, except
that exemptions, allowances, deductions or credits that are
calculated on an annual basis (such as the deduction for
depreciation or capital allowances) shall be apportioned on a per
diem basis. For purposes hereof, all Taxes which are the subject
of this Section 8.03(c) arising from this transaction, except as
set forth in Section 8.03(e), shall be deemed to be Taxes
attributable to the Pre-Closing Period and shall be the
responsibility of Seller (including any transfer, documentary,
sales, use or other Taxes assessed upon or with respect to the
transfer of the Purchased Assets to Purchaser, and any recording
or filing fees with respect thereto). Purchaser shall prepare
and file (or cause to be prepared and filed) on a timely basis
all Tax Returns for all taxable periods beginning after the
Closing Date, shall pay all taxes shown to be due on such Tax
Returns, and shall indemnify and hold Seller harmless against,
from and respect of all Taxes (i) for any taxable year or period
commencing after the Closing Date, and (ii) for any taxable
period beginning before and ending after the Closing Date, other
than Taxes attributable to the Pre-Closing Period. The
provisions of Section 8.03(b) regarding payment, verification,
and interest shall apply to the Taxes that are subject to this
Section 8.03(c).
(d) Sales Tax Certificates. Purchaser will provide
Seller with an appropriate resale certificate for sales tax
purposes.
(e) Sales and Use Taxes. The sales and use Taxes
arising out of the transfer of the Purchased Assets (the "Sales
Tax") shall be determined at Closing based on the allocation
described in Section 8.04 and shall be paid by Purchaser. To the
extent permitted by Applicable Law, Purchaser and Seller shall
cooperate fully in minimizing the Sales Tax. To the extent a
taxing authority provides notice to Seller of an audit of the
Sales Tax, Seller shall immediately notify Purchaser and
Purchaser shall assume responsibility for such audit and shall
pay when due any additional Sales Tax ultimately assessed with
respect to the transactions contemplated by this Agreement.
Purchaser shall have complete authority to control, settle or
defend any proposed adjustment to the Sales Tax, and Seller shall
cooperate fully with Purchaser, in its defense or settlement of
any proposed adjustment to the Sales Tax.
8.04 Allocation of Purchase Price. The Purchase Price shall
be allocated in accordance with Schedule 8.04 (as such allocation
of Purchase Price Schedule shall be determined prior to Closing
and attached hereto). Each of the parties hereto agrees to
report the transactions contemplated hereby for state and federal
Tax purposes in accordance with such allocation of the Purchase
Price. Purchaser shall prepare Schedule 8.04 subject to Seller's
approval, which approval shall not be unreasonably withheld.
8.05 Confidentiality. The parties understand and agree that
this Agreement is subject to the terms and conditions of the
CNDA. In the event that any party hereto receives a request to
disclose all or any part of any confidential information under
the terms of a subpoena, order, civil
<PAGE> 26 CONFIDENTIAL
investigative demand or similar process issued by a court of
competent jurisdiction or by another Governmental Authority, such
party agrees to: (a) immediately notify the party to whom such
confidential information relates of the existence, terms and
circumstances surrounding such request, (b) consult with such
party to whom the information relates on the advisability of
taking legally available steps to resist or narrow such request;
and (c) if disclosure of such information is required, furnish
only that portion of the confidential information that, in the
opinion of counsel to the party who has received the request,
such party is legally compelled to disclose and advise the party
to whom such confidential information relates as far in advance
of such disclosure as possible so that such party to whom the
confidential information relates may seek an appropriate
protective order or other reliable assurance that confidential
treatment will be accorded such confidential information. In any
event, the party who receives the request shall not oppose
actions by the party to whom the confidential information relates
to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded such
confidential information.
8.06 Waiver of Bulk Sales Laws. Purchaser and Seller hereby
waive compliance with all applicable "bulk sales" laws in respect
of the transactions contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to Obligations of Purchaser. The
obligations of Purchaser to consummate the Closing are subject to
the satisfaction or waiver of each of the following conditions:
(a) Performance by Seller. (i) Seller shall have
performed and satisfied in all material respects each of its
obligations hereunder required to be performed and satisfied by
it on or prior to the Closing Date, (ii) each of the
representations and warranties of Seller contained herein or in
any of the other Acquisition Documents and in any Schedules or
Exhibits hereto or thereto shall have been true and correct in
all material respects and contained no misstatement or omission
that would make any such representation or warranty misleading
when made and shall be true and correct in all material respects
and contain no misstatement or omission that would make any such
representation or warranty materially misleading at and as of the
Closing with the same force and effect as if made as of the
Closing and (iii) Purchaser shall have received a certificate
signed by a duly authorized executive officer of Seller to the
foregoing effect and to the effect that the conditions specified
within this Section 9.01(a) have been satisfied.
(b) Required Contractual Consents. All Required
Contractual Consents and Seller Approvals and Purchaser Approvals
that are not Governmental Approvals set forth on Schedule 9.01(b)
shall have been obtained without the imposition of any conditions
that are or would become applicable to any of the Purchased
Assets, the Business or Purchaser (or any Affiliate or Associate
of Purchaser) after the Closing that would be materially
burdensome on any such Purchased Assets, the Business or
Purchaser. All Required Contractual Consents, Seller Approvals
and Purchaser Approvals set forth on Schedule 9.01(b) shall be in
effect as of the Closing Date.
<PAGE> 27 CONFIDENTIAL
(c) No Violation. The transactions contemplated by
this Agreement and the other Acquisition Documents and the
consummation of the Closing shall not violate any Applicable Law.
No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any
court or other Governmental Authority or any other legal
restraint or prohibition preventing the transfers contemplated
hereby or the consummation of the Closing, or imposing Damages in
respect thereto, shall be in effect as of the Closing Date, and
there shall be no pending or threatened actions or proceedings by
any Governmental Authority (or determinations by any Governmental
Authority) or by any other Person having jurisdiction with
respect to such matter challenging or in any manner seeking to
restrict or prohibit the transfer and exchange contemplated
hereby or the consummation of the Closing, or to impose
conditions that would be materially burdensome on the Purchased
Assets, the Business or Purchaser (or any Affiliate or Associate
of Purchaser) or their respective businesses substantially as
such businesses have been conducted prior to the Closing Date or
as said businesses, as of the date hereof, would be reasonably
expected to be conducted after the Closing Date.
(d) Allocation of Purchase Price. Purchaser and
Seller shall have agreed on the allocation of the Purchase Price
pursuant to Section 8.04.
(e) Transition Services Agreement. Purchaser and
Seller shall have agreed upon, executed and delivered the
Transition Services Agreement, pursuant to which for a limited
period of time Seller will provide certain services for
Purchaser's benefit in connection with the operation of the
Business.
(f) Acquisition Documents. Seller shall have executed
and delivered to Purchaser all Acquisition Documents to which
Seller is a party.
(g) Opinion of Counsel. Purchaser shall have received
an opinion of counsel to Seller, dated the Closing Date, in
substantially the form attached hereto as Exhibit 9.01.
(h) Subordination Agreement. Seller and Fleet Bank
shall have executed and delivered a Subordination Agreement in a
form acceptable to Purchaser and subject to Purchaser's approval.
(i) XeTel Corporation Consent. XeTel Corporation
shall have executed and delivered to Seller a Consent to
Assignment and Assumption, in a form acceptable to Seller and
Purchaser and subject to Seller's and Purchaser's approval, of
that certain Manufacturing Agreement dated April 13, 1998 by and
between XeTel Corporation and Intel Flash Products Division, a
division of Seller.
9.02 Conditions to Obligations of Seller. The obligations
of Seller to consummate the Closing are subject to the
satisfaction or waiver of each of the following conditions:
(a) Performance by Purchaser. (i) Purchaser shall
have performed and satisfied in all material respects each of its
obligations hereunder required to be performed and satisfied by
it on or prior to the Closing Date, (ii) each of the
representations and warranties of Purchaser contained herein or
in any of the other Acquisition Documents and in any Schedules or
Exhibits hereto or thereto shall have been true and correct in
all material respects and
<PAGE> 28 CONFIDENTIAL
contained no misstatement or omission that would make any such
representation or warranty misleading when made and shall be true
and correct in all material respects and contain no misstatement
or omission that would make any such representation or warranty
materially misleading at and as of the Closing with the same
force and effect as if made as of the Closing and (iii) Seller
shall have received a certificate signed by a duly authorized
executive officer of Purchaser to the foregoing effect and to the
effect that the conditions specified within this Section 9.02(a)
have been satisfied.
(b) Required Contractual Consents. All Required
Contractual Consents set forth on Schedule 9.02(b) shall have
been obtained without the imposition of any conditions that are
or would become applicable to Seller (or any Affiliate or
Associate of Seller) after the Closing that would be materially
burdensome on Seller (or any Affiliate or Associate of Seller).
All Required Contractual Consents shall be in effect as of the
Closing Date.
(c) No Violation. The transactions contemplated by
this Agreement and the other Acquisition Documents and the
consummation of the Closing shall not violate any Applicable Law.
No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any
court or other Governmental Authority or any other legal
restraint or prohibition preventing the transfer and exchange
contemplated hereby or the consummation of the Closing, or
imposing Damages in respect thereto, shall be in effect as of the
Closing Date, and there shall be no pending or threatened actions
or proceedings by any Governmental Authority (or determinations
by any Governmental Authority) or by any other Person challenging
or in any manner seeking to materially restrict, prohibit or
condition the transfer and exchange contemplated hereby or the
consummation of the Closing, or to impose conditions that would
be materially burdensome on Seller (or any Affiliate or Associate
of Seller) or their respective businesses substantially as such
businesses have been conducted prior to the Closing Date or as
said businesses, as of the date hereof, would reasonably be
expected to be conducted after the Closing Date.
(d) Allocation of Purchase Price. Purchaser and
Seller shall have agreed on the allocation of the Purchase Price
pursuant to Section 8.04.
(e) Transition Services Agreement. Purchaser and
Seller shall have agreed upon, executed and delivered the
Transition Services Agreement, pursuant to which for a limited
period of time Seller will provide certain services for
Purchaser's benefit in connection with the operation of the
Business.
(f) Acquisition Documents. Purchaser shall have
executed and delivered to Seller all Acquisition Documents to
which Purchaser is a party, including the Note and the Security
Agreement and any UCC-1 financing statements required to perfect
the security interest being granted to Seller.
(g) Opinion of Counsel. Seller shall have received an
opinion of counsel from counsel to Purchaser, dated the Closing
Date, in substantially the form attached hereto as Exhibit 9.02.
<PAGE> 29 CONFIDENTIAL
(h) XeTel Corporation Consent. XeTel Corporation
shall have executed and delivered to Seller a Consent to
Assignment and Assumption, in a form acceptable to Seller and
Purchaser and subject to Seller's and Purchaser's approval, of
that certain Manufacturing Agreement dated April 13, 1998 by and
between XeTel Corporation and Intel Flash Products Division, a
division of Seller.
ARTICLE X
INDEMNIFICATION
Section 10.1. General Survival. The parties agree that,
regardless of any investigation made by the parties, the
representations, warranties, covenants and agreements (in the
case of covenants and agreements, to the extent of performance or
non-performance prior to the Closing Date) of the parties
contained in this Agreement shall survive the execution and
delivery of this Agreement for a period beginning on the date
hereof and ending at 5:00 p.m., California time, on the first
anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Section 3.17,
Investment Representations, shall survive until the sixtieth
(60th) day following the expiration of the statute of limitations
(if any) applicable to a claim based upon such representation or
warranty.
Section 10.2. Indemnification.
(a) Indemnification Provisions for Purchaser. Subject
to the provisions of Section 10.1, from and after the Closing
Date, Purchaser and their respective affiliates, officers,
directors, stockholders, representatives and agents (collectively
the "Purchaser Indemnitees") shall be indemnified and held
harmless by Seller from and against and in respect of any and all
Losses (as defined below) incurred by, resulting from, arising
out of, relating to, imposed upon or incurred by Purchaser or any
other Purchaser Indemnitee by reason of:
(i) any inaccuracy in or breach of any of Seller's
representations, warranties, covenants or agreements (to the
extent of performance or non-performance prior to the
Closing Date) contained in this Agreement;
(ii) any misrepresentation contained in written any
statement or certificate furnished to Purchaser by or on
behalf of Seller in connection with the transactions
contemplated by this Agreement; and
(iii) Liabilities (other than Assumed Liabilities)
arising from the conduct of the Business prior to the
Closing.
(b) Indemnification Provisions for Seller. Subject to
the provisions of Section 10.1, from and after the Closing Date,
Seller and its affiliates, officers, directors, stockholders,
representatives and agents (collectively, the "Seller
Indemnitees") shall be indemnified and held harmless by Purchaser
from and against and in respect of any and all Losses (as defined
below) incurred by, resulting from, arising out of, relating to,
imposed upon or incurred by any Seller Indemnitee by reason of:
<PAGE> 30 CONFIDENTIAL
(i) any inaccuracy in or breach of any of Purchaser's
representations, warranties, covenants or agreements (to the
extent of performance or non-performance prior to the
Closing Date) contained in this Agreement;
(ii) any misrepresentation contained in any written
statement or certificate furnished to Seller by or on behalf
of Purchaser in connection with the transactions
contemplated by this Agreement; and
(iii) Liabilities arising from the conduct of the
Business subsequent to the Closing.
For purposes of this Agreement, the term "Indemnitee"
shall mean either a Purchaser Indemnitee or a Seller Indemnitee,
as the case may be, and the term "Indemnitor" shall mean either a
Purchaser Indemnitor or a Seller Indemnitor, as the case may be.
(c) For purposes of this Agreement, the term, "Losses"
means any and all deficiencies, judgments, settlements, demands,
claims, suits, actions or causes of action, assessments,
liabilities, losses, damages (excluding indirect, incidental or
consequential damages), interest, fines, penalties, costs and
expenses (including reasonable legal, accounting and other costs
and expenses) incurred in connection with investigating,
defending, settling or satisfying any and all demands, claims,
actions, causes of action, suits, proceedings, assessments,
judgments or appeals, and in seeking indemnification therefor,
and interest on any of the foregoing from the date a claim is
made until paid at the reference rate of Bank of America NT&SA.
Notwithstanding the above, Losses shall not include (i) expenses
incurred in connection with investigations unless a claim is made
or (ii) Losses specifically identified in the Schedules or
Exhibits hereto.
(d) No Indemnitee shall be entitled to indemnification
for any Losses arising from the breach of any representations and
warranties until the aggregate amount of all Losses under all
claims of all Indemnities for all such breaches shall exceed Two
Hundred Thousand Dollars ($200,000) (the "Floor"), at which time
all Losses incurred shall be subject to indemnification
hereunder. The Floor shall not apply to Losses covered by
Section 10.2(a)(iii) and Section 10.2(b)(iii).
(e) The amount of any Losses otherwise recoverable
under this Section 10.2 by shall be reduced by any amounts
actually received by an Indemnitees under insurance policies (net
of any costs incurred in connection with the collection thereof).
Section 10.3. Manner of Indemnification.
(a) Each Indemnification claim shall be made only in
accordance with this Article X.
(b) In the event that an Indemnitee wishes to make a
claim for Losses under Article X of this Agreement, Indemnitee
shall deliver a written notice (a "Notice of Claim") to the
applicable Indemnitor. The Notice of Claim shall (i) specify in
reasonable detail the nature of the claim being made, and (ii)
state the aggregate dollar amount of such claim.
<PAGE> 31 CONFIDENTIAL
(c) If the Indemnitor wishes to object to the
allowance of the claim made in a Notice of Claim, the Indemnitor
shall deliver a written objection to the Indemnitee within twenty
(20) calendar days after receipt of such Notice of Claim by the
Indemnitor expressing such objection and explaining in reasonable
detail and in good faith the basis therefor. Following receipt
by Indemnitee of the Indemnitor's written objection, if any, the
parties shall promptly meet to agree on the rights of the
respective parties with respect to each of such claims. If the
parties should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and
amounts agreed upon shall be promptly paid. Any unresolved
dispute between the parties shall be resolved in accordance with
Sections 11.11 and 11.12 and the other applicable provisions of
this Agreement.
Section 10.4. Third-Party Claims. If Purchaser becomes
aware of a third-party claim that Purchaser believes, in good
faith, may result in a claim by it against Seller, Purchaser
shall notify Seller of such claim. Seller shall have the right
to assume and conduct the defense of such claim. Seller shall
conduct such defense in a commercially reasonable manner, and
shall be authorized to settle any such claim without the consent
of the Purchaser, provided, however, that: (a) Seller shall not
be authorized to encumber any assets of Purchaser or agree to any
restriction that would apply to Purchaser or the conduct of
Purchaser's business; (b) Seller shall have paid or caused to be
paid any amounts arising out of such settlement; and (c) that a
condition to any such settlement shall be a complete release of
the Purchaser with respect to such third party claim. Purchaser
shall be entitled to participate in (but not control) the defense
of any third party claim, with its own counsel and at its own
expense. Purchaser shall cooperate fully with Seller in the
defense of any third party claim. If Seller does not assume the
defense of any third party claim in accordance with the
provisions hereof, Purchaser may defend such third party claim
and may settle such third party claim after giving written notice
of the terms thereof to Seller.
Section 10.5. Exclusive Remedy. Notwithstanding any other
provision of this Agreement to the contrary, the provisions of
this Article X shall be the sole and exclusive remedy of the
Indemnitees from and after the Closing Date for any claims
arising under this Agreement, including claims of breach of any
representation, warranty or covenant in this Agreement; provided,
however, that the foregoing clause of this sentence shall not be
deemed a waiver by any party of any right to specific performance
or injunctive relief, or any remedy arising by reason of any
claim of fraud with the respect to this Agreement. In that
regard, other than claims arising out of fraud, the total
liability to Indemnitees shall be limited to Three Million
Dollars ($3,000,000).
ARTICLE XI
MISCELLANEOUS
11.01 Notices. All notices and other communications
pursuant to this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied, sent by
nationally-recognized overnight courier or mailed by registered
or certified mail (return receipt requested), postage prepaid, to
the parties at the addresses set forth below or to such other
address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance
herewith. Any such notice or communication shall be deemed to
have been delivered and received (a) in the case of personal
delivery, on the date of such delivery, (b) in the
<PAGE> 32 CONFIDENTIAL
case of telecopier, on the date sent if confirmation of receipt
is received and such notice is also promptly mailed by registered
or certified mail (return receipt requested), (c) in the case of
a nationally-recognized overnight courier in circumstances under
which such courier guarantees next Business Day delivery, on the
next Business Day after the date when sent and (d) in the case of
mailing, on the third Business Day following that on which the
piece of mail containing such communication is posted:
if to Seller, to:
Intel Corporation
200 Mission College Boulevard
Santa Clara, California 95054
Attention: Treasurer
Telephone: (408) 765-8080
Telecopy: (408) 765-6038
with copies to:
Intel Corporation
200 Mission College Boulevard
Santa Clara, California 95054
Attention: General Counsel
Telephone: (408) 765-8080
Telecopy: (408) 765-1859
and
Gibson, Dunn & Crutcher LLP
1530 Page Mill Road
Palo Alto, California 94304
Attention: Lawrence Calof, Esq.
Telephone: (650) 849-5300
Telecopy: (650) 849-5333
if to Purchaser, to:
Centennial Technologies, Inc.
7 Lopez Road
Wilmington, Massachusetts 01887
Attention: President
Telephone: (978) 988-8848
Telecopy: (978) 988-7651
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
<PAGE> 33 CONFIDENTIAL
Attention: Raymond C. Zemlin, P.C.
Telephone: (617) 570-1000
Telecopy: (617) 523-1231
or to such other address as the person to whom notice is given
may have previously furnished to the others in writing in the
manner set forth above. Any party hereto may give any notice,
request, demand, claim or other communication hereunder using any
other means (including ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is
received by the individual for whom it is intended.
11.02 Amendments; Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by all parties hereto,
or in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No waiver by a party of any default,
misrepresentation or breach of a warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation or breach of a
warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence. No
failure or delay by a party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies
provided under Applicable Law.
11.03 Expenses. All costs and expenses incurred in
connection with this Agreement and the other Acquisition
Documents and in closing and carrying out the transactions
contemplated hereby and thereby shall be paid by the party
incurring such cost or expense.
11.04 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors, heirs, personal representatives and
permitted assigns. No party hereto may assign either this
Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of each other party,
which approval shall not be unreasonably withheld. No such
assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
11.05 Governing Law. This Agreement shall be construed
in accordance with and governed by the internal laws (without
reference to choice or conflict of laws) of the State of
Delaware.
11.06 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts and the signatures
delivered by telecopy, each of which shall be an original, with
the same effect as if the signatures were upon the same
instrument and delivered in person. This Agreement shall become
effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
<PAGE> 34 CONFIDENTIAL
11.07 Entire Agreement. This Agreement (including the
Schedules and Exhibits referred to herein, which are hereby
incorporated by reference), the other Acquisition Documents and
the CNDA constitute the entire agreement between and among the
parties with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements,
understandings and negotiations, both written and oral, between
and among the parties with respect to the subject matter of this
Agreement. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
11.08 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof. All references to an
Article, Section, Exhibit or Schedule are references to an
Article, Section, Exhibit or Schedule of this Agreement, unless
otherwise specified, and include all subparts thereof.
11.09 Severability. If any provision of this Agreement,
or the application thereof to any Person, place or circumstance,
shall be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other Persons, places and circumstances
shall remain in full force and effect only if, after excluding
the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated
hereby in substantially the same manner as originally set forth
at the later of the date this Agreement was executed or last
amended.
11.10 Construction. The parties hereto intend that each
representation, warranty, and covenant contained herein shall
have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party
has not breached shall not detract from or mitigate the fact that
the party is in breach of the first representation, warranty or
covenant.
11.11 Dispute Resolution.
(a) All disputes arising directly under the express
terms of this Agreement or the grounds for termination thereof
shall be resolved as follows: The senior management of all
parties to the dispute shall meet to attempt to resolve such
disputes. If the disputes cannot be resolved by such senior
management, any party may make a written demand for formal
dispute resolution and specify therein the scope of the dispute.
Within thirty (30) days after such written notification, the
parties agree to meet for one (1) day with an impartial mediator
and consider dispute resolution alternatives other than
litigation. If an alternative method of dispute resolution is
not agreed upon within thirty (30) days after the one (1) day
mediation, either party may begin litigation Proceedings.
(b) Notwithstanding the provisions of Section 11.11(a)
above, each party shall have the right, without the requirement
of first seeking a remedy through arbitration, to seek
preliminary injunctive or other equitable relief in any proper
court in the event that such party determines that eventual
redress through arbitration will not provide a sufficient remedy
for any violation of this Agreement by any other party.
<PAGE> 35 CONFIDENTIAL
(c) In the event a Proceeding is brought to enforce or
interpret any provision of this Agreement, the prevailing party
shall be entitled to recover reasonable attorney's fees and costs
in an amount to be fixed by the court or arbitrator, as
applicable.
11.12 Submission to Jurisdiction; Waiver of Jury Trial.
(a) The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the
Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not
to assert, as a defense in any Proceeding for the interpretation
or enforcement hereof or of any such document, that it is not
subject thereto or that such Proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not
be appropriate or that this Agreement or any such document may
not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such Proceeding
shall be heard and determined in such a Delaware State or Federal
court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the
manner provided in Section 11.12 or in such other manner as may
be permitted by Applicable Law, shall be valid and sufficient
service thereof.
(b) The parties agree that irreparable damage may
occur and that the parties would not have any adequate remedy at
law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court
located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled
at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11.12.
<PAGE> 36 CONFIDENTIAL
11.13 Meaning of Include and Including. Whenever in
this Agreement the word "include" or "including" is used, it
shall be deemed to mean "include, without limitation" or
"including, without limitation," as the case may be, and the
language following "include" or "including" shall not be deemed
to set forth an exhaustive list.
11.14 Cumulative Remedies. The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided under
Applicable Law.
11.15 Third Party Beneficiaries. No provision of this
Agreement shall create any third party beneficiary rights in any
Person, including any employee or former employee of Seller or
any Affiliate or Associate thereof (including any beneficiary or
dependent thereof).
11.16 Specific Performance. The parties hereby
acknowledge and agree that the failure of any party to perform
its agreements and covenants hereunder, including its failure to
take all actions as are necessary on its part to the consummation
of the transactions contemplated herein, may cause irreparable
injury to the other parties, for which Damages, even if
available, may not be an adequate remedy. Accordingly, each
party hereby consents to the issuance of injunctive relief by any
court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the
remedy of specific performance of its obligations hereunder.
11.17 Survival. The representations and warranties and
covenants of the parties shall survive the Closing for the period
set forth in Section 10.1.
<PAGE> 37 CONFIDENTIAL
IN WITNESS WHEREOF, the parties hereto here caused this Agreement
to be duly executed by their respective authorized officers as of
the day and year first above written.
SELLER: PURCHASER:
INTEL CORPORATION CENTENNIAL TECHNOLOGIES, INC.
a Delaware corporation a Delaware corporation
By: /s/Noel S. Lazo By: /s/Richard J. Pulsifer
Name: Noel S. Lazo Name: Richard J. Pulsifer
Title: Assistant Treasurer Title: Chief Financial
Officer, Secretary and
Treasurer
[Signature Page to Asset Purchase Agreement Between Intel
Corporation and Centennial Technologies, Inc.]
<PAGE>
EXHIBIT 2
RIGHTS AGREEMENT
CENTENNIAL TECHNOLOGIES, INC.
INTEL CORPORATION
December 29, 1999
<PAGE> 1 INTEL CONFIDENTIAL
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") is made and entered
into as of December 29, 1999 by and among Centennial
Technologies, Inc., a Delaware corporation (the "Company"), and
Intel Corporation, a Delaware corporation ("Intel").
RECITALS
A. The Company and Intel have entered into an Asset
Purchase Agreement of even date herewith (the "Asset Purchase
Agreement"), pursuant to which Intel has sold certain assets to
the Company and the Company has, among other things, issued
shares of its Series B Preferred Stock to Intel.
B. It is a condition to the closing of the transactions
contemplated by the Asset Purchase Agreement that the Company
enter into this Agreement providing to Intel certain information
rights, registration rights and other rights, all as more fully
set forth herein.
AGREEMENT
In consideration of the foregoing recitals, the mutual
promises in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. INFORMATION RIGHTS.
The Company covenants and agrees that for so long as Intel
and its Affiliates hold at least twenty-five percent (25%) of the
Series B Preferred Stock of the Company acquired in connection
with the transactions contemplated by the Asset Purchase
Agreement (or Common Stock issuable upon conversion thereof), the
Company shall:
(a) Annual Reports. Furnish to Intel promptly
following the filing of such report with the SEC a copy of the
Company's Annual Report on Form 10-K for each fiscal year, which
shall include a consolidated balance sheet as of the end of such
fiscal year, a consolidated statement of income and a
consolidated statement of cash flows of the Company and its
Subsidiaries for such year, setting forth in each case in
comparative form the figures from the Company's previous fiscal
year, all prepared in accordance with generally accepted
accounting principles and practices and audited by nationally
recognized independent certified public accountants. In the
event the Company shall no longer be required to file Annual
Reports on Form 10-K, the Company shall, within ninety (90) days
following the end of each respective fiscal year, deliver to the
Intel a copy of such balance sheets, statements of income and
statements of cash flows.
(b) Quarterly Reports. Furnish to Intel promptly
following the filing of such report with the SEC, a copy of each
of the Company's Quarterly Reports on Form 10-Q, which shall
include a consolidated balance sheet as of the end of the
respective fiscal quarter, consolidated statements of income and
consolidated statements of cash flows of the Company and its
Subsidiaries for the respective fiscal quarter and for the year
to-date, setting forth in each case in comparative form the
figures from the comparable periods in the Company's immediately
<PAGE> 2 INTEL CONFIDENTIAL
preceding fiscal year, all prepared in accordance with generally
accepted accounting principles and practices (except, in the case
of any Form 10-Q, as may otherwise be permitted by Form 10-Q),
but all of which may be unaudited. In the event the Company
shall no longer be required to file Quarterly Reports on Form 10-
Q, the Company shall, within forty-five (45) days following the
end of each of the first three (3) fiscal quarters of each fiscal
year, deliver to Intel a copy of such balance sheets, statements
of income and statements of cash flows.
(c) SEC Filings. The Company shall deliver to Intel
copies of each other document filed with the SEC on a non-
confidential basis promptly following the filing of such document
with the SEC.
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Agreement:
(a) Affiliate. The term "Affiliate" means, with
respect to any person or entity, any person or entity directly or
indirectly controlling, controlled by or under direct or indirect
common control with such other person or entity.
(b) Applicable Law. The term "Applicable Law" means,
with respect to any Person, any federal, state, local or foreign
statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority applicable to
such Person or any of its Affiliates or ERISA Affiliates or any
of their respective properties, assets, officers, directors,
employees, consultants or agents.
(c) Registration. The terms "register," "registered,"
and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness
of such registration statement
(d) Registrable Securities. The term "Registrable
Securities" means: (x) the shares of Common Stock issuable upon
conversion of the shares of Series B Preferred Stock issued to
Intel in connection with the transactions contemplated by the
Asset Purchase Agreement and (y) any shares of Common Stock of
the Company or other securities of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or
other security that is issued as) a dividend or other
distribution with respect to, or in exchange for or in
replacement of, any of the securities described in the
immediately preceding clause. Notwithstanding the foregoing,
"Registrable Securities" shall exclude any Registrable Securities
sold by a person in a transaction in which rights under this
Section 2 are not assigned in accordance with this Agreement or
any Registrable Securities sold in a public offering, whether
sold pursuant to Rule 144 promulgated under the Securities Act,
or in a registered offering, or otherwise.
(e) Registrable Securities Then Outstanding. The
number of shares of "Registrable Securities Then Outstanding"
shall mean the number of Purchased Shares, shares of Common Stock
and other securities that are Registrable Securities and are then
issued and outstanding.
<PAGE> 3 INTEL CONFIDENTIAL
(f) Holder. For purposes of this Section 2, the term
"Holder" means any person owning of record Registrable Securities
that have not been sold to the public or pursuant to Rule 144
promulgated under the Securities Act or any permitted assignee of
record of such Registrable Securities to whom rights under this
Section 2 have been duly assigned in accordance with this
Agreement.
(g) Exchange Act. The term "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
(h) Form S-3. The term "Form S-3" means such form
under the Securities Act as is in effect on the date hereof or
any successor registration form under the Securities Act
subsequently adopted by the SEC that permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(i) Person. The term "Person" means an individual,
corporation, partnership, association, limited liability company,
trust, estate or other similar business entity or organization,
including a governmental authority.
(j) SEC. The term "SEC" means the United States
Securities and Exchange Commission or any successor agency
administering the federal securities laws.
(k) Securities Act. The term "Securities Act" means
the Securities Act of 1933, as amended.
(l) Subsidiary. The term "Subsidiary" means, with
respect to any Person, (a) any corporation as to which more than
fifty percent (50%) of the outstanding stock having ordinary
voting rights or power (and excluding stock having voting rights
only upon the occurrence of a contingency unless and until such
contingency occurs and such rights may be exercised) is owned or
controlled, directly or indirectly, by such Person and/or by one
or more of such Person's direct or indirect Subsidiaries and (b)
any partnership, joint venture or other similar relationship
between such Person (or any Subsidiary thereof) and any other
Person (whether pursuant to a written agreement or otherwise).
2.2 Demand Registration.
(a) Request by Holders. If the Company shall,
following the date hereof, receive a written request from the
Holders of twenty-five percent (25%) of the Registrable
Securities, that the Company file a registration statement under
the Securities Act on Form S-3 or, if the Company is not eligible
to file a registration statement on Form S-3 such other form as
such Holders (upon the advice of the underwriters, if any,
engaged by such Holders) may request covering the registration of
Registrable Securities, then the Company shall, within ten (10)
business days of the receipt of such written request, give
written notice of such request ("Request Notice") to all Holders,
and use commercially reasonable efforts to effect, as soon as
reasonably practicable, the registration under the Securities Act
of all Registrable Securities that Holders request to be
registered and included in such registration by written notice
given such Holders to the Company within twenty (20) days after
receipt of the Request Notice; provided that the Company shall
not be obligated to effect any such registration if the Company
has, within the six (6) month period preceding the date of such
request, already effected a registration under the
<PAGE> 4 INTEL CONFIDENTIAL
Securities Act pursuant to Section 2.3, other than a registration
from which the Registrable Securities of Holders have been
excluded with respect to all or any portion of the Registrable
Securities the Holders requested be included in such
registration; provided, however, that the Company shall have no
obligation to cause any registration statement contemplated by
this Section 2.1 to become effective prior to the three hundred
and sixty-fifth (365th) day after the date hereof. If requested
by such Holders, upon the advice of the underwriters, if any,
engaged by such Holders, the Company shall register such
Registrable Securities on Form S-1 or any successor registration
form.
(b) Underwriting. If the Holders initiating the
registration request under this Section 2.2 ("Initiating
Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, then they shall so
advise the Company as a part of their request, and the Company
shall include such information in the written notice referred to
in Section 2.2(a). In such event, the right of any Holder to
include his or her Registrable Securities in such registration
shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting (unless otherwise mutually agreed
by a majority in interest of the initiating Holders and such
Holder determined based on the number of Registrable Securities
held by such Holders being registered). All Holders proposing to
distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such
underwriting by the Holders of a majority of the Registrable
Securities being registered and reasonably acceptable to the
Company (including a market stand-off agreement of up to ninety
(90) days if required by such underwriters). Notwithstanding any
other provision of this Section 2.2, if the underwriter(s)
advise(s) the Company in writing that marketing factors require a
limitation of the number of securities to be underwritten then
the Company shall so advise all Holders of Registrable Securities
that would otherwise be registered and underwritten pursuant
hereto, and the number of Registrable Securities that may be
included in the underwriting shall be reduced as required by the
underwriter(s) and allocated among the Holders of Registrable
Securities on a pro rata basis according to the number of
Registrable Securities then outstanding held by each Holder
requesting registration (including the initiating Holders);
provided, however, that the number of shares of Registrable
Securities to be included in such underwriting and registration
shall not be reduced unless all other securities of the Company
and any selling securityholder other than the Holders are first
entirely excluded from the underwriting and registration.
Subject to the proviso in the immediately preceding sentence, the
Company and other stockholders of the Company can include shares
in any such underwritten offering. Any Registrable Securities
excluded and withdrawn from such underwriting shall be withdrawn
from the registration.
(c) Maximum Number of Demand Registrations. The
Company shall be obligated to effect only two (2) such
registration pursuant to this Section 2.2.
(d) Expenses. All expenses incurred in connection
with any registration pursuant to this Section 2.2, including all
federal and "blue sky" registration, filing and qualification
fees, printer's and accounting fees, and fees and disbursements
of counsel for the Company (but excluding underwriters' discounts
and commissions relating to shares sold by the Holders), shall be
borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.2 shall bear such
Holder's proportionate share (based on the total number of shares
<PAGE> 5 INTEL CONFIDENTIAL
sold in such registration other than for the account of the
Company) of all discounts, commissions or other amounts payable
to underwriters or brokers in connection with such offering by
the Holders. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration
proceeding begun pursuant to this Section 2.2 if the registration
request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (and
such expenses shall be paid on demand by the Holders requesting
such withdrawal), unless the Holders of such majority agree that
such registration constitutes the use by the Holders of one (1)
demand registration pursuant to this Section 2.2 (in which case
such registration shall also constitute the use by all Holders of
Registrable Securities of one (l) such demand registration);
provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change
relating to the business, financial condition or prospects of the
Company not known to the Holders at the time of their request for
such registration and have withdrawn their request for
registration after learning of such material adverse change, then
the Holders shall not be required to pay any of such expenses and
such registration shall not constitute the use of a demand
registration pursuant to this Section 2.2.
2.3 Piggyback Registrations. The Company shall notify all
Holders of Registrable Securities in writing at least thirty (30)
days prior to filing any registration statement under the
Securities Act for purposes of effecting a public offering of
securities of the Company (including registration statements
relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any employee
benefit plan, any dividend reinvestment plan or any merger or
other corporate reorganization) and will afford each such Holder
an opportunity to include in such registration statement all or
any part of the Registrable Securities then held by such Holder.
Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by
such Holder shall within twenty (20) days after receipt of the
above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the
number of Registrable Securities such Holder wishes to include in
such registration statement. If a Holder decides not to include
all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities
in any subsequent registration statement or registration
statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions
set forth herein.
(a) Underwriting. If a registration statement under
which the Company gives notice under this Section 2.3 is for an
underwritten offering, then the Company shall so advise the
Holders of Registrable Securities. In such event, the right of
any such Holder's Registrable Securities to be included in such a
registration pursuant shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into
an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting
(including a market stand-off agreement of up to ninety (90) days
if required by such underwriters); provided, however, that it
shall not be considered customary to require any of the Holders
to provide representations and warranties regarding the Company
or indemnification of the underwriters for material misstatements
or omissions regarding the Company in the registration statement
or prospectus for such offering. Notwithstanding any other
provision of this Agreement, if the
<PAGE> 6 INTEL CONFIDENTIAL
managing underwriter determine(s) in good faith that marketing
factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares
from the registration and the underwriting; provided; however,
that the securities to be included in the registration and the
underwriting shall be allocated, (1) first to the Company
(provided, however, that a minimum of twenty percent (20%) of the
number of Registrable Securities held by each Holder (where any
Registrable Securities that are not shares of Common Stock but
are exercisable or exchangeable for, or convertible into, shares
of Common Stock, shall be deemed to have been so exercised,
exchanged or converted for such purpose) must also in any event
be included if requested by any such Holder), (2) second, to the
extent the managing underwriter determines additional securities
can be included after compliance with clause (1), to each of the
Holders (to the extent not included pursuant to clause (1))
requesting inclusion of their Registrable Securities in such
registration statement on a pro rata basis based on the total
number of Registrable Securities and other securities entitled to
registration then held by each such Holder, and (3) third, to the
extent the managing underwriter determines additional securities
can be included after compliance with clauses (1) and (2), any
other shares of Common Stock or other securities of the Company.
Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, the Holder
and the partners and retired partners of such Holder, or the
estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing
persons, and for any Holder that is a corporation, the Holder and
all corporations that are affiliates of such Holder, shall be
deemed to be a single "Holder," and any pro rata reduction with
respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and
individuals included in such "Holder," as defined in this
sentence.
(b) Expenses. All expenses incurred in connection
with a registration pursuant to this Section 2.3 (excluding
underwriters' and brokers' discounts and commissions relating to
shares sold by the Holders), including all federal and "blue sky"
registration, filing and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel for the
Company, shall be borne by the Company.
(c) Not Demand Registration. Registration pursuant to
this Section 2.3 shall not be deemed to be a demand registration
as described in Section 2.2 above. Except as otherwise provided
herein, there shall be no limit on the number of times the
Holders may request registration of Registrable Securities under
this Section 2.3.
2.4 Form S-3 Registration. If requested by Intel, the
Company shall use all reasonable commercial efforts to cause to
be filed and become effective with the SEC a Registration
Statement on Form S-3 relating to all of the Registrable
Securities (in the event such registration statement is not
effective on such date, the Company shall continue to use all
reasonable commercial efforts to cause it to become effective
until it becomes effective), such Registration Statement to be
effected only for sales or other transfers by Intel in connection
with offerings, sales and transfers not constituting an
underwritten public offering; provided, however, that the Company
shall not be obligated to cause such registration statement to
become effective before the one hundred eighty-first (181st) day
following the date hereof. The Company shall use commercially
reasonable efforts to cause any such Registration Statement to
become effective as promptly as possible after such filing (but
shall not be required to cause such
<PAGE> 7 INTEL CONFIDENTIAL
Registration Statement to become effective prior to the one
hundred eighty-first (181st) day following the date hereof) and
shall also use its best efforts to obtain any related
qualifications, registrations or other compliances that may be
necessary under any applicable "blue sky" laws. In connection
with such registration, the Company will:
(a) Notice. Promptly give written notice to the
Holders of the proposed registration and any related
qualification or compliance; and
(b) Registration. Effect such registration and all
such qualifications and compliances and as would permit or
facilitate the sale and distribution of all or such portion of
such Holders or Holders' Registrable Securities on and after the
one hundred and eighty first (181st) day following the date
hereof; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or
compliance pursuant to this Section 2.4 in any particular
jurisdiction in which the Company would be required to qualify to
do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance.
(c) Expenses. The Company shall pay all expenses
incurred in connection with the first two (2) registrations
requested pursuant to this Section 2.4, excluding brokers'
discounts and commissions relating to shares sold by the Holders,
including federal and "blue sky" registration, filing and
qualification fees, printers' and accounting fees, and fees and
disbursements of counsel. Intel shall pay all expenses for
subsequent registrations it requests pursuant to this Section
2.4.
(d) Not Demand Registration. Form S-3 registrations
pursuant to this Section 2.4 shall not be deemed to be demand
registrations as described in Section 2.2 above.
(e) Maintenance. The Company shall use all reasonable
commercial efforts to maintain the effectiveness of any Form S-3
registration statement filed under this Section 2.4 until the
earlier of: (a) the date on which all of the Registrable
Securities have been sold; and (b) one hundred eighty (180) days
after the effective date of such registration statement.
(f) Maximum Number of Form S-3 Registrations. The
Company shall be obligated to effect only one such registration
pursuant to this Section 2.4 in any six (6) month period, without
limitation of the total number of registrations on Form S-3.
2.5 Obligations of the Company. Whenever required to
effect the registration of any Registrable Securities under this
Agreement the Company shall, as expeditiously as reasonably
possible:
(a) Registration Statement. Prepare and file with the
SEC a registration statement with respect to such Registrable
Securities and use commercially reasonable efforts to cause such
registration statement to become effective; provided, however,
that, except as otherwise required by this Section 2, the Company
shall not be required to keep any such registration statement
effective for more than ninety (90) days.
(b) Amendments and Supplements. Prepare and file with
the SEC such amendments and supplements to such registration
statement and the prospectus used in
<PAGE> 8 INTEL CONFIDENTIAL
connection with such registration statement as may be necessary
to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration
statement.
(c) Prospectuses. Furnish to the Holders such number
of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by
them that are included in such registration.
(d) Blue Sky. Use commercially reasonable efforts to
register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such
states or jurisdictions.
(e) Underwriting. In the event of any underwritten
public offering, enter into and perform its obligations under an
underwriting agreement in usual and customary form (including
customary indemnification of the underwriters by the Company),
with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and
perform its obligations under such an agreement; provided,
however, that it shall not be considered customary to require any
of the Holders to provide representations and warranties
regarding the Company or indemnification of the underwriters for
material misstatements or omissions regarding the Company in the
registration statement or prospectus for such offering.
(f) Notification. Notify each Holder of Registrable
Securities covered by such registration statement at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act of the happening of any event as a
result of which the prospectus included in such registration
statement, as then in effect, includes an 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 not
misleading in the light of the circumstances then existing. In
such event, the Company shall prepare a supplement or post-
effective amendment to such registration statement or related
prospectus or file any other required document so that, as
thereafter delivered to the purchasers of Registrable Securities
sold thereunder, the prospectus will not contain an 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, in light of the circumstances under which they were
made, not misleading or, if appropriate, issue a Suspension
Notice as provided in Section 2.10 hereinafter.
(g) Opinion and Comfort Letter. Furnish, at the
request of any Holder requesting registration of Registrable
Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are
being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and
(ii) in the event that such securities are being sold through
underwriters, a "comfort" letter dated as of such date, from the
independent certified
<PAGE> 9 INTEL CONFIDENTIAL
public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters requesting
registration of Registrable Securities.
2.6 Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to
Sections 2.2, 2.3 or 2.4 that the selling Holders shall furnish
to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to timely
effect the registration of their Registrable Securities.
2.7 Indemnification. In the event any Registrable
Securities are included in a registration statement under
Sections 2.2, 2.3 or 2.4:
(a) By the Company. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, the
partners, officers, shareholders, employees, representatives and
directors of each Holder, any underwriter (as determined in the
Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims,
damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions
or violations (collectively a "Violation"):
(x) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto;
(y) 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, or
(z) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any federal or
state securities law or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner,
officer, shareholder, employee, representative, director,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this subsection shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the
Company, nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon a Violation that occurs in
reliance upon and in conformity with written information
furnished expressly for use in connection with such registration
by such Holder, partner, officer, shareholder, employee,
representative, director, underwriter or controlling person of
such Holder.
<PAGE> 10 INTEL CONFIDENTIAL
(b) By Selling Holders. To the extent permitted by
law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act,
any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's
partners, officers, shareholders, employees, representatives and
directors and any person who controls such Holder within the
meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities (joint or several) to
which the Company or any such officer or director, controlling
person, underwriter or other such Holder, partner, officer,
shareholder, employee, representative, director or controlling
person of such other Holder may become subject under the
Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity
with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by
the Company or any such officer or director, controlling person,
underwriter or other Holder, partner, officer, shareholder,
employee, representative, director or controlling person of such
other Holder in connection with investigating or defending any
such loss, claim, damage, liability or action: provided, however,
that the indemnity agreement contained in this subsection shall
not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Holder; and provided further, that the
total amounts payable in indemnity by a Holder under this
subsection or otherwise in respect of any and all Violations
shall not exceed in the aggregate the net proceeds received by
such Holder in the registered offering out of which such
Violations arise.
(c) Notice. Promptly after receipt by an indemnified
party under of notice of the commencement of any action
(including any governmental action), such indemnified party will,
if a claim in respect thereof is to be made against any
indemnifying party under this section, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses
of one such additional counsel in the aggregate to be paid by the
indemnifying party, to the extent that representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential conflict
of interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of liability except to the extent
the indemnifying party is prejudiced as a result thereof.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of the Company and Holders are
subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or
the amended prospectus filed with the SEC pursuant to SEC Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall
not inure to the benefit of any person if a copy of
<PAGE> 11 INTEL CONFIDENTIAL
the Final Prospectus was timely furnished to the indemnified
party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities
Act in any case in which either (i) any Holder exercising rights
under this Agreement, or any controlling person of any such
Holder, makes a claim for indemnification pursuant to this
section, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this section provides for
indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such selling
Holder or any such controlling person in circumstances for which
indemnification is provided under this section; then, and in each
such case, the Company and such Holder will contribute to the
aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such
proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price of
its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all
securities offered by and sold under such registration statement,
and the Company and other selling Holders are responsible for the
remaining portion; provided, however, that, in any such case:
(A) no such Holder will be required to contribute any amount in
excess of the public offering price of all such Registrable
Securities offered and sold by such Holder pursuant to such
registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
(f) Survival. The obligations of the Company and
Holders under this Section 2.7 shall survive until the fifth
anniversary of the completion of any offering of Registrable
Securities in a registration statement, regardless of the
expiration of any statutes of limitation or extensions of such
statutes.
2.8 Termination of the Company's Obligations. The Company
shall have no obligations pursuant to this Section 2 with respect
to any Registrable Securities proposed to be sold by a Holder in
a registration pursuant to Section 2.2, 2.3 or 2.4 more than five
(5) years after the date hereof.
2.9 No Superior Registration Rights to Third Parties.
Without the prior written consent of Intel, the Company covenants
and agrees that it shall not grant, or cause or permit to be
created, for the benefit of any person or entity any registration
rights of any kind (whether similar to the demand, "piggyback" or
Form S-3 registration rights described in this Section 2, or
otherwise) relating to shares of the Company's Common Stock or
any other securities of the Company that are superior to the
rights granted under this Section 2.
2.10 Suspension Provisions. Notwithstanding the foregoing
subsections of this Section 2, the Company shall not be required
to take any action with respect to the registration or the
declaration of effectiveness of the registration statement
following written notice to the Holders from the Company (a
"Suspension Notice") of the existence of any state of facts or
the
<PAGE> 12 INTEL CONFIDENTIAL
happening of any event (including pending negotiations relating
to, or the consummation of, a transaction, or the occurrence of
any event that the Company believes, in good faith, requires
additional disclosure of material, non-public information by the
Company in the registration statement that the Company believes
it has a bona fide business purpose for preserving
confidentiality or that renders the Company unable to comply with
the published rules and regulations of the SEC promulgated under
the Securities Act or the Exchange Act, as in effect at any
relevant time (the "Rules and Regulations")) that would result in
(1) the registration statement, any amendment or post-effective
amendment thereto, or any document incorporated therein by
reference containing an untrue statement of a material fact or
omitting to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
(2) the prospectus issued under the registration statement, any
prospectus supplement, or any document incorporated therein by
reference including an untrue statement of material fact or
omitting to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, provided that the Company (1)
shall not issue a Suspension Notice more than twice in any twelve
(12) month period, (2) shall use its best efforts to remedy, as
promptly as practicable, but in any event within ninety (90) days
of the date on which the Suspension Notice was delivered, the
circumstances that gave rise to the Suspension Notice and deliver
to the Holders notification that the Suspension Notice is no
longer in effect and (3) shall not issue a Suspension Notice for
any period during which the Company's executive officers are not
similarly restrained from disposing of shares of the Company's
Common Stock. Upon receipt of a Suspension Notice from the
Company, all time limits applicable to the Holders under this
Section 2 shall automatically be extended by an amount of time
equal to the amount of time the Suspension Notice is in effect,
the Holders will forthwith discontinue disposition of all such
shares pursuant to the registration statement until receipt from
the Company of copies of prospectus supplements or amendments
prepared by or on behalf of the Company (which the Company shall
prepare promptly), together with a notification that the
Suspension Notice is no longer in effect, and if so directed by
the Company, the Holders will deliver to the Company all copies
in their possession of the prospectus covering such shares
current at the time of receipt of any Suspension Notice.
3. OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION.
3.1 Confidential Information. Confidential Information (as
defined below) shall not be disclosed by any party hereto to any
third party except in accordance with the provisions set forth
below. For purposes of this Agreement, the term "Confidential
Information" refers to the following items: (i) the existence of
this Agreement and the Asset Purchase Agreement, and (ii) the
terms and provisions of this Agreement and the Asset Purchase
Agreement; provided, however, that Confidential Information shall
not include any information that was (i) publicly known and
generally available in the public domain prior to its disclosure
by the Company, (ii) becomes publicly known and generally
available in the public domain through no action or inaction on
the part of the Company or (iii) becomes publicly known by
written consent or other action of Intel.
3.2 Public Announcements. Neither the Company nor Intel
shall issue any press release or otherwise make any public
statements with respect to the transactions contemplated by this
Agreement and the Asset Purchase Agreement, without the prior
consent of the other party, except as may be required by
Applicable Law, or by the rules and regulations of, or pursuant
to
<PAGE> 13 INTEL CONFIDENTIAL
any agreement with, the Nasdaq National Market. The Company and
Intel agree there shall be no public announcement of this
Agreement or the Asset Purchase Agreement or the transactions
contemplated hereby or thereby except as may be required by
Applicable Law or as mutually agreed by the parties. The parties
agree to announce the transactions contemplated by this Agreement
and the Asset Purchase Agreement to Intel's employees, customers,
vendors and strategic partners at such time and in such form as
is mutually agreed upon by the parties.
3.3 Legally Compelled Disclosure. The Company agrees that
it will provide Intel with drafts of any documents, press
releases or other filings in which the Company desires to
disclose this Agreement and the Asset Purchase Agreement, the
transactions contemplated hereby or thereby, or any other
Confidential Information is disclosed at least three (3) business
days prior to the filing or disclosure thereof, and that it will
make any changes to such materials as requested by Intel unless
advised by counsel that the Rules and Regulations require
otherwise.
3.4 Other Information. The provisions of this Section 3
shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by
any of the parties hereto with respect to the transactions
contemplated hereby. Additional disclosures and exchange of
confidential information between the Company and Intel shall be
governed by the terms of the CNDA. In addition, the terms of the
Supply Agreement of even date herewith between the Company and
Intel shall be governed by the confidentiality provisions
therein.
4. ASSIGNMENT AND AMENDMENT.
4.1 Assignment of Rights. The rights of Intel under
Sections 2.2 and 2.3 are transferable to a Person who acquires at
least twenty percent (20%) of the Preferred Stock owned by Intel
on the date of this Agreement; provided, however, that such
transferred rights are not subject to further assignment. No
assignment permitted by this Section 4 shall be effective until
the Company is given written notice by the assigning party,
stating the name and address of the assignee and identifying the
securities of the Company as to which the rights in question are
being assigned. In all cases, any such assignee shall receive
such assigned rights subject to all the terms and conditions of
this Agreement.
4.2 Amendment of Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
Intel (or, in the case of an amendment or waiver of any provision
of Section 2 hereof, only with the written consent of the Company
and the Holders of a majority of the Registrable Securities then
outstanding and entitled to the registration rights set forth in
Section 2 hereof). Any amendment or waiver effected in
accordance with this Section 4.2 shall be binding upon Intel,
each Holder, each permitted successor or assignee of Intel or
such Holder and the Company.
5. RIGHT OF FIRST OFFER
If at any time Intel shall desire to sell, transfer or
otherwise dispose of ten percent (10%) or more of its shares of
Preferred Stock in a single transaction or series of related
transactions (the "Offered Shares"), Intel shall deliver written
notice of its desire to do so (the "Sale Notice") to the Company.
The Company then shall have ten (10) days to submit to Intel an
offer to
<PAGE> 14 INTEL CONFIDENTIAL
purchase the Offered Shares for cash payable not later than ten
(10) days after acceptance (the "Company Offer"). Intel shall
have the right and option, within ten (10) days after the Company
Offer, to accept irrevocably such offer. If, after the end of
the ten (10) day period following the Company Offer, Intel shall
not have accepted the Company Offer, Intel shall have one hundred
twenty (120) days in which to sell the Offered Shares to any
bona fide third party, at a price not less than ninety five
percent (95%) of that contained in the Company Offer.
6. GENERAL PROVISIONS.
6.1. Notices. Except as may be otherwise provided herein,
all notices, requests, waivers and other communications made
pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given: (a) when hand
delivered to the other party; (b) when received when sent by
facsimile at the address set forth below; (c) three business days
after deposit in the U.S. mail with first class or certified mail
receipt requested postage prepaid and addressed to the other
party as set forth below; or (d) the next business day after
deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-
business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery service
provider.
To the Company:
Centennial Technologies, Inc.
7 Lopez Road
Wilmington, Massachusetts 01887
Attn: President
Fax: (978) 988-7651
With copies to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Raymond C. Zemlin, P.C.
Fax: (617) 523-1231
To Intel: as provided on the signature page hereto
Each person making a communication hereunder by facsimile
shall promptly confirm by telephone to the person to whom such
communication was addressed each communication made by it by
facsimile pursuant hereto but the absence of such confirmation
shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate
additional addresses, for purposes of this Section 5.1 by giving
the other party written notice of the new address in the manner
set forth above.
6.2 Entire Agreement. This Agreement and the Asset
Purchase Agreement, together with all the schedules and exhibits
hereto, constitutes and contains the entire agreement and
understanding of the parties with respect to the subject matter
hereof and supersedes any and all
<PAGE> 15 INTEL CONFIDENTIAL
prior negotiations, correspondence, agreements, understandings,
duties or obligations between the parties respecting the subject
matter hereof.
6.3 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware without regard to
provisions regarding conflict of laws.
6.4 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, then
such provision(s) shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in
accordance with its terms.
6.5 Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the
parties hereto and their permitted successors and assigns, any
rights or remedies under or by reason of this Agreement.
6.6 Successors and Assigns. Subject to the provisions of
Section 4.1, the provisions of this Agreement shall inure to the
benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto.
6.7 Captions. The captions to sections of this Agreement
have been inserted for identification and reference purposes only
and shall not be used to construe or interpret this Agreement.
6.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
6.9 Adjustments for Stock Splits, Etc. Wherever in this
Agreement there is a reference to a specific number of shares of
stock, then, upon the occurrence of any subdivision, combination
or stock dividend, the specific number of shares so referenced in
this Agreement shall automatically be proportionally adjusted to
reflect the affect on the outstanding shares of such class or
series of stock by such subdivision, combination or stock
dividend.
{Balance of this page intentionally left blank}
<PAGE> 16 INTEL CONFIDENTIAL
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year herein above first written.
CENTENNIAL TECHNOLOGIES, INC.
By: /s/Richard J. Pulsifer
----------------------
Richard J. Pulsifer
Chief Financial Officer,
Secretary and Treasurer
INTEL CORPORATION
By: /s/Noel S. Lazo
------------------
Name: Noel S. Lazo
Title: Assistant Treasurer
Address: 2200 Mission College Boulevard
Santa Clara, California 95052
[Signature Page to Rights Agreement between
Centennial Technologies, Inc.
and Intel Corporation]
