SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 3, 1994
QUANTUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-12390 94-2665054
(Commission File No.) (IRS Employer Identification No.)
500 McCarthy Boulevard
Milpitas, CA 95035
(Address of principal executive offices and zip code)
Registrant's telephone number,
including area code: (408) 894-4000
ITEM 2. Acquisitions or Dispositions of Assets
On July 18, 1994, Quantum Corporation (the "Company")
entered into a Stock and Asset Purchase Agreement (the
"Agreement"), as amended by Amendment No. 1, dated as of
October 3, 1994 (the "Amendment No. 1"), as supplemented by the
Supplemental Agreement to the Stock and Asset Purchase Agreement,
dated as October 3, 1994 (the "Supplemental Agreement") pursuant
to which the Company agreed to acquire from Digital Equipment
Corporation ("Digital"): (i) the stock of certain subsidiaries of
Digital, including 81% of the capital stock of Rocky Mountain
Magnetics, Inc., a Delaware corporation ("RMMI"), pursuant to the
RMMI Stock Purchase Agreement, dated as of July 18, 1994; and
(ii) certain of the other assets related to the data storage
business conducted by Digital directly and through its
subsidiaries, including the design, manufacture and marketing of
computer disk drive, tape drive, tape media solid state memory
device and magnetic recording head products and optical storage
devices and technology other than CD-ROM but not including
Digital's subsystems, video-server, CD-ROM media business or
floppy diskette media business (the "Business"), and to assume
certain specified liabilities related to the Business. The
transaction closed on October 3, 1994. The Company plans to
continue to use the assets in substantially the same business.
The total purchase price was $360 million, plus assumption
by the Company of specified liabilities related to the Business.
The purchase price is subject to post-closing reduction to the
extent that the value of inventory and property, plant and
equipment transferred at closing was less than specified levels
or if capital expenditures made by Digital related to the
Business are less than specified levels. The purchase price was
paid with $290,000,000 in cash and a $70,000,000 note. The
source of funds for the purchase price was existing cash from
Bank of America and funds provided by a credit facility provided
by a syndicate of banks managed by ABN AMRO N.V., Barclays Bank
PLC and Canadian Imperial Bank of Commerce.
The foregoing description of the proposed transaction is
qualified by the full text of the Agreement, the Amendment No. 1,
the Supplemental Agreement, the RMMI Stock Purchase Agreement,
dated as of July 18, 1994 among Quantum Corporation, Digital
Equipment Corporation and Rocky Mountain Magnetics, Inc. and the
Patent Assignment and License Agreement, dated as of October 3,
1994, by and between Digital Equipment Corporation and Quantum
Corporation, copies of which have been filed as Exhibits to this
Current Report on Form 8-K and are hereby incorporated herein by
reference.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements
The Registrant believes that it would be impractical to
provide the required financial statements at the time this
report on Form 8-K is filed. The Registrant intends to file
such financial statements as an amendment to this Form 8-K
within sixty days of the date hereof.
(b) Pro Forma Financial Information
The Registrant believes that it would be impractical to
provide the required pro forma financial information at the
time this report on Form 8-K is filed. The Registrant
intends to file such financial information as an amendment
to this Form 8-K within sixty days of the date hereof.
(c) Exhibits
1. Stock and Asset Purchase Agreement by and among Quantum
Corporation, Quantum Peripherals (Europe) S.A. and Digital
Equipment Corporation, dated as of July 18, 1994.
2. Amendment No. 1, dated as of October 3, 1994, to the Stock
and Asset Purchase Agreement, dated as of July 18, 1994,
among Quantum Corporation, Quantum Peripherals (Europe) S.A.
and Digital Equipment Corporation.
3. Supplemental Agreement to Stock and Asset Purchase
Agreement, dated as of October 3, 1994, between Quantum
Corporation, Quantum Peripherals (Europe) S.A. and Digital
Equipment Corporation.
4. RMMI Stock Purchase Agreement, dated as of July 18, 1994
among Quantum Corporation, Digital Equipment Corporation and
Rocky Mountain Magnetics, Inc.
5. Patent Assignment and License Agreement, dated as of October
3, 1994, by and between Digital Equipment Corporation and
Quantum Corporation.
6. Press Release, dated July 18, 1994.
7. Press Release, dated October 3, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
QUANTUM CORPORATION
Dated: October 17, 1994
By:/s/ JOSEPH T. RODGERS
Executive VP Finance,
Chief Financial Officer
and Secretary
<PAGE>
INDEX TO EXHIBITS
Page No.
1. Stock and Asset Purchase Agreement by and among Quantum
Corporation, Quantum Peripherals (Europe) S.A. and Digital
Equipment Corporation, dated as of July 17, 1994.
2. Amendment No. 1, dated as of October 3, 1994, to the Stock
and Asset Purchase Agreement, dated as of July 18, 1994,
among Quantum Corporation, Quantum Peripherals (Europe) S.A.
and Digital Equipment Corporation.
3. Supplemental Agreement to Stock and Asset Purchase
Agreement, dated as of October 3, 1994, between Quantum
Corporation, Quantum Peripherals (Europe) S.A. and Digital
Equipment Corporation.
4. RMMI Stock Purchase Agreement, dated as of July 18, 1994
among Quantum Corporation, Digital Equipment Corporation and
Rocky Mountain Magnetics, Inc.
5. Patent Assignment and License Agreement, dated as of October
3, 1994, by and between Digital Equipment Corporation and
Quantum Corporation.
6. Press Release, dated July 18, 1994.
7. Press Release, dated October 3, 1994.
STOCK AND ASSET PURCHASE AGREEMENT
dated as of
July 18, 1994
among
DIGITAL EQUIPMENT CORPORATION,
QUANTUM CORPORATION,
and
QUANTUM PERIPHERALS (EUROPE) S.A.
STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT dated as of July 18, 1994
between DIGITAL EQUIPMENT CORPORATION, a Massachusetts corporation
("Seller"), and QUANTUM CORPORATION, a Delaware corporation
("Buyer"), and QUANTUM PERIPHERALS (EUROPE) S.A., a wholly owned
subsidiary of Buyer ("Quantum Europe").
W I T N E S S E T H:
WHEREAS, Seller conducts a data storage business (the
"Business," which term does not include Seller's subsystems,
video server, CD-ROM media business or floppy diskette media
business but does include the design, manufacture and marketing
of computer disk drive, tape drive, tape media, solid state
memory device and magnetic recording head products and optical
storage devices and technology other than CD-ROM) directly and
through its subsidiaries Rocky Mountain Magnetics, Inc. ("RMMI")
and Digital Equipment Storage Products (Malaysia) snd bhd
("Malaysian Subsidiary") (RMMI and the Malaysian Subsidiary,
collectively, the "Subsidiaries"); and
WHEREAS, Buyer and Quantum Europe desire to purchase
substantially all of the assets of the Business from Seller, and
Seller desires to sell substantially all of the assets of the
Business to Buyer and Quantum Europe, upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Accounting Convention" means the accounting
principles and procedures used to prepare the Financial
Statements as described in Exhibit A.
"Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or
under common control with such other Person.
"Ancillary Agreements" means the Seller-Buyer
Lease Agreement, the Seller-Buyer Patent Assignment Agreement,
the Seller-Buyer Transition and Services Agreement, the Seller-
Buyer Supply Agreement, the Seller-Buyer Software Assignment and
License Agreement, the Seller-Buyer Trademark Assignment
Agreement, the RMMI Stock Purchase Agreement, the RMMI Head
Supply Agreement and the RMMI MR Head Manufacturing and Supply
Agreements.
"Closing Date" means the date of the Closing.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" means (i) United States,
state and foreign trademark rights, service marks, tradenames and
brand names, including claims for infringement, and registrations
thereof and applications therefor and goodwill associated with
the foregoing accruing from the dates of first use thereof; (ii)
United States and foreign copyrights, copyright registrations and
copyright applications, including claims for infringement, and
other rights associated with the foregoing and the underlying
works of authorship; (iii) United States and foreign patents and
patent applications, including claims for infringement and all
international proprietary rights associated therewith; (iv)
contracts or agreements granting any right, title, license or
privilege under the intellectual property rights of any third
party; and (v) inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs,
trade secrets, shop and royalty rights, employee covenants and
agreements respecting intellectual property and non-competition.
Intellectual Property includes, without limitation, the items
listed on Schedule 3.17.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or other
similar encumbrance of any kind in respect of such asset.
"Material Adverse Effect" means a material adverse
effect on the business, assets, financial condition or results of
operations of the Business taken as a whole.
"1934 Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
"Person" means an individual, a corporation, a
partnership, an association, a trust or other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
"RMMI Head Supply Agreement" means the RMMI Head
Supply Agreement between Buyer and RMMI to be entered into
substantially on the terms set forth on Exhibit B-1.
"RMMI MR Head Manufacturing and Supply Agreements"
means the MR Head Manufacturing and Supply Agreements between
Seller and Buyer to be entered into on the Closing Date
substantially on the terms set forth on Exhibit B-2.
"RMMI Stock Purchase Agreement" means the RMMI
Stock Purchase Agreement between Seller and Buyer to be entered
into on the date of this Agreement substantially in the form of
Exhibit C.
"RMMI Stockholders' Agreement" means the
Stockholders' Agreement, dated as of August 19, 1992, by and
among Seller, Storage Technology Corporation ("StorageTek") and
RMMI.
"Seller-Buyer Lease" means the Lease between
Buyer, as lessee, and Seller, as lessor, to be entered into on
the Closing Date substantially on the terms set forth in Exhibit
D pursuant to which Seller will agree to lease to Buyer, on the
terms and conditions specified in such lease, certain space in
Seller's Colorado Springs, Colorado facility.
"Seller-Buyer Patent Assignment Agreement" means
the Patent Assignment Agreement between Seller and Buyer to be
entered into on the Closing Date substantially in the form of
Exhibit E pursuant to which Seller will agree to assign to Buyer
certain patents owned by Seller and to license to Buyer certain
Intellectual Property owned by Seller and further pursuant to
which Buyer will agree to license back to Seller certain patents
assigned to Buyer.
"Seller-Buyer Software Assignment and License
Agreement" means the Software Assignment and License Agreement
between Seller and Buyer to be entered into on the Closing Date
substantially in the form of Exhibit F pursuant to which Seller
will license certain software to Buyer.
"Seller-Buyer Supply Agreement" means the Supply
Agreement between Seller and Buyer to be entered into on the
Closing Date substantially in the form of Exhibit G pursuant to
which Buyer will agree to supply certain products to Seller on
the terms and conditions specified in such agreement.
"Seller-Buyer Trademark Assignment Agreement"
means the Trademark Assignment Agreement between Seller and Buyer
to be entered into on the Closing Date substantially in the form
of Exhibit M pursuant to which Seller will agree to assign to
Buyer all of the trademarks relating solely to the Business.
"Seller-Buyer Transition and Services Agreement"
means the Transition and Services Agreement between Seller and
Buyer to be entered into on the Closing Date substantially in the
form of Exhibit H pursuant to which Seller will agree to supply
certain services and assign or license certain assets to Buyer
after the Closing Date on the terms and conditions specified in
such agreement.
"Shrewsbury Facility" means the land and buildings
located at 333 South Street in Shrewsbury, Massachusetts known to
Seller as "Shrewsbury #1 and #2" and more fully described in
Schedule 3.08(a), which land and buildings are currently owned by
Seller and are to be transferred to Buyer pursuant to this
Agreement.
"Statement of Net Assets" means an unaudited
statement aggregating inventories, property, plant and equipment,
warranty reserves and domestic vacation accrual as of July 2,
1994, presented in accordance with the Accounting Convention and
found in Schedule 3.06(a).
"Statement of Net Assets Date" means July 2, 1994.
(b) Each of the following terms is defined in the
Section set forth opposite such term.
Term Section
Accounting Referee 2.08
Acquisition Proposal 5.03
Allocation Statement 2.06
Apportioned Obligation 8.05
Assumed Liabilities 2.03
Buyer's Accountants 2.08
Buyer 401(k) Plan 9.03
Buyer Health Care Plan 9.08
Buyer Indemnitee 8.01
Buyer Non-Compliance Certificate 10.03
Buyer Savings Plan 9.03
Capital Expenditure Plan 5.08
Cause 9.01
CERCLA 3.20
Closing 2.07
Closing Statement 2.08
Closing Inventory Reference Value 2.08
Closing Property, Plant and
Equipment Reference Value 2.08
Code 8.01
Confidential Information 5.07
Consent 3.05
Contracts 2.01
Conveyance Documents 2.07
Court Order 3.20
Digital Tradename 6.02
Effective Date 9.01
Effective Time 2.08
Environmental Laws 3.20
Environmental Liabilities 3.20
ERISA 9.05
Estimated Closing Statement 2.08
Event of Loss 11.02
Excluded Assets 2.02
Excluded Liabilities 2.04
Final Net Worth 2.08
Financial Statements 3.06
Governmental Permits 3.20
Hazardous Substance 3.20
Hazardous Substance Activities 3.20
Hired Employees 9.01
Indemnified Party 11.03
Indemnifying Party 11.03
Indonesian Subsidiary 5.11
Inventory Reference Value 2.08
JAMS 13.09
Leave Expiration Date 9.01
Loss 11.02
Malaysian Subsidiary Recitals
Material Loss 11.02
Minimum Net Worth 2.08
Note 2.06
Permit 3.14
Permitted Lien 3.08
Plan Eligibility Date 9.02
Plans 9.05
Post-Closing Tax Period 8.01
Pre-Closing Tax Period 8.01
Price Allocation 8.04
Property, Plant and Equipment
Reference Value 2.08
Purchased Assets 2.01
Purchase Price 2.06
Release 3.20
Remedial Action 3.20
Returns 8.03
RMMI Shares 2.01
SAVE Plan 9.03
Section 338(h)(10) Election 8.04
Seller's Accountants 2.08
Seller Group 8.01
Seller Non-Compliance Certificate 10.02
Seller Pension Plan 9.02
Seller Transferred Employee 9.01
Shares 2.01
StorageTek 1.01
Subsidiary Recitals
Subsidiary Employee 9.05
Subsidiary Securities 3.21
Target Inventory Reference Value 2.08
Target Property, Plant and
Equipment Reference Value 2.08
Tax 8.01
Tax Asset 8.01
Tax Indemnification Period 8.01
Taxing Authority 8.01
Tax Loss 8.06
Transfer 9.03
Transferred Employee 9.01
Warranty Reserve 3.06
ARTICLE II.
PURCHASE AND SALE
2.01 Purchase and Sale.
(a) Upon the terms and subject to the conditions of
this Agreement, Buyer agrees to purchase from Seller and Seller
agrees to, or to cause its Affiliates to, sell, transfer, assign
and deliver, or cause to be sold, transferred, assigned and
delivered, to Buyer at Closing, free and clear of all Liens other
than Permitted Liens all of the assets, properties and business,
other than the Excluded Assets, of every kind and description,
wherever located, real, personal or mixed, tangible or
intangible, owned, held or used solely in the conduct of the
Business by Seller as the same shall exist on the Closing Date,
including all assets shown on the Statement of Net Assets and not
disposed of in the ordinary course of business, and all assets of
the Business thereafter acquired by Seller (the "Purchased
Assets"), and including, without limitation, all right, title and
interest of Seller in and to:
(i) all shares (the "Shares") of capital stock of
the Malaysian Subsidiary owned by Seller or its Affiliates and,
subject to Section 2.01(b), an 81% equity interest in RMMI (the
"RMMI Shares") conveyed to Buyer pursuant to the RMMI Stock
Purchase Agreement;
(ii) the Shrewsbury Facility, together with all
fixtures and improvements thereto, and the assets located in, or
attributable to the operations of the Business in, Batam,
Indonesia;
(iii) all personal property and interests
therein, including machinery, equipment, furniture, office
equipment, communications equipment, vehicles, storage tanks,
spare and replacement parts, fuel and other tangible property
used solely in the Business, including without limitation the
items listed on Schedule 3.08(b), being a list of all items of
personal property owned, leased or subleased by the Business
having an original acquisition cost of $1,000 or more;
(iv) all raw materials, work-in-process, finished
goods, supplies and other inventories of the Business;
(v) all rights under all contracts, agreements,
leases, licenses of Intellectual Property to Seller by third
parties, commitments, sales and purchase orders and other
instruments to the extent related to the Business including
without limitation the items listed on Schedule 3.13
(collectively, the "Contracts") (provided that, in the event that
the RMMI Shares are Excluded Assets, then any contracts between
Seller, StorageTek and RMMI shall also be Excluded Assets);
(vi) all prepaid expenses to the extent relating
to the operation of the Business, including but not limited to ad
valorem taxes, leases and rentals;
(vii) all of Seller's rights, claims, credits,
causes of action or rights of set-off against third parties
relating to the Purchased Assets, including, without limitation,
to the extent assignable unliquidated rights under manufacturers'
and vendors warranties;
(viii) all Intellectual Property owned or
assignable by Seller and used solely in the Business, including
without limitation the items listed on Schedule 3.17 that are not
specifically identified thereon as Excluded Assets;
(ix) all transferable licenses, permits or other
governmental authorizations relating solely to the Business,
including without limitation the items listed on Schedule 3.14;
(x) originals or copies of all books, records,
files and papers, whether in hard copy or computer format, used
in the Business, including, without limitation, product
engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of
present and former suppliers, lists of present and former
customers, personnel and employment records, and any information
relating to Taxes imposed on the Purchased Assets, provided in
each case that any information contained in such materials which
does not relate to the Business may be deleted by Seller before
such materials are delivered to Buyer;
(xi) all computer software programs and data owned
or assignable by Seller used solely in the Business; and
(xii) all goodwill associated with the
Business or the Purchased Assets, together with the right to
represent to third parties that Buyer is the successor to the
Business.
(b) In the event that StorageTek shall exercise its
right of first refusal pursuant to Section 2.2 of the RMMI
Stockholders' Agreement and purchase the RMMI Shares pursuant to
such right of first refusal on the terms set forth in the RMMI
Stock Purchase Agreement, then the RMMI Shares shall not be
Shares and shall be Excluded Assets, and all of the assets of
RMMI shall be Excluded Assets and all of the liabilities of RMMI
shall be Excluded Liabilities and the RMMI Shares shall not be
purchased by Buyer pursuant to the RMMI Stock Purchase Agreement.
2.02 Excluded Assets. Buyer expressly understands and
agrees that the following assets and properties of Seller (the
"Excluded Assets") shall be excluded from the Purchased Assets:
(i) all of Seller's cash and cash equivalents on
hand and in banks, except for cash and cash equivalents held by
Subsidiaries;
(ii) all accounts, notes and other receivables of
or relating to the Business, except for accounts, notes and other
receivables held by Subsidiaries;
(iii) all Intellectual Property licensed (but
not assigned) to Buyer pursuant to the terms of the Seller-Buyer
Patent Assignment Agreement;
(iv) all software licensed (but not assigned) to
Buyer under the Seller-Buyer Software Assignment and License
Agreement;
(v) the Colorado Springs, Colorado real estate
that is the subject of the Seller-Buyer Lease;
(vi) the land and buildings located at 333 South
Street in Shrewsbury, Massachusetts known to Seller as Shrewsbury
#3;
(vii) any assets sold or otherwise disposed of
in the ordinary course of the operation of the Business and not
in violation of any provisions of this Agreement during the
period from the date hereof until the Closing Date;
(viii) any Federal, state and local income and
franchise tax credits, prepaid taxes and tax refund claims; and
(ix) any assets or Contracts relating to the
purchase by Seller of assembled disk drives and parts, components
and spares acquired in connection therewith.
2.03 Assumption of Liabilities. Upon the terms and subject
to the conditions of this Agreement, Buyer agrees, effective at
the time of Closing, to assume, to the extent indicated below,
the following, and only the following, specific debts,
obligations, contracts and liabilities of Seller arising out of
the conduct of the Business (the "Assumed Liabilities"):
(i) all liabilities and obligations of Seller
arising from and after the Closing Date under the Contracts
(other than liabilities or obligations that constitute accounts
payable of the Seller on the Closing Date or that are
attributable to any failure by Seller to comply with the terms of
the Contracts and other than liabilities relating to the purchase
by Seller of electronic data storage devices from other
manufacturers);
(ii) fifty percent (50%) of the liabilities and
obligations of Seller arising under any warranties granted by
Seller to customers in connection with the sale of goods or
services by the Business shipped before the Closing, but only as
and to the extent such liabilities are applicable to 3-inch
drives, provided that the aggregate liability for warranties
assumed by Buyer under this clause (ii) shall not exceed
$10,000,000 (as determined by Buyer's fully burdened average cost
of repair for each particular product);
(iii) all liabilities allocated to Buyer under
Articles VIII and IX; and
(iv) the liabilities attributable to the
operations of the Business in Batam, Indonesia in the ordinary
course of business.
2.04 Excluded Liabilities. Notwithstanding any provision in
this Agreement to the contrary, Buyer is assuming only the
Assumed Liabilities and is not assuming any other debt,
obligation, contract or liability of Seller of whatever nature
whether currently existing or arising hereafter. All such other
debts, obligations, contracts and liabilities shall be retained
by and remain debts, obligations, contracts and liabilities of
Seller (all such debts, obligations, contracts and liabilities
not being assumed, the "Excluded Liabilities"). Without limiting
the foregoing, each of the following shall be Excluded
Liabilities for purposes of this Agreement:
(i) any debt, obligation, contract or liability
for Taxes arising from or with respect to the Purchased Assets,
the transactions contemplated hereby or the conduct of the
Business that is incurred in or attributable to a Pre-Closing Tax
Period (except to the extent set forth in Section 8.05(d));
(ii) subject to Sections 2.03(iii), 9.01(b)(ii)
and 9.04(d), any debt, obligation, contract or liability relating
to employee benefits or compensation arrangements existing on or
prior to the Closing Date, including, without limitation, any
liabilities or obligations under any of Seller's employee plans
or programs or Plans listed on Schedule 9.05(a);
(iii) any debt, obligation, contract or
liability relating to an Excluded Asset;
(iv) all debts, obligations, contracts or
liabilities, other than for Taxes to the extent set forth in
Section 8.05(d), incurred by Seller in connection with this
Agreement and the transactions contemplated herein;
(v) any and all Environmental Liabilities that
arise from or relate to the emission, discharge, Release or
disposal of Hazardous Substances into the environment (including
workplaces) or Hazardous Substance Activities, whether by Seller
or others, in each case prior to the Closing, including without
limitation all penalties, fines (civil or criminal), and all
third party liability related thereto;
(vi) any and all liabilities arising under
warranties for products shipped on or before the Closing Date to
the extent that the aggregate liability for warranties for such
products assumed by Buyer pursuant to Section 2.03(ii) exceeds
$10,000,000;
(vii) any and all accounts payable, notes and
other payables existing on the Closing Date, except for accounts
payable, notes and other payables of Subsidiaries to third
parties; and
(viii) any and all liabilities arising pursuant
to agreements or understandings with distributors and relating to
products shipped on or before the Closing Date (such as price
protection, meeting the competition or stock rotation
arrangements).
2.05 Assignment of Contracts and Rights. Anything in this
Agreement 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 consent of
a third party thereto, would constitute a breach or other
contravention thereof or would in any way adversely affect the
rights of Buyer or Seller thereunder. Seller and Buyer will use
their best efforts (but without any payment of money by Seller or
Buyer) to obtain the consent of the other parties to any such
Purchased Asset or claim or right or any benefit arising
thereunder for the assignment thereof to Buyer as Buyer may
request. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would adversely affect
the rights of Seller thereunder so that Buyer would not in fact
receive all such rights, Seller and Buyer will cooperate in a
mutually agreeable arrangement under which Buyer would obtain the
benefits and assume the obligations thereunder in accordance with
this Agreement, including subcontracting, sub-licensing, or sub-
leasing to Buyer, or under which Seller would enforce for the
benefit of Buyer, with Buyer assuming Seller's obligations, any
and all rights of Seller against a third party thereto. Seller
will promptly pay to Buyer when received all monies received by
Seller under any Purchased Asset or any claim or right or any
benefit arising thereunder, except to the extent the same
represents an Excluded Asset. In such event, Seller and Buyer
shall, to the extent the benefits therefrom and obligations
thereunder have not been provided by alternate arrangements
satisfactory to Buyer and Seller, negotiate in good faith an
adjustment in the consideration paid by Buyer for the Purchased
Assets, to the extent not otherwise adjusted pursuant to Section
2.08.
2.06 Purchase Price; Allocation of Purchase Price.
(a) The purchase price for the Purchased Assets, the
rights under the Ancillary Agreements and the covenant not to
compete contained in Section 5.06 is $330,000,000 in cash plus a
note (the "Note") in the amount of $70,000,000 having the
principal terms set forth in Exhibit I, plus the assumption of
the Assumed Liabilities (the "Purchase Price"); provided that
$100,000,000 of the cash portion of the Purchase Price
attributable to the RMMI Shares shall be paid pursuant to the
RMMI Stock Purchase Agreement; and, provided further, that in the
event that StorageTek shall exercise its right of first refusal
pursuant to Section 2.2 of the RMMI Stockholders' Agreement, then
the cash portion of the Purchase Price shall be $230,000,000 and
the total Purchase Price shall be $300,000,000. The Purchase
Price shall be paid as provided in Section 2.07.
(b) As soon as practicable after the Closing, Buyer
shall deliver to Seller a statement (the "Allocation Statement"),
setting forth the valuation of the Purchased Assets, the rights
under the Ancillary Agreements and the covenant not to compete
contained in Section 5.06, for the purposes of allocation of the
Purchase Price among the Purchased Assets, the rights under the
Ancillary Agreements and the covenant not to compete.
(c) Seller and Buyer agree to report an allocation of
the Purchase Price among the Purchased Assets, rights under the
Ancillary Agreements and the covenant not to compete contained in
Section 5.06 in a manner entirely consistent with the Allocation
Statement, and agree to act in accordance with such Allocation
Statement in the preparation of financial statements and filing
of all tax returns (including, without limitation, filing Form
8594 with its Federal income tax return for the taxable year that
includes the date of the Closing) and in the course of any tax
audit, tax review or tax litigation relating hereto.
(d) Each party shall deliver to the other party a copy
of its Form 8594 relating to this transaction no later than 10
days prior to the filing thereof.
2.07 Closing. The closing (the "Closing") of the purchase
and sale of the Purchased Assets and the assumption of the
Assumed Liabilities hereunder shall take place at the offices of
Testa, Hurwitz & Thibeault in Boston, Massachusetts on October 1,
1994 or, if the conditions set forth in Article X have not been
satisfied on or before such date, on the last day of the first
fiscal month of the Seller ending at least 10 business days after
satisfaction of the conditions set forth in Article X, or at such
other time or place as Buyer and Seller may agree. At the
Closing:
(a) Buyer shall deliver to Seller the cash portion of
the Purchase Price, less the Deposit (as defined in the RMMI
Stock Purchase Agreement), in immediately available funds by wire
transfer to an account of Seller with a bank in Boston,
Massachusetts designated by Seller by notice to Buyer no later
than two business days prior to the Closing Date.
(b) Buyer shall deliver to Seller the Note.
(c) Seller shall deliver to Buyer certificates for the
Shares, duly endorsed or accompanied by stock powers duly
endorsed in blank, with any required transfer stamps affixed
thereto, provided that the equity interest in RMMI shall be
conveyed only to the extent provided in the RMMI Stock Purchase
Agreement.
(d) Seller and Buyer shall enter into an Assignment
and Assumption Agreement substantially in the form attached
hereto as Exhibit J, and Seller shall deliver to Buyer such
deeds, bills of sale, endorsements, consents, assignments and
other good and sufficient instruments of conveyance and
assignment (the "Conveyance Documents") as the parties and their
respective counsel shall deem reasonably necessary or appropriate
to vest in Buyer all right, title and interest in, to and under
the Purchased Assets.
(e) Seller and Buyer shall enter into the Ancillary
Agreements.
2.08 Purchase Price Adjustment.
(a) General. As an adjustment to the Purchase Price,
Seller agrees to pay Buyer the amount, if any, by which the
Target Property, Plant and Equipment Reference Value exceeds the
Closing Property, Plant and Equipment Reference Value and the
amount, if any, by which the Target Inventory Reference Value
exceeds the Closing Inventory Reference Value.
(b) Definitions. The following terms, as used herein,
have the following meanings:
"Accounting Referee" means a nationally recognized
accounting firm, other than Coopers & Lybrand and Buyer's
accountants, selected by Buyer and Seller pursuant to Section
2.08(e).
"Closing Statement" means a statement of inventories
and property, plant and equipment, presented in accordance with
the Accounting Convention, as of the Closing Date.
"Closing Inventory Reference Value" means the Inventory
Reference Value (i) as shown in Seller's calculation delivered
pursuant to Section 2.08(c) if no notice of disagreement with
respect thereto is delivered by Buyer pursuant to Section 2.08(d)
or (ii) if such a notice of disagreement is delivered, (A) as
agreed by the parties pursuant to Section 2.08(e) or (B) in the
absence of such agreement, as shown in Accounting Referee's
calculation delivered pursuant to Section 2.08(e); provided that
Closing Inventory Reference Value shall not in any event be more
than Seller's calculation of the Inventory Reference Value
delivered pursuant to Section 2.08(c) nor less than Buyer's
calculation of the Inventory Reference Value delivered pursuant
to Section 2.08(d).
"Closing Property, Plant and Equipment Reference Value"
means Property, Plant and Equipment Reference Value (i) as shown
in Seller's calculation delivered pursuant to Section 2.08(c) if
no notice of disagreement with respect thereto is delivered by
Buyer pursuant to Section 2.08(d) or (ii) if such a notice of
disagreement is delivered, (A) as agreed by the parties pursuant
to Section 2.08(e) or (B) in the absence of such agreement, as
shown in Accounting Referee's calculation delivered pursuant to
Section 2.08(e); provided that Property, Plant and Equipment
Closing Reference Value shall not in any event be more than
Seller's calculation of Property, Plant and Equipment Reference
Value delivered pursuant to Section 2.08(c) nor less than Buyer's
calculation of Property, Plant and Equipment Reference Value
delivered pursuant to Section 2.08(d).
"Inventory Reference Value" means the value of the
inventory constituting Purchased Assets as set forth on the
Closing Statement (in the event that the RMMI Shares are
Purchased Assets, including 100% of the value of the inventory of
RMMI).
"Property, Plant and Equipment Reference Value" means
the value of the property, plant and equipment constituting
Purchased Assets as set forth on the Closing Statement (in the
event that the RMMI Shares are Purchased Assets, including 100%
of the value of the property, plant and equipment of RMMI).
"Target Inventory Reference Value" means $115,000,000
($114,000,000 in the event that the RMMI Shares are Excluded
Assets).
"Target Property, Plant and Equipment Reference Value"
means $155,000,000 ($133,400,000 in the event that the RMMI
Shares are Excluded Assets).
(c) Preparation of Closing Statement. As promptly as
practicable after the Closing Date, Seller will cause the Closing
Statement to be prepared, will cause Coopers & Lybrand to attest
that the Closing Statement is appropriately presented in
compliance with the Accounting Convention and will prepare a
certificate based on such Closing Statement setting forth its
calculation of the Inventory Reference Value and the Property,
Plant and Equipment Reference Value. As promptly as practicable,
but no later than 60 days, after the Closing Date, Seller will
cause the Closing Statement, together with its certificate and
the attestation of Coopers & Lybrand thereon, to be delivered to
Buyer. Buyer's accountants shall have the opportunity to observe
the taking of the physical count of the inventory and of the
property, plant and equipment in connection with the preparation
of the Closing Statement.
(d) Disagreement by Buyer. If Buyer disagrees with
Seller's calculation of the Inventory Reference Value and the
Property, Plant and Equipment Reference Value, Buyer may, within
20 days after delivery of the documents referred to in Section
2.08(c), deliver a notice to Seller disagreeing with such
calculation and setting forth Buyer's calculation of such amount.
Any such amount of disagreement shall specify those items or
amounts as to which Buyer disagrees, and Buyer shall be deemed to
have agreed with all other items and amounts contained in the
Closing Statement and the calculation of the Inventory Reference
Value and the Property, Plant and Equipment Reference Value
delivered by Seller pursuant to Section 2.08(c).
(e) Dispute Resolution. If a notice of disagreement
shall have been delivered by Buyer pursuant to Section 2.08(d),
the parties shall, during the 20 days following such delivery,
use their best efforts to reach agreement on the disputed items
or amounts in order to determine the amount of the Inventory
Reference Value and the Property, Plant and Equipment Reference
Value, which amount shall not be more than the amount shown in
Seller's calculation thereof delivered pursuant to Section
2.08(c) nor less than the amount shown in Buyer's calculation
thereof delivered pursuant to Section 2.08(d). If, during such
period, the parties are unable to reach agreement, they shall
promptly thereafter select the Accounting Referee and cause the
Accounting Referee promptly to review this Agreement and the
disputed items or amounts for the purpose of calculating the
Inventory Reference Value and the Property, Plant and Equipment
Reference Value. In making such calculation, the Accounting
Referee shall consider only those items or amounts in the Closing
Statement or Seller's calculation of the Closing Inventory
Reference Value and the Closing Property, Plant and Equipment
Reference Value as to which Buyer has disagreed. The Accounting
Referee shall deliver to Seller and Buyer, as promptly as
practicable, a report setting forth such calculation. Such
report shall be final and binding upon the parties hereto. The
cost of such review and report shall be borne (i) by Seller if
Buyer's calculation of the Inventory Reference Value and the
Property, Plant and Equipment Reference Value is closer to the
Closing Inventory Reference Value and the Closing Property, Plant
and Equipment Reference Value than Seller's calculation thereof,
(ii) by Buyer if the reverse is true and (iii) otherwise equally
by Seller and Buyer.
(f) Cooperation. The parties hereto agree that they
will, and agree to cause their respective independent accountants
to, cooperate and assist in the preparation of the Closing
Statement and the calculation of the Inventory Reference Value
and the Property, Plant and Equipment Reference Value and in the
conduct of the audits and reviews referred to in this Section
2.08, including without limitation the making available to the
extent necessary of books, records, work papers and personnel.
(g) Time of Payment. Any payment pursuant to this
Section 2.08 shall be made at a mutually convenient time and
place (i) within 30 days after Seller's delivery of the documents
referred to in Section 2.08(c) if no notice of disagreement with
respect to the Inventory Reference Value and the Property, Plant
and Equipment Reference Value is delivered by Buyer or (ii) if a
notice of disagreement with respect to the Inventory Reference
Value and the Property, Plant and Equipment Reference Value is so
delivered then within 10 days after the earlier of (A) agreement
between the parties pursuant to Section 2.08(e) with respect to
the Inventory Reference Value and the Property, Plant and
Equipment Reference Value and (B) delivery of the calculation of
the Inventory Reference Value and the Property, Plant and
Equipment Reference Value by the Accounting Referee pursuant to
Section 2.08(e).
(h) Method of Payment. Any payments pursuant to this
Section 2.08 shall be made by delivery by Seller of a certified
or official bank check payable in immediately available funds to
Buyer or by causing such payments to be credited to such account
of Buyer designated by Buyer. The amount of any payment to be
made pursuant to this Section 2.08 shall bear interest from and
including the Closing Date to but excluding the date of payment
at a rate per annum equal to the rate publicly announced from
time to time by Morgan Guaranty Trust Company of New York as its
Base Rate in New York City in effect from time to time during the
period from the Closing Date to the date of payment. Such
interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a
year of 365 days and the actual number of days for which interest
is due.
2.09 Organization of Buyer. At least ten (10) business days
before the Closing, Buyer shall designate the identity of each of
its Affiliates, including Quantum Europe, that is to acquire
specific stock or assets or to assume liabilities on the Closing
Date. Seller shall cooperate with Buyer in assigning assets or
liabilities in whatever manner Buyer may determine is most
appropriate for the continuing conduct of the business. Buyer
shall reimburse Seller for any out-of-pocket incremental cost
incurred by Seller as a result of any designation of a purchaser
other than Buyer or any United States subsidiaries of Buyer,
provided that any retention of outside counsel or accountants by
Seller shall be approved by Buyer in advance.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
3.01 Corporate Existence and Power. Each of Seller, RMMI
and the Malaysian Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
Each of Seller, RMMI and the Malaysian Subsidiary is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such
qualification necessary, except for those jurisdictions where
failure to be so qualified or be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
Seller has heretofore delivered to Buyer true and complete copies
of the articles of organization and by-laws (or equivalent
organizational documents) of each of Seller, RMMI and the
Malaysian Subsidiary as currently in effect.
3.02 Corporate Authorization. The execution, delivery and
performance by Seller of this Agreement and each of the Ancillary
Agreements, and the consummation by Seller of the transactions
contemplated hereby and thereby are within Seller's corporate
powers and have been duly authorized by all necessary corporate
action on the part of Seller. This Agreement and each of the
Ancillary Agreements constitute, or upon execution and delivery
will constitute, valid and binding agreements of Seller.
3.03 Governmental Authorization. The execution, delivery
and performance by Seller of this Agreement and each of the
Ancillary Agreements does not require any action by or in respect
of, or filing with, any governmental body, agency, official or
authority other than any such action or filing the failure to
obtain or complete which would not have, individually or in the
aggregate, a Material Adverse Effect and other than (x)
compliance with any applicable requirements of the HSR Act and
(y) compliance with any governmental requirements regarding the
transfer of the stock of the Malaysian Subsidiary.
3.04 Non-Contravention. The execution, delivery and
performance by Seller of this Agreement and each of the Ancillary
Agreements do not and will not (i) contravene or conflict with
the articles of organization or by-laws of Seller and the
Subsidiaries, (ii) assuming compliance with the matters referred
to in Section 3.03, contravene or conflict with or constitute a
material violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable
to Seller, the Subsidiaries or the Business, (iii) assuming the
receipt of all Consents, constitute a material default under or
give rise to any right of termination, cancellation or
acceleration of any material right or obligation relating to the
Business or to a loss of any material benefit relating to the
Business to which Seller or the Subsidiaries is entitled under
any provision of any material agreement, contract or other
instrument binding upon Seller or the Subsidiaries or by which
any of the purchased Assets is or may be bound or any Permit, or
(iv) result in the creation or imposition of any Lien on any
Purchased Asset, other than Permitted Liens.
3.05 Consents. Schedule 3.05 sets forth each agreement,
contract and other instrument binding upon Seller or any
Subsidiary and each Permit requiring a consent as a result of the
execution, delivery and performance of this Agreement or any of
the Ancillary Agreements, or the consummation of the transactions
contemplated hereby and thereby (each such consent, a "Consent").
3.06 Financial Statements; Reserves.
(a) The Statement of Net Assets and the unaudited
consolidated statement of operations for the Business for the
fiscal year ended July 2, 1994, and the unaudited balance sheets
and statements of operations for the Subsidiaries and the Batam,
Indonesia operations of the Business (on a pro forma basis) as of
such date and for such period, Indonesia attached hereto as
Schedule 3.06(a) (the "Financial Statements") of the Business
report, on a basis consistent with the accounting policies and
procedures described in the Accounting Convention, the financial
position of the Business as of the date thereof and its results
of operations for the period then ended.
(b) The projections for the four fiscal quarters in
fiscal year 1995 attached hereto as Schedule 3.06(b) were
prepared in good faith in a manner consistent with Seller's past
practices, and no member of Seller's senior management with
responsibility for the Business believes that such projections
are materially incorrect or overstated, it being understood that
projections of this nature are not guarantees of future
performance.
(c) Seller has established a reserve on the Statement
of Net Assets for liabilities arising under warranties for 3-
inch drives in the amount of $16,000,000 (the "Warranty
Reserve"). The Warranty Reserve has been calculated consistent
with past practice and in accordance with the Accounting
Convention, and Seller has no reason to believe that such
Warranty Reserve is inaccurate or understates such liabilities as
of the Statement of Net Assets Date.
3.07 Absence of Certain Changes. Except as disclosed in
Schedule 3.07, since the Statement of Net Assets Date, Seller has
conducted the Business in the ordinary course consistent with
past practices, and there has not been:
(a) any creation or other incurrence of any Lien
(other than Permitted Liens) on any Purchased Asset other than in
the ordinary course of business consistent with past practices;
(b) any damage, destruction or other casualty loss
whether covered by insurance or not, affecting the Business or
any Purchased Asset that, individually or in the aggregate, has
had a Material Adverse Effect;
(c) any transaction, contract, agreement or other
instrument entered into, or commitment made, by Seller or any
Subsidiary relating to the Business or any Purchased Asset
(including the acquisition or disposition of any assets) or any
relinquishment by Seller or any Subsidiary of any material
contract or other right, or the waiver of material rights
thereunder, other than transactions and commitments in the
ordinary course of business consistent with past practices and
those contemplated by this Agreement;
(d) any change in any method of accounting or
accounting practice by Seller or any Subsidiary with respect to
the Business except for any such change after the date hereof
required by reason of a concurrent change in generally accepted
accounting principles;
(e) any (i) entering into of any employment, deferred
compensation, severance or other similar agreement (or any
amendment to any such existing agreement) with any employee of
the Business, (ii) increase in benefits payable to any employee
of the Business under any existing severance or termination pay
policies or employment agreements, or (iii) increase in
compensation, bonus or other benefits payable to any employee of
the Business, other than in the ordinary course of business
consistent with past practice;
(f) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Business,
or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees;
(g) any material capital expenditure, or commitment
for a capital expenditure, for additions or improvements to
property, plant and equipment of the Business, except pursuant to
the Capital Expenditure Plan;
(h) any material sale, lease, license, pledge or other
transfer or disposition of any of the Purchased Assets, except
for the sale of inventory items in the ordinary course of
business consistent with past practice;
(i) any indebtedness for borrowed money incurred,
assumed or guaranteed by any Subsidiary;
(j) any declaration, setting aside, or payment of any
dividend or any other distribution in respect of any of the
Subsidiary's capital stock or any redemption, purchase or other
acquisition by Seller or any Subsidiary of any capital stock of
any Subsidiary, or any security relating thereto;
(k) any loan or advance (other than advances in the
ordinary course of business for travel and entertainment in
accordance with past practice) to any officer, director, or
employee of the Business; or
(l) any other event or condition not in the ordinary
course of the Business.
3.08 Properties.
(a) Schedule 3.08(a) describes all real property
owned, leased or subleased by Seller or an Subsidiary and used in
the Business, other than the real property included in the
Excluded Assets.
(b) Schedule 3.08(b) describes all material personal
property owned, leased or subleased by Seller or any Subsidiary
that had an acquisition cost of $1,000 or more and that is
included in the Purchased Assets, including but not limited to
machinery, equipment, furniture, vehicles, storage tanks, spare
and replacement parts, fuel and other trade fixtures and fixed
assets, and any Liens thereon, specifying in the case of leases
or subleases, the name of the lessor or sublessor.
(c) (i) Seller or the Subsidiaries have good and
marketable title to, or in the case of leased property has valid
leasehold interests in, all Purchased Assets and other assets
(whether real, personal, tangible or intangible) reflected on the
Statement of Net Assets or acquired after the Statement of Net
Assets Date, except for properties and assets sold since the
Statement of Net Assets Date in the ordinary course of business
consistent with past practices. Assuming the receipt of all
Consents, none of the Purchased Assets is subject to any
restriction with respect to the transferability thereof and
Seller has complete and unrestricted power and right to sell,
assign, convey and deliver the Purchased Assets to Buyer as
contemplated hereby.
(ii) All leases of real property or personal
property that are material to the Business are in good standing
and are valid, binding and enforceable in accordance with their
respective terms, and there does not exist under any such lease
of real property or personal property any material default by
Seller or a Subsidiary or any event that, with notice or lapse of
time or both, would constitute such a material default.
(d) No Purchased Asset is subject to any Lien, except:
(i) Liens disclosed in the Statement of Net
Assets or specifically described on Schedule 3.08(d);
(ii) Liens for taxes not yet due or being
contested in good faith (and for which adequate accruals or
reserves have been established on the Statement of Net Assets);
(iii) Liens described on the surveys or
excluded under the title insurance policies attached as Schedule
3.08(d) and Liens identified on Schedule 3.08(d); and
(iv) Liens that do not materially detract from the
value of such Purchased Asset as now used, or materially
interfere with any present or intended use of such Purchased
Asset (clauses (i), (ii), (iii) and (iv) are, collectively,
"Permitted Liens").
(e) No violation of any law, regulation or ordinance
relating to the Business or any Purchased Asset currently exists,
except for violations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect.
3.09 Sufficiency of Purchased Assets. Except as
specifically described in Schedule 3.09, the Purchased Assets,
together with the rights to be granted to Buyer under the
Ancillary Agreements, will enable Buyer to carry on the Business
as it is currently conducted.
3.10 Condition of Purchased Assets. The tangible personal
property included in the Purchased Assets is in good operating
condition and repair (ordinary wear and tear excepted), and has
been maintained consistent with the standards generally followed
in the industry and applicable legal standards. All buildings
and other structures owned or used in the conduct of the Business
are in good condition and repair (ordinary wear and tear
excepted).
3.11 Title to Purchased Assets. Upon consummation of the
transactions contemplated hereby, Buyer will have acquired good
and marketable title in and to, or a valid leasehold interest in,
each of the Purchased Assets, free and clear of all Liens, except
for Permitted Liens.
3.12 Litigation; No Undisclosed Liabilities. Except as
disclosed on Schedule 3.12, there is no action, suit,
investigation or proceeding pending against or, to the knowledge
of Seller, threatened against, affecting or arising from, the
Business, any Subsidiary or any Purchased Asset before any court
or arbitrator or any governmental body, agency or official that
could reasonably be expected to have a Material Adverse Effect or
that challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated hereby. Except as and to the
extent specifically disclosed in the Financial Statements, the
Business does not have any liabilities, commitments or
obligations (secured or unsecured, and whether accrued, absolute,
contingent, direct, indirect or otherwise), other than commercial
liabilities and obligations incurred since the date of the
Financial Statements in the ordinary course of business and
consistent with past practice with only such exceptions as would
not in the aggregate reasonably be expected to have a Material
Adverse Effect.
3.13 Material Contracts.
(a) Except for the Contracts disclosed in Schedule
3.13 or any other schedule to this Agreement, in connection with
the conduct of the Business, as of the date of this Agreement,
neither Seller nor any Subsidiary is a party to or subject to:
(i) any real property lease, or any other lease
providing for an annual rental of $25,000 or more;
(ii) any open purchase orders or commitments to
purchase materials, supplies, goods, services, equipment or other
assets (and the disclosure in Schedule 3.13 shall list each such
order or commitment by supplier) (provided that Seller shall
provide Buyer with a complete list of open purchase orders within
ten days of the date hereof); or any contract, arrangement,
understanding or supplier/customer relationship pursuant to which
the Seller and each Subsidiary, taken in the aggregate, purchased
materials, supplies, goods, services, equipment or other assets
from any supplier (and the disclosure in Schedule 3.13 shall list
each such supplier); or any pending nonrecurring engineering
expense of the Seller related to the Business;
(iii) any sales, customer or other similar
agreement providing for the sale by Seller of materials,
supplies, goods, services, equipment or other assets;
(iv) any partnership, joint venture or other
similar contract, arrangement or agreement;
(v) any contract relating to indebtedness for
borrowed money or the deferred purchase price of property
(whether incurred, assumed, guaranteed or secured by an asset),
except contracts relating to indebtedness incurred in the
ordinary course of business in an amount not exceeding $50,000;
(vi) any material license agreement, franchise
agreement or agreement in respect of similar rights granted to or
held by Seller or any Subsidiary;
(vii) any agency, dealer, distribution, sales
representative or other similar agreement;
(viii) any agreement, contract or commitment
that meaningfully limits the freedom of Seller or any Subsidiary
to compete in the Business or solicit customers or otherwise
restricts Seller from carrying on the Business anywhere in the
world or limits the freedom of Seller to own, operate, sell,
transfer, pledge or otherwise dispose of or encumber any
Purchased Asset and that would so limit the freedom of the Buyer
after the Closing Date;
(ix) any agreement requiring Seller to assign any
interest in any Intellectual Property or any other proprietary
information;
(x) any agreement, contract or commitment which
is or relates to an agreement with or for the benefit of any
Affiliate of Seller or any Subsidiary; or
(xi) any other Agreement, contract or commitment
not made in the ordinary course of business that is material to
the Business taken as a whole.
(b) Each Contract disclosed in any Schedule to this
Agreement or required to be disclosed pursuant to Section 3.13(a)
is in full force and effect, and none of Seller, any Subsidiary
or, to the knowledge of Seller, any other party thereto is in
default in any material respect under the terms of any such
Contract, nor has any event or omission occurred which through
the passage of time or the giving of notice, or both, would
constitute a default by Seller or a Subsidiary thereunder or give
rise to an automatic termination, or the right of discretionary
termination thereof by any other party thereto.
3.14 Licenses and Permits. Schedule 3.14 describes each
license, franchise, permit or other similar authorization
affecting, or relating in any way to, the Business, together with
the name of the government agency or entity issuing such license
or permit, which permits, if expired or withdrawn, would likely
have a Material Adverse Effect on the Business (the "Permits").
Except as set forth on Schedule 3.14, such Permits are valid and
in full force and effect and, assuming the related Consents have
been obtained prior to the Closing Date, are transferable by
Seller, and none of the Permits will, assuming the related
Consents have been obtained prior to the Closing Date, be
terminated or impaired or become terminable as a result of the
transactions contemplated hereby. Except as set forth on
Schedule 3.14, upon consummation of such transactions, Buyer
will, assuming the related Consents have been obtained prior to
the Closing Date, have all of the right, title and interest in
all the Permits.
3.15 Insurance Coverage. Seller has furnished to Buyer a
summary of all insurance policies and fidelity bonds covering the
Purchased Assets, the business and operations of the Business and
the Subsidiaries and their employees. Except as disclosed in
Schedule 3.15, all coverage under such policies and bonds will
terminate on the Closing Date.
3.16 Compliance with Laws. Except as disclosed in Schedules
3.14 and 3.20, neither Seller nor any Subsidiary is in violation
of, has violated (to the best knowledge of the General Counsel
and the Finance Manager - Storage Division of Seller) since
June 30, 1991, or has received written notice since June 30, 1991
of any violation or alleged violation of, and, to the knowledge
of the General Counsel and the Finance Manager - Storage Division
of the Seller, neither Seller nor any Subsidiary is subject to
material liability (whether accrued, absolute, contingent, direct
or indirect) for past or continuing violation of, any material
law, rule, ordinance or regulation, or judgment, order or decree
entered by any court, arbitrator or governmental authority,
domestic or foreign, applicable to the Purchased Assets or the
conduct of the Business.
3.17 Intellectual Property Used or Useful in the Business.
(a) Schedule 3.17 sets forth a list of all
applications, registrations, filings and other formal actions
made or taken pursuant to federal, state and foreign laws by
Seller to perfect or protect its interest in the Intellectual
Property used or useful in the Business, including without
limitation all patents, patent applications, trademarks and
service marks, trademark and service mark applications,
registered copyrights and copyright applications (indicating
which of such Intellectual Property is Excluded Assets),
specifying as to each, as applicable: (i) the nature of such
Intellectual Property; (ii) the owner of such Intellectual
Property; (iii) the jurisdictions in which such Intellectual
Property has been issued or registered or in which an application
for such issuance of registration has been filed, including the
respective registration or application numbers; and (iv) material
licenses, sublicenses and other agreements as to which Seller or
any Subsidiary, or any of their Affiliates is a party and
pursuant to which any Person is authorized to use such
Intellectual Property, including the identity of all parties
thereto. All Intellectual Property shown as registered in
Schedule 3.17 has been properly registered, all pending
registrations and applications have been properly made and filed
and all annuity, maintenance, renewal and other fees relating to
registrations or applications are current. Except as disclosed
on Schedule 3.17, Seller has no knowledge of any Intellectual
Property required in order to conduct the Business, as such is
currently being conducted or proposed to be conducted, other than
the Intellectual Property being acquired by or licensed to Buyer
pursuant to this Agreement or the Ancillary Agreements. Except
as disclosed in Schedule 3.17, to Seller's knowledge, Seller is
not infringing and has not infringed any Intellectual Property of
another in the operation of the Business, nor, to the best of
Seller's knowledge, is any other person infringing the
Intellectual Property of Seller. Except as disclosed on Schedule
3.17 Seller has not granted any license or made any assignment of
any Intellectual Property listed on Schedule 3.17, nor does
Seller pay any royalties or other consideration for the right to
use any Intellectual Property of others. Except as described on
Schedules 3.12 and 3.17, Seller has received no written notice of
any inquiries, investigations or claims or litigation challenging
or threatening to challenge Seller's right, title and interest
with respect to its continued use and right to preclude others
from using any Intellectual Property of Seller related to the
Business.
(b) Except as disclosed on Schedules 3.12 and 3.17,
neither Seller nor any Subsidiary has been sued or charged in
writing with or been a defendant in any claim, suit, action or
proceeding relating to the Business that has not been finally
terminated prior to the date hereof and that involves a claim of
infringement of any intellectual property of a third party. No
Intellectual Property relating to the Business or any of the
Purchased Assets is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by
Seller or any Subsidiary with respect to the Business or
restricting the licensing thereof by Seller or any Subsidiary to
any Person. Except as disclosed on Schedule 3.17, neither Seller
nor any Subsidiary has entered into any agreement to indemnify
any other Person against any charge of infringement of any
Intellectual Property relating to the Business or any of the
Purchased Assets.
3.18 Employees. Schedule 3.18 sets forth a true and
complete list of (a) the number of employees of the Business, (b)
the number of independent contractors and consultants providing
services to the Business, (c) the titles, annual salaries and
other compensation of all employees of the Business whose annual
base salary exceeds $100,000, and (d) the average wage rates for
non-salaried employees of the Business (by classification) and
the number of employees of the Business in each classification.
Seller has not entered into any employment agreement with any
employee of the Business.
3.19 Finders' Fees. Except for Lehman Brothers, whose fees
will be paid by Seller, there is no investment banker, broker,
finder or other intermediary that has been retained by or is
authorized to act on behalf of Seller or any Subsidiary who might
be entitled to any fee or commission from Buyer or any of is
Affiliates upon consummation of the transactions contemplated by
this Agreement and each of the Ancillary Agreements.
3.20 Environmental Compliance.
(a) Environmental Definitions. The following terms,
as used here, have the following meanings:
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Court Order" means any judgment, order, award or
decree of any foreign, federal, state, local or other court,
tribunal or other governmental entity, and any award in any
arbitration proceeding.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, transnational, trade area or
trade zone treaties, laws (including common or case law),
regulations, or governmental restrictions, as in effect and
interpreted on the Closing Date, relating to human health
(including health and safety in the workplace) or the environment
or to emissions, discharges or Releases or threatened Releases of
Hazardous Substances into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to Hazardous Substance Activities, or the
clean-up or other remediation thereof.
"Environmental Liabilities" means all liabilities
relating to the Purchased Assets or Seller's, the Subsidiaries'
or their Affiliates' use or ownership thereof that (i) arise
under or relate to Environmental Laws or arise in connection with
or relate to any matter disclosed or required to be disclosed in
Schedule 3.20 and (ii) arise from or relate to actions occurring
or conditions existing before the Closing Date.
"Governmental Permits" means all licenses,
franchises, permits, privileges, immunities, approvals and other
authorizations from any governmental entity having jurisdiction
over the relevant facility or activity.
"Hazardous Substance" means any hazardous
substances, wastes or materials as defined in any Environmental
Laws.
"Hazardous Substance Activities" shall mean the
use, processing, distribution, manufacture, handling, storage,
transportation, disposal, Release or threatened Release of, or
Remedial Action concerning any Hazardous Substance.
"Release" has the meaning specified in 42 U.S.C.
sec 9601(22).
"Remedial Action" shall mean any response action,
reporting, investigation, characterization, feasibility study,
health assessment, risk assessment, remedial action, treatment,
recycling, removal action, transport, monitoring, maintenance or
any other activity incident to the Release or threatened Release,
remediation or removal of a Hazardous Substance.
(b) Environmental Representations. Except as
disclosed on Schedule 3.20:
(i) Seller, the Subsidiaries and their Affiliates
are now in compliance and have at all times since January 1, 1990
complied in each case in all material respects with all
applicable Environmental Laws as they relate to the Business or
the Purchased Assets or Seller's, the Subsidiaries' or their
Affiliates' use or ownership thereof.
(ii) No written notice, notification, demand,
request for information, citation, summons or Court Order has
been issued and received by Seller, no complaint has been filed
and received by Seller, no penalty has been assessed and, to
Seller's knowledge, no investigation is pending before any
governmental or other entity (i) with respect to any alleged
material violation by Seller or any Subsidiary or their
Affiliates of any Environmental Law in connection with the
conduct of the Business, (ii) with respect to any alleged
material failure by Seller or any Subsidiary or their Affiliates
to have any environmental permit, certificate, license, approval,
registration or Governmental Permits required in connection with
the conduct of the Business, (iii) with respect to any
generation, treatment, storage, recycling, transportation,
disposal or Release of any Hazardous Substance generated by the
Business or generated at or located at, in, under or above the
Purchased Assets, or (iv) with respect to any alleged liability
to any person as the result of Hazardous Substance Activities of
or relating to the Business or the Release or threatened Release
of any Hazardous Substance generated by the Business at any
location (provided that the foregoing representations, insofar as
they relate to RMMI, relate only to the period since January 1,
1992).
(iii) No reportable Release has ever occurred
(a) in connection with the Business or the Purchased Assets or
Seller's, the Subsidiaries' or their Affiliates' use or ownership
thereof or (b) in connection with any Hazardous Substance
Activities conducted by Seller, the Subsidiaries or their
Affiliates in the conduct of the Business at any location.
(iv) There are no environmental Liens on any of
the Purchased Assets, and, to Seller's knowledge, no governmental
actions have been taken or are in process that could subject any
of such Purchased Assets to such Liens.
(v) Seller, the Subsidiaries and their Affiliates
have obtained all material environmental, health and safety
permits and Governmental Permits (a) necessary for the Business,
(b) necessary for any current operations of or on any of the
Purchased Assets, (c) required as part of any Hazardous Substance
Activities, or (d) required by any Environmental Law; Seller, the
Subsidiaries and their Affiliates are in material compliance and
have complied with all material terms and conditions thereof; and
all such permits are fully transferable to Buyer at the Closing
without any material changes in the terms or conditions thereof
or the payment (in the aggregate) of more than $5,000 to the
relevant governmental entities.
(vi) There is not now, nor has there ever been, on
any of the Purchased Assets (a) any above ground or underground
tank or underground piping, or (b) any surface impoundment,
landfill or waste pile, in each case now or previously used to
store or dispose of any Hazardous Substance or that contains or
contained any Hazardous Substance in excess of any applicable
action level or proscribed concentration level or in an amount
that requires any Remedial Action under Environmental Laws.
(vii) To the best knowledge of Seller's
Worldwide Environmental Health and Safety Manager, there is no
material amount of asbestos or a.c.m. that is located at, in, on
or under, or is a part of, any of the facilities used in the
Business, nor has Seller, the Subsidiaries or their Affiliates
ever sold asbestos or a.c.m. as part of the Business.
(viii) None of the Seller, the Subsidiaries or
their Affiliates has, since January 1, 1990, filed, and none of
them intends or is required by any Environmental Law to file, any
notice or report under any Environmental Law reporting a
violation of any Environmental Law related in any respect to the
Business or the Purchased Assets.
(ix) To the knowledge of Seller, none of the
Hazardous Substance Activities conducted by Seller, the
Subsidiaries and their Affiliates in connection with the Business
or the Purchased Assets have resulted in the exposure of any
person to a Hazardous Substance in a manner that has caused or
will cause a material adverse health effect.
(x) No event legally requiring evacuation to
protect against environmental risk of any portion of the
facilities used in the Business has occurred within the five
calendar years preceding the Closing Date.
(xi) Seller, the Subsidiaries and their Affiliates
have disclosed to Buyer all environmental or health and safety
audits or reports relating to the Business or the Purchased
Assets that detail, describe or list the conditions thereof with
respect to compliance with Environmental Laws or with respect to
the potential or need to perform any Remedial Action in
connection therewith.
3.21 Capitalization of the Subsidiaries.
(a) Schedule 3.21 sets forth a true and complete
description of (i) the authorized capital stock of each
Subsidiary, and (ii) the outstanding capital stock of each
Subsidiary as of the date hereof and the record owners thereof.
(b) All of the outstanding shares of capital stock of
each Subsidiary are duly authorized, validly issued, fully paid
and nonassessable and, except as disclosed in Schedule 3.21, all
such shares are owned by Seller free and clear of all security
interests, liens, claims, pledges, agreements, limitations in
voting rights, charges or other encumbrances of any nature
whatsoever. There are no outstanding (i) securities of Seller or
any Subsidiary convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests
in any Subsidiary or (ii) options or other rights to acquire from
Seller or any Subsidiary, or obligations of Seller or any
Subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or
ownership interests in, any Subsidiary (the items in clauses (i)
and (ii) being referred to collectively as the "Subsidiary
Securities"). Except as disclosed in Schedule 3.21, there are no
outstanding obligations of Seller or any Subsidiary to
repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
3.22 Disclosure. No representation or warranty by Seller in
this Agreement, nor any certificate, instrument, schedule or
exhibit hereto furnished or to be furnished by or on behalf of
Seller pursuant to this Agreement, contains or shall contain any
untrue statement of material fact or, when taken together, omits
or shall omit a material fact necessary to make the statements
contained therein not misleading, with only such exceptions as
would not in the aggregate reasonably be expected to have a
Material Adverse Effect. All statements and information
contained in any certificate, instrument, schedule or exhibit
delivered by or on behalf of Seller pursuant to this Agreement
shall be deemed representations and warranties by Seller.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warranties to Seller that:
4.01 Organization and Existence. Buyer is a corporation
duly incorporated, validly existing and in good standing under
the laws of Delaware and has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
4.02 Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary
Agreements, and the consummation by Buyer of the transactions
contemplated hereby and thereby are within the corporate powers
of Buyer and have been duly authorized by all necessary corporate
action on the part of Buyer. This Agreement and each of the
Ancillary Agreements constitute, or upon execution and delivery
will constitute, valid and binding agreements of Buyer. The Note
has been duly authorized and, upon execution and delivery, will
constitute a valid and binding obligation of Buyer.
4.03 Governmental Authorization. The execution, delivery
and performance by Buyer of this Agreement, the Ancillary
Agreements and the Note require no action by or in respect of, or
filing with, any governmental body, agency, official or authority
other than compliance with any applicable requirements of the HSR
Act.
4.04 Non-Contravention. The execution, delivery and
performance by Buyer of this Agreement, each of the Ancillary
Agreements and the Note do not and will not (i) contravene or
conflict with the certificate of incorporation or bylaws of Buyer
or (ii) assuming compliance with the matters referred to in
Section 4.03, contravene or conflict with any provision of any
law, regulation, judgment, injunction, order or decree binding
upon or applicable to Buyer.
4.05 Finders' Fees. Except for Hambrecht & Quist
Incorporated, whose fees will be paid by Buyer, there is no
investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Buyer who
might be entitled to any fee or commission from Seller or any of
its Affiliates upon consummation of the transactions contemplated
by this Agreement and each of the Ancillary Agreements.
4.06 Financing. Buyer has sufficient funds in bank
accounts, commitments for funds or currently available lines of
credit to pay the cash portion of the Purchase Price.
4.07 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer,
threatened against or affecting, Buyer before any court or
arbitrator or any governmental body, agency or official that in
any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
ARTICLE V.
COVENANTS OF SELLER
Seller agrees that:
5.01 Conduct of the Business. From the date hereof until
the Closing Date, Seller and each Subsidiary shall conduct the
Business in the ordinary course consistent with past practice,
use its best efforts to preserve intact the business organization
and relationships with third parties of the Business, and to keep
available the services of the present employees of the Business.
Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, Seller and each Subsidiary will
not:
(a) acquire a material amount of assets that would be
included in the Purchased Assets from any other Person, except in
the ordinary course of business consistent with past practice;
(b) sell, lease, license, pledge or otherwise dispose
of any Purchased Assets, except for the sale of inventory items
in the ordinary course of business consistent with past practice;
(c) enter into any contract, commitment or obligation
related to the Business, except contracts or commitments which
are made in the ordinary course of business and consistent with
past practice; in addition, it is understood and agreed that
Seller will not, without Buyer's prior written consent, enter
into any agreement or license relating to HDB motors, with
respect to solid state devices, firmware, components or
architecture, with respect to engineering services to be provided
to Seller relating to the Business or with respect to
indebtedness for borrowed money by any Subsidiary;
(d) do or omit to do any act which would result in a
material breach of any material contract, commitment or
obligation;
(e) amend any articles of organization or by-laws or
other charter documents of any Subsidiary (other than for the
purpose of deleting the Digital Tradename from the name of any
such Subsidiary), make any changes in the authorized or issued
capital stock of any Subsidiary, or take or commence the taking
of any action with respect to dissolution, liquidation or winding
up of Seller or any Subsidiary;
(f) declare, set aside or pay any dividend on or make
any other distribution in respect of any capital stock of any
Subsidiary or issue, transfer, deliver, pledge, encumber or sell
or authorize the issuance, delivery, pledge, encumbrance or sale
of any shares of capital stock, or securities convertible into,
or rights, warrants or options to acquire any such capital stock
of any Subsidiary;
(g) grant any license or make any assignment of any
Intellectual Property used or useful in the Business;
***
(h) directly or indirectly solicit or encourage any
employee of Seller or Seller's subsidiaries whose job relates
primarily to the Business (other than the individuals described
in a letter previously delivered to Buyer) to leave such
employment or to not become a Hired Employee, or to offer to
employ any such person after the Closing; or
(i) agree or commit to do any of the foregoing.
5.02 Consents. Seller shall use its best efforts prior to
Closing to obtain all Consents and to effect the notification of,
or filing with, each person or authority whose consent or
approval is required in order to permit the consummation of the
transactions contemplated by this Agreement and to enable Buyer
to conduct and operate the Business as presently conducted and as
contemplated to be conducted. All Consents shall be in writing
and executed counterparts shall be delivered to Buyer promptly
after Seller's receipt thereof.
5.03 No Negotiation. From the date of this Agreement until
the Closing Date, Seller shall not directly or indirectly
(through any employee, officer, director, agent or representative
or otherwise) solicit, encourage or furnish any information to
any prospective buyer, commence or conduct negotiations with any
other party or enter into any agreement with any other party
concerning the sale of the Business or the Purchased Assets or
any part thereof other than in the ordinary course of business of
the Business consistent with past practice (an "Acquisition
Proposal"), or take any other action to facilitate inquiries or
the making of any proposal that constitutes or may reasonably be
expected to lead to an Acquisition Proposal. Seller shall
immediately cease and cause to be terminated any existing
discussions or negotiations with any parties other than Buyer
conducted prior to the date of this Agreement with respect to any
Acquisition Proposal.
5.04 Access to Information; Financial Statements. From the
date hereof until the Closing Date, subject to the terms and
conditions of the Non-Disclosure Agreement dated as of May 11,
1994 (as supplemented on June 6, 1994) and the terms and
conditions hereof, Seller and the Subsidiaries (a) will give
Buyer, its counsel, financial advisors, auditors and other
authorized representatives access on reasonable notice and at
reasonable times to the offices, properties, books and records of
Seller and the Subsidiaries relating to the Business, (b) will
furnish to Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating
data and other information relating to the Business as such
Persons may reasonably request, and (c) will instruct the
employees, counsel and financial advisors of Seller and the
Subsidiaries to cooperate with Buyer in its investigation of the
Business, provided, that any investigation pursuant to this
Section shall be conducted in such a manner as not to
unreasonably interfere with the conduct of the business of Seller
and the Subsidiaries and, provided further, that a representative
of Seller may accompany Buyer's representatives and agents during
their investigation of the Business. Notwithstanding the
foregoing, Buyer shall not be given access to personnel records
of Seller or the Subsidiaries relating to individual performance
or evaluation records or medical histories to the extent that
such access would be in violation of applicable law or violate
obligations of confidentiality. In addition, Seller and the
Subsidiaries shall prepare and deliver to Buyer, prior to the
Closing Date (i) audited balance sheets of the Business as of the
end of the fiscal years ending on or about the end of June 1993
and 1994, (ii) audited statements of operations and changes in
financial position of the Business for the fiscal years ended on
or about the end of June 1992, 1993 and 1994, (iii) an unaudited
balance sheet of the Business as of the end of the last full
fiscal quarter ending more than 30 days prior to the Closing
Date, and (iv) unaudited statements of operations for each of the
fiscal quarters ending at more than 30 days prior to the Closing
Date, beginning with the fiscal quarter ending on or about the
end of June 1993, in each case prepared in accordance with
generally accepted accounting principles. In addition, Seller
shall provide Buyer with unaudited statements of operations for
the preceding quarter, and balance sheets and changes in
financial position as of the Closing Date, for each of RMMI, the
operations of the Business conducted in Batam, Indonesia, and the
Malaysian Subsidiary, each prepared in accordance with the
Accounting Convention, together with an analysis thereof, in each
case as soon as practicable after the Closing Date. Seller shall
give Buyer and Buyer's accountants access to the books and
records of Seller necessary to allow Buyer to prepare any other
financial reports relating to the Business which may from time to
time be required by governmental or Nasdaq National Market rules.
Any inspection of the facilities of Seller or environmental
investigations of such facilities by Buyer shall be conducted in
accordance with and subject to the execution of a Right of Entry
Agreement substantially in the form of Exhibit K hereto.
5.05 Notices of Certain Events. Seller shall promptly
notify Buyer of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection with
the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting Seller,
the Subsidiaries or the Business that, if pending on the date of
this Agreement, would have been required to have been disclosed
pursuant to Section 3.12 or that relate to the consummation of
the transactions contemplated by this Agreement.
5.06 Noncompetition. Except as provided in the Seller-Buyer
Supply Agreement and as contemplated in the other Ancillary
Agreements, Seller shall not directly or indirectly enter into or
engage in any businesses directly competitive with the Business
for a period of five years from the Closing Date without the
prior written consent of Buyer, nor shall Seller solicit for
employment any employee of the Business during the two-year
period immediately following the Closing; provided that the
conduct of business by RMMI, so long as Seller continues to own
the RMMI Shares and continues to control RMMI, shall not be
deemed a violation of this Section 5.06.
5.07 Confidentiality. Seller will hold, and will use its
best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
Confidential Information concerning Buyer or the Business
provided to it pursuant to Section 6.01. Seller shall not at any
time subsequent to the Closing, except as explicitly requested by
Buyer, (i) use for any purpose, (ii) disclose to any person, or
(iii) keep or make copies of, any documents, tapes, disks or
programs containing Confidential Information concerning Buyer or
the Business. For purposes hereof, "Confidential Information"
shall mean all trade rights in which Buyer has an interest, all
customer lists and customer information and all other information
concerning the processes, apparatus, equipment, packaging,
products, marketing and distribution methods, forecasts and plans
of Buyer or relating solely to the Business except to the extent
that such information can be shown to have been (i) in the public
domain through no fault of Seller or (ii) later lawfully acquired
by Seller from sources other than Buyer.
5.08 Capital Expenditures. Seller shall use commercially
reasonable best efforts to adhere to the capital expenditure plan
set forth on Schedule 5.08 hereto (the "Capital Expenditure
Plan"), with such changes as shall have been consented to from
time to time in advance by Buyer (which consent shall not be
unreasonably withheld), and shall have expended at least
$29,000,000 ($23,110,000 if the RMMI Shares are not purchased at
the Closing) of pursuant to such plan during the quarter ended
October 1, 1994. Should Buyer, in its sole discretion, elect to
fund additional capital expenditures related to the Business
prior to the Closing Date, Seller will cooperate with Buyer in
incorporating the capital equipment or other assets purchased by
Buyer into the Business prior to the Closing.
5.09 Qualification of Products Under Supply Agreement.
Promptly after the date hereof, Seller shall cooperate with Buyer
to qualify Buyer's products for sale under the Seller-Buyer
Supply Agreement.
5.10 Payment of Warranty Costs. Buyer agrees to perform or
have performed the warranty obligations of Seller relating to 3-
inch drives shipped prior to the Closing. Seller shall reimburse
Buyer for 50% of all liabilities and obligations arising under
any warranty granted by Seller to customers in connection with
the sale of 3-inch drives shipped prior to the Closing Date.
Each month, Buyer shall report to Seller the amount of
reimbursement due pursuant to this Section 5.10, as determined
using Buyer's fully burdened average cost of repair for each
particular product, and Seller shall promptly pay to Buyer such
amount.
5.11 Incorporation of Indonesian Subsidiary. Seller shall
use its best efforts to complete the process of incorporating an
Indonesian corporation called PT Digital Equipment Storage
(Indonesia) (the "Indonesian Subsidiary") as promptly as
possible, and shall transfer all of the equity of the Indonesian
Subsidiary to Buyer or Buyer's designee immediately upon such
incorporation.
5.12 Covenant Not to Sue. Seller shall not bring any claim,
action or proceeding against Buyer for use of any trade secret,
know-how or processes of Seller that have been used in the
Business but that have not been transferred to Buyer pursuant
hereto so long as such use relates solely to Buyer's conduct of
the Business after Closing.
5.13 RMMI Right of First Refusal. Buyer and Seller agree to
endeavor to obtain from StorageTek a waiver of StorageTek's right
of first refusal under Section 2.2 of the Stockholders' Agreement
with respect to the transfer of the RMMI Shares pursuant to the
RMMI Stock Purchase Agreement. Seller agrees that, on or prior
to the second business day following the written request of
Buyer, Seller shall give to StorageTek a Transfer Notice (for
purposes of this Section 5.13, as defined in the RMMI
Stockholders' Agreement) with respect to the proposed transfer of
the RMMI Shares pursuant to the RMMI Stock Purchase Agreement if
such Notice shall not previously have been given. Seller shall
notify Buyer in writing on or prior to the day following receipt
by Seller of a Purchase Notice (for purposes of this Section
5.13, as defined in the RMMI Stockholders' Agreement).
If the Closing shall have occurred without the purchase of
the RMMI Shares, then for the purposes of such Closing and
thereafter, the representations and warranties contained in this
Agreement (other than in Section 3.17) and the covenants
contained in Sections 5.01 to 5.05, 5.07, 5.08 and 5.16 and
Articles VII through IX and the references therein to the
Business shall be read to omit reference to RMMI.
5.14 RMMI Head Supply Agreement. Buyer agrees, and Seller
agrees to cause RMMI, to negotiate in good faith the definitive
form of the RMMI Head Supply Agreement and to execute such
agreement promptly following execution of this Agreement.
5.15 Sublicense of RMMI License Rights. Seller hereby
grants to Buyer a non-exclusive, irrevocable, worldwide, royalty-
free, paid-up sublicense of Seller's rights under the Technology
Cross License Agreement by and between Seller and RMMI dated
August 19, 1992 (the "Cross License Agreement") to the maximum
extent permitted by such agreement, which sublicense shall become
effective upon the Closing under this Agreement. Seller shall
maintain the Cross License Agreement and its license rights
thereunder in full force and effect. Buyer agrees to treat the
Confidential Information (as defined in the Cross License
Agreement) in accordance with the terms of Section 4 of the Cross
License Agreement. This sublicense shall not be sold, assigned
or sublicensed except in connection with (i) the sale of the
business unit or larger business enterprise in which the
technology is employed or (ii) the design, manufacture or
assembly of components included in products sold by Buyer or its
business units.
5.16 Software to be Made Available. Seller shall use
commercially reasonable best efforts to secure for the benefit of
Buyer licenses or such other arrangements as are necessary to
enable Buyer to use, on and after the Closing Date, the software
products known as "Workstream" and "Maxcim." Seller's
obligations under this Section 5.15 shall be subject to Buyer's
agreement to pay the reasonable costs, if any, of obtaining
rights to continue the use of such software.
ARTICLE VI.
COVENANTS OF BUYER
Buyer agrees that:
6.01 Access. On and after the Closing Date, subject to the
terms and conditions of this Agreement, upon reasonable notice
Buyer will afford promptly to Seller and its agents reasonable
access to its properties, books, records, employees and auditors
to the extent necessary to permit Seller to determine any matter
relating to its rights and obligations hereunder or with respect
to any period ending on or before the Closing Date; provided,
that any such access by Seller shall not unreasonably interfere
with the conduct of the business of Buyer and, provided further,
that a representative of Buyer may accompany Seller's
representatives agents during such investigation.
Notwithstanding the foregoing, Seller shall not have access to
personnel records of Buyer relating to individual performance or
evaluation records or medical histories to the extent that such
access would violate applicable Laws or violate obligations of
confidentiality. Any inspection of the facilities of the
Business or environmental investigations of such facilities by
Seller on or after the Closing Date shall be conducted in
accordance with and subject to the execution of a Right of Entry
Agreement substantially in the form of Exhibit K hereto.
6.02 Trademarks; Tradenames.
(a) Except as provided in this Section 6.02, after the
Closing, Buyer and its affiliates shall not use any of the names
listed on Schedule 6.02. Such names shall be referred to,
collectively or individually, as the context requires, as the
"Digital Tradename."
(b) After the Closing, Buyer shall have the right to
sell existing inventory and to use existing packaging, labeling,
containers, supplies, advertising materials, brochures, technical
data sheets and any similar materials bearing any Digital
Tradename until the earlier of (i) 15 months after the Closing
Date and (ii) the date existing stocks of such materials are
exhausted. Buyer shall comply with all applicable laws or
regulations in any use of packaging or labeling containing the
Digital Tradename.
(c) Buyer shall not be obligated to change the Digital
Tradename on goods in the hands of dealers, distributors and
customers at the time of the expiration of the time period set
forth in subsection (b) above. With respect to goods in the
possession of Buyer 15 months after the Closing Date, the
obliteration of the Digital Tradename shall be deemed compliance
with Buyer's covenants not to use the Digital Tradename pursuant
to this Section 6.02.
(d) Buyer agrees to cease using the Digital Tradename
on buildings, cars, trucks and other fixed assets as soon as
possible within a period not to exceed three months after the
Closing Date.
(e) Buyer shall have the right to use the Digital
Tradename to the extent necessary as a result of the use of the
Digital Tradename in the names of the Subsidiaries; provided,
however, that Buyer shall change the names of the Subsidiaries as
soon as practicable following the Closing to names that do not
include the Digital Tradename and shall thereafter cease using
the Digital Tradename in connection with the names of the
Subsidiaries.
6.03 Covenant Not to Sue. Buyer shall not bring any claim,
action or proceeding against Seller for a period of five years
from the Closing Date for use of any trade secret, know-how or
processes transferred to Buyer pursuant hereto so long as such
use does not violate Section 5.06.
6.04 Cooperation Under StorageTek Technology License Option
Agreement. In the event StorageTek exercises its right of first
refusal to purchase the Shares, and the Closing under this
Agreement occurs (in which case Seller will no longer own its
disk drive business), Buyer will cooperate as necessary to enable
Seller to fulfill its obligations under the Technology License
Option Agreement between Seller and StorageTek dated August 19,
1992, including the provision of the technical assistance
referred to in such agreement in consideration of the associated
cash payments.
ARTICLE VII.
COVENANTS OF BOTH PARTIES
The parties hereto agree that:
7.01 Best Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, each party will use its best
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
Seller and Buyer each agree to execute and deliver such other
documents, certificates, agreements and other writings and to
take such other actions as may be necessary or desirable in order
to consummate or implement expeditiously the transactions
contemplated by this Agreement and the Ancillary Agreements and
to vest in Buyer good and marketable title to the Purchased
Assets.
7.02 Certain Filings. Seller and Buyer shall cooperate with
one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement and the Ancillary
Agreements and (b) in taking such actions or making any such
filings, in furnishing such information as may be required in
connection therewith, and in seeking timely to obtain any such
actions, consents, approvals or waivers.
7.03 Public Announcements. The parties agree not to issue
any press release or making any public statement with respect to
this Agreement and the Ancillary Agreements or the transactions
contemplated hereby and thereby and, except as may be required by
applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or
make any such public statement, in each case without the other
party's prior consent.
ARTICLE VIII.
TAX MATTERS
8.01 Tax Definitions. The following terms, as used herein,
have the following meanings:
"Buyer Indemnitee" means Buyer, any of its Affiliates and,
effective upon the Closing, RMMI.
"Code" means the Internal Revenue Code of 1986, as amended.
"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.
"Seller Group" means the affiliated group of corporations
(as defined in Section 1504(a) of the Code) of which Seller is a
member and any foreign corporation which would have been in such
affiliated group but for the fact that it is a foreign
corporation.
"Tax" means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad
valorem, franchise, capital, paid-up capital, profits, greenmail,
License, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other
like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount
imposed by any Taxing Authority and (ii) any liability of any of
the Subsidiaries for the payment of any amounts of the type
described in (i).
"Taxing Authority" means any governmental authority
(domestic or foreign) responsible for the imposition of any Tax.
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction
or any other credit or tax attribute of RMMI that could reduce
Taxes (including, without limitation, deductions and credits
related to alternative or add-on minimum Taxes).
"Tax Indemnification Period" means (i) with respect to any
Tax described in clause (i) of the definition of "Tax," any
Pre-closing Tax Period of the Subsidiaries, and (ii) with respect
to any Tax described in clause (ii) of the definition "Tax," any
Pre-Closing Tax Period of the Subsidiaries and the taxable year
of any member of a group described in such clause (ii) that
includes (but does not end on) the Closing Date.
8.02 Tax Representations With Respect to Purchased Assets.
Seller hereby represents and warrants to Buyer that:
(a) Seller has timely paid all Taxes, and all interest
and penalties due thereon and payable by it for the Pre-Closing
Tax Period which will have been required to be paid on or prior
to the Closing Date, the non-payment of which would result in a
Lien on any Purchased Asset, would otherwise adversely affect the
Business or would result in Buyer or any Subsidiary becoming
liable or responsible therefor.
(b) Seller has established adequate reserves for the
payment of, and will timely pay all Tax liabilities, assessments,
interest and penalties which arise from or with respect to the
Purchased Assets or the operation of the Business and are
incurred in or attributable to the Pre-Closing Tax Period, the
non-payment of which would result in a Lien on any Purchased
Asset, would otherwise adversely affect the Business or would
result in Buyer or any Subsidiary becoming liable therefor.
8.03 Tax Representations With Respect to Subsidiaries.
(a) Seller hereby represents and warrants that, except
as set forth in Schedule 8.03, (i) all Tax returns, statements,
reports, elections and forms (including estimated tax returns and
reports and information returns and reports) required to be filed
with any Taxing Authority with respect to any Pre-Closing Tax
Period by or on behalf of the Subsidiaries (collectively, the
"Returns"), have been or will be filed when due in accordance
with all applicable laws; (ii) as of the time of filing, the
Returns correctly reflected (and, as to any Returns not filed as
of the date hereof, will correctly reflect) the facts regarding
the income, business, assets, operations, activities and status
of the Subsidiaries and any other information required to be
shown therein and do not omit any material information that
should have been included therein; (iii) the Subsidiaries, or
Seller on their behalf, have timely paid, or withheld and
remitted to the appropriate Taxing Authority, all Taxes shown as
due and payable on the Returns that have been filed; (iv) the
Subsidiaries are not delinquent in the payment of any Tax and
have not requested any extension of time within which to file or
send any Return, which Return has not since been filed or sent;
(v) none of the Subsidiaries and any member of any affiliated or
combined group of which the Subsidiaries are or have been a
member has granted any extension or waiver of the limitation
period applicable to any Return, which period (after giving
effect to such extension or waiver) has not yet expired; (vi)
there is no claim, audit, action, suit, proceeding, or
investigation now pending or threatened against or with respect
to the Subsidiaries in respect of any Tax or Tax Asset; (vii)
none of the property owned or used by the Subsidiaries is subject
to a lease, other than a "true" lease for tax purposes; (viii)
none of the property owned by the Subsidiaries is "tax-exempt use
property" within the meaning of Section 168(h) of the Code; (ix)
no Subsidiary has (A) been a member of an affiliated group other
than one of which Seller was the common parent, or (B) filed or
been included in a combined, consolidated or unitary Return other
than one filed by Seller; and (x) no Subsidiary will be as of the
Closing Date under any contractual obligation to pay the Tax
obligations of any other Person, or to pay the Tax obligations
with respect to transactions relating to any other Person, or to
indemnify any other person with respect to any Tax as of the
Closing Date.
(b) Schedule 8.03 contains a list of states,
territories and jurisdictions (whether foreign or domestic) to
which any Tax is properly payable by any Subsidiary.
8.04 Elections.
(a) If requested by Buyer, Seller agrees to make a
timely, effective and irrevocable election under Section
338(h)(10) of the Code (the "Section 338(h)(10) Election"), and
to file such election in accordance with applicable regulations.
In addition, Seller and Buyer agree to cooperate to make timely
and effective filings and elections under any comparable statutes
in any other jurisdiction with respect to the Subsidiaries. The
Section 338(h)(10) Election shall properly reflect the Price
Allocation (as hereinafter defined). Buyer shall allocate the
modified aggregate deemed sales price (or MADSP, as such term is
defined in Treasury Regulations Section 1.338(h)(10)-IT(f)) among
the assets of RMMI in accordance with the Treasury regulations
promulgated under Section 338(h)(10). Such allocation shall be
the "Price Allocation." Seller and Buyer agree to act in
accordance with the Price Allocation in the preparation, filing
and audit of any Tax return.
(b) Without the prior written consent of Buyer,
neither Seller nor any Subsidiary nor any Affiliate of Seller
shall, to the extent it may affect or relate to any Subsidiary,
make any election, change any election, change an annual tax
accounting period, adopt or change any tax accounting method, or
file any amended Return if any such action would have the effect
of increasing the Tax liability of any Subsidiary, Buyer or any
Affiliate of Buyer.
(c) The Seller Group shall include RMMI through the
close of business on the Closing Date in its consolidated Federal
Tax return and in those state and local tax returns that are
filed on a consolidated, combined or unitary basis.
8.05 Tax Cooperation; Allocation of Taxes.
(a) Buyer, Seller and the Subsidiaries agree to
furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating
to the Purchased Assets, the Business and the Subsidiaries 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, suit or proceeding relating to any Tax return.
Seller, Buyer and each Subsidiary shall cooperate with each other
in the conduct of any audit or other proceeding related to Taxes
involving the Business or any Subsidiary and each shall execute
and deliver such powers of attorney and other documents as are
necessary to carry out the intent of this paragraph.
(b) The Subsidiaries and Seller agree (i) to retain
all books and records with respect to Tax matters pertinent to
the Subsidiaries relating to any Pre-Closing Tax Period, and to
abide by all record retention agreements entered into with any
Taxing Authority and (ii) to give the other party reasonable
written notice prior to destroying or discarding any such books
and records and, if the other party so requests, the Subsidiaries
or Seller, as the case may be, shall allow the other party to
take possession of such books and records.
(c) All real property taxes, personal property taxes
and similar ad valorem obligations levied with respect to the
Purchased Assets for a taxable period which includes (but does
not end on) the Closing Date (collectively, the "Apportioned
Obligations") shall be apportioned between Seller and Buyer 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 Period.
Seller shall be liable for the proportionate amount of such taxes
that is attributable to the Pre-Closing Tax Period. Within 90
days after the Closing, Seller and Buyer shall present a
statement to the other setting forth the amount of reimbursement
to which each is entitled under this Section 8.05(c) 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 the later of (i)
10 days after delivery of such statement or (ii) 10 days prior to
the date such Tax is payable to the applicable Taxing Authority.
Thereafter, Seller shall notify Buyer upon receipt of any bill
for real or 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 Buyer who
shall pay the same to the appropriate taxing authority, provided
that if such bill covers the Pre-Closing Tax Period, Seller shall
also remit prior to the due date of assessment to Buyer payment
for the proportionate amount of such bill that is attributable to
the Pre-Closing Tax Period. If either Seller or Buyer shall
thereafter make a payment for which it is entitled to
reimbursement under this Section 8.05(c), the other party shall
make such reimbursement promptly but in no event later than 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 and not made within 10 days of delivery of the
statement shall bear interest at the rate per annum determined,
from time to time, under the provisions of Section 6621(a)(2) of
the Code for each day until paid.
(d) Subject to Section 2.09, any transfer,
documentary, sales, use or other Taxes assessed upon or with
respect to the transfer of the Purchased Assets to Buyer and any
recording or filing fees with respect thereto shall be shared
equally by Buyer and Seller; provided that Seller shall be liable
for all such Taxes and fees in excess of an aggregate of
$750,000.
8.06 Tax Indemnification With Respect to the Subsidiaries.
(a) Seller hereby indemnifies each Buyer Indemnitee
against and agrees to hold each Buyer Indemnitee harmless from
any (v), damages from the breach of any representation, warranty
or covenant contained in Article VIII of this Agreement, (w)
Taxes of RMMI related to the Tax Indemnification Period, (x)
Taxes of a Subsidiary resulting from a breach of the provisions
of Section 8.04(b), (y) Taxes, including any state or local
Taxes, arising directly from the Section 338(h)(10) Election,
other than any incremental sales tax imposed in any state or
subdivision solely by reason of the Section 338(h)(10) Election,
and (z) liabilities, costs, expenses (including, without
limitation, reasonable expenses of investigation and attorneys'
fees and expenses), losses, damages, assessments, settlements or
judgments arising out of or incident to the imposition,
assessment or assertion of any Tax described in (v), (w), (x) or
(y), including those incurred in the contest in good faith in
appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax, and any liability as transferee (the
sum of (v), (w), (x), (y), and (z) being referred to herein as a
"Tax Loss").
(b) Seller hereby indemnifies each Buyer Indemnitee
against and agrees to hold each Buyer Indemnitee harmless from
any Taxes assessed on Malaysian Subsidiary with respect to the
Tax Indemnification Period if such assessment results from
actions within the control of Seller. Any Tax assessed during
the Tax Indemnification Period that results from the Buyer's
failure to meet the conditions of the Pioneer Status Incentive
granted on March 31, 1994, under the Malaysian Incentives Act of
1986 will be the responsibility of Buyer.
(c) For purposes of this Section 8.06, in the case of
any Taxes that are imposed on a periodic basis and are payable
for a taxable period that includes (but does not end on) the
Closing Date, the portion of such Tax related to the portion of
such taxable period ending on the Closing Date shall (x) in the
case of Taxes other than Taxes based upon or related to income,
be deemed to be the amount of such Tax for the entire taxable
period multiplied by a fraction the numerator of which is the
number of days in the taxable period ending on the Closing Date
and the denominator of which is the number of days in the entire
taxable period, and (y) in the case of any Tax based upon or
related to income, be deemed equal to the amount which would be
payable if the relevant taxable period ended on the Closing Date,
less (z) amounts reflected as tax liabilities on the Closing
Statement. Any credits relating to a taxable period that begins
before and ends after the Closing Date shall be taken into
account as though the relevant taxable period ended on the
Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with
prior practice of the Subsidiaries.
(d) Upon payment by any Buyer Indemnitee of any Tax
Loss, Seller shall discharge its obligation to indemnify the
Buyer Indemnitee against such Tax Loss by paying to Buyer an
amount equal to the amount of such Tax Loss.
(e) Any payment pursuant to this Section 8.06 shall be
made not later than 30 days after receipt by Seller of written
notice from Buyer stating that any Tax Loss has been paid by a
Buyer Indemnitee and the amount thereof and of the indemnity
payment requested. Any payment required under this Section 8.06
and not made when due shall bear interest at a rate per annum
equal to the rate of interest announced by Morgan Guaranty Trust
Company of New York from time to time as its Base Rate in New
York City in effect from time to time to the date of payment.
(f) Buyer agrees to give prompt notice to Seller of
the assertion of any claim, or the commencement of any suit,
action or proceeding in respect of which indemnity may be sought
hereunder and of any Tax Loss that Buyer deems to be within the
ambit of this Section 8.06 (specifying with reasonable
particularity the basis therefor) and will give Seller such
information with respect thereto as Seller may reasonably
request. Seller may, at its own expense, (i) participate in and,
(ii) except as provided in Section 8.06(g), upon notice to Buyer,
assume and control the defense of any such suit, action or
proceeding (including any Tax audit), provided that (i) Seller's
counsel is reasonably satisfactory to Buyer, (ii) Seller shall
thereafter consult with Buyer upon Buyer's reasonable request for
such consultation from time to time with respect to such suit,
action or proceeding (including any Tax audit) and (iii) Seller
shall not, without Buyer's consent, agree to any settlement with
respect to any Tax if such settlement would adversely affect the
Tax liability of Buyer, any of its Affiliates or, upon the
Closing, any Subsidiary. If Seller assumes such defense, Buyer
shall have the right (but not the duty) to consult with respect
to the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by Seller. Seller shall be
liable for the fees and expenses of counsel employed by Buyer for
any period during which Seller has not assumed the defense
thereof. Whether or not Seller chooses to defend or prosecute
any claim, all of the parties hereto shall cooperate in the
defense or prosecution thereof.
(g) Buyer shall assume and control the defense of any
claim that relates to Taxes described in Section 8.06(c). Seller
shall have the right (but not the duty) to consult with respect
to the defense of any such claim and to employ counsel, at its
own expense, separate from the counsel employed by Buyer. Whether
or not Seller chooses to consult in the defense of any such
claim, all of the parties hereto shall cooperate in the defense
thereof.
(h) Seller shall not be liable under this Section 8.06
with respect to any Tax resulting from a claim or demand the
defense of which Seller was not offered the opportunity to assume
as provided under Section 8.06(f). No investigation by Buyer or
any of its Affiliates at or prior to the Closing Date shall
relieve Seller of any liability hereunder.
8.07 Refunds and Credits; Carrybacks.
(a) The parties shall be entitled to any refunds or
credits of Taxes as follows:
(i) Buyer shall be entitled to all refunds and
credits of Taxes of (or attributable to) the Subsidiaries to the
extent such refunds or credits are attributable to a Post-Closing
Tax Period or to a loss carryforward remaining immediately after
the Closing Date; and
(ii) Seller shall be entitled to all refunds and
credits of Taxes of (or attributable to) the Subsidiaries to the
extent such refunds or credits are attributable to a Pre-Closing
Tax Period but not including the loss carryforwards of the
Subsidiaries remaining immediately after the Closing Date.
(b) Seller shall forward to Buyer or reimburse Buyer
for any refunds or credits due to Buyer under this Section 8.07
within thirty (30) days of the actual receipt thereof by Seller
or any Affiliate, and Buyer shall forward to Seller or reimburse
Seller for any such refunds or credits due to Seller under this
Section 8.07 within thirty (30) days of the actual receipt
thereof by a Buyer or a Subsidiary.
(c) Notwithstanding any other provision of this
Section 8.07, to the extent permitted by applicable law, Buyer
and the Subsidiaries shall be entitled to the full amount of any
Tax refund or credit to the extent such refund or credit is
attributable to the carryback of any tax benefit, loss,
deduction, credit or attribute of the Subsidiaries from a Post-
Closing Tax Period to a Pre-Closing Tax Period or from the
Subsidiaries' loss carryforwards remaining immediately after the
Closing Date. In the event that applicable law requires a result
different than that prescribed in the preceding sentence and,
pursuant to applicable law, a tax benefit, loss, deduction,
credit or other attribute of Subsidiaries which belongs to Buyer
under this Section 8.07 shall have been utilized by Seller or any
Affiliate, then Seller shall pay to Buyer the amount of any such
Tax benefit, refund or credit to Seller or any Affiliate. Any
amount payable pursuant to the preceding sentence shall be paid
within thirty (30) days of the actual or constructive receipt
thereof by Seller or any Affiliate.
ARTICLE IX.
EMPLOYEE BENEFITS
9.01 Continued Employment.
(a) In accordance with the provisions of this Article
IX, Buyer shall offer to employ all Transferred Employees who are
employees of the Seller or Affiliates of the Seller other than
the Subsidiaries on the Closing Date, and the Subsidiaries shall
continue the employment of the Transferred Employees who are
employees of the Subsidiaries as of the Closing Date.
"Transferred Employee" means all of the following individuals
who, on the Closing Date, are actively employed by Seller, any
Affiliate of Seller or the Subsidiaries as regular (not
temporary) employees: (i) any person whose job on or before
July 2, 1994 related primarily to the Business (or who became
primarily employed in the Business after such date to fill a
vacancy or to meet the planned needs of the Business in the
ordinary course) and who is located in the United States, Batam,
Indonesia or Penang, Malaysia, or is part of the Batam operations
management group in Singapore (provided, that in the event that
the RMMI Shares are Excluded Assets, then no employee of RMMI
shall be a Transferred Employee), (ii) the members of the
engineering group in Ottowa, Canada, employed primarily in the
Business, consisting of approximately six people, (iii) the
worldwide sales force employed primarily in the Business,
consisting of approximately 38 people, and (iv) any person listed
on Exhibit L on the Closing Date (which exhibit shall be amended
from time to time after the date hereof based upon discussions
between, and with the agreement of, Buyer and Seller). "Seller
Transferred Employee" means a Transferred Employee employed by
the Seller on the Closing Date, and "Subsidiary Employee" means a
Transferred Employee employed by a Subsidiary on the Closing
Date. For the purposes of this Section 9.01, any person who is
on a disability leave that has lasted not more than 26 weeks,
authorized leave of absence or military service as of the Closing
Date shall be considered an active employee (such inactive
employees who are Seller Transferred Employees shall be offered
employment by Buyer as of the date they return to active
employment) but not any other inactive or former employee
including any person whose disability leave has lasted more than
26 weeks or who is on unauthorized leave of absence or who has
terminated his or her employment or retired under the Seller
Pension Plan (as defined in Section 9.02(a)) on or before the
Closing Date.
(b) Seller shall provide Buyer with a list of all
Transferred Employees with addresses as soon as possible after
the date of execution of this Agreement. On a date that is not
fewer than ten days prior to the Closing Date, Buyer shall offer
employment in writing as of 12:01 a.m. of the day following the
Closing Date to all Seller Transferred Employees. Buyer shall
not assume responsibility for any Seller Transferred Employee
until such employee signs and returns to Buyer a written form of
acceptance of the offered terms of employment on or before the
Closing Date. Buyer shall hire all Seller Transferred Employees
to whom it has made such an offer in accordance with this
paragraph and who accept such offer in the manner and within the
timeframe specified by Buyer (such Seller Transferred Employees
hired by Buyer being hereinafter referred to as the "Hired
Employees"). If Buyer hires a Seller Transferred Employee after
the Closing Date, except as provided in paragraph (c), below, or
any other employee previously employed by Seller or any
Subsidiary, such person shall not constitute a Hired Employee.
The terms and conditions of Buyer's offer to hire Seller
Transferred Employees shall be made in writing and shall include
pertinent conditions as determined in the sole discretion of
Buyer, subject to the following:
(i) For six months following the Closing Date,
Buyer shall pay each such Hired Employee at the applicable salary
rate which is not less than the rate paid by Seller to him or her
immediately preceding the Closing Date provided that the Hired
Employee continues to perform duties determined by Buyer to be
comparable to those performed by the Hired Employee while
employed by Seller immediately prior to the Closing Date;
(ii) Buyer shall employ such Hired Employees at
will; provided that Buyer agrees not to terminate any Hired
Employee other than for Cause during the one year period
following the Closing Date unless it provides such terminated
employee a severance benefit equal to that specified in Schedule
9.01(b) hereto or, at Buyer's discretion, a severance benefit
equal to that offered by Seller as of the Closing Date to
comparably situated employees. "Cause" means fraud, theft, the
commission of any crime or similar act, the violation of any
employment practice or policy of Buyer, or poor employment
performance.
(iii) Hired Employees shall be initially
assigned to positions as determined by Buyer with
responsibilities and duties approximately comparable to those
such Hired Employees had at Seller immediately prior to the
Closing Date, except as otherwise specifically agreed to by such
Hired Employee;
(iv) no Hired Employee shall, as a condition of
initial employment by Buyer, be required to take a drug test or a
physical examination; and
(v) Hired Employees shall be eligible to
participate in the employee benefit plans offered to comparably
situated employees of Buyer beginning on the date of commencement
of employment with Buyer in accordance with the terms and
conditions of such plans, except as provided for herein,
including without limitation participation in Buyer's plans in
the manner described in this Article IX (all such employee
benefits being the same benefits as Buyer provides to its other
comparable United States employees.
(c) Buyer shall have no duty to hire any Seller
Transferred Employee who has not met, as of the date such Seller
Transferred Employee's employment was to begin pursuant to this
Section 9.01, the conditions set forth in Buyer's written offer
of employment made to the individual or who has not signed and
returned to Buyer a written form of acceptance of the offered
terms and conditions of employment on or before the Closing Date.
Such conditions may include the requirement that the Seller
Transferred Employee not fail to report to work on the first work
day for such employee following the Closing Date except due to a
leave of absence approved by Seller prior to the Closing Date and
mandatory under the policies and procedures of Seller or
applicable law. A Seller Transferred Employee who accepts
Buyer's offer of employment, but fails to report to work on such
first work day due to such a leave of absence as set forth in the
preceding sentence shall be treated as a Hired Employee for
purposes of this Agreement as of 12:01 a.m. of the day after the
date the leave expires (the day the leave expires, the "Leave
Expiration Date"), provided that: (i) the termination of the
leave is not caused by the misconduct of or a failure to act by
such Seller Transferred Employee; (ii) as of the Leave Expiration
Date such Seller Transferred Employee has met all other
applicable conditions precedent to employment, (iii) such Seller
Transferred Employee has, in the case of leave due to disability,
been medically cleared to return to full-time active employment
with Seller without restrictions or with restrictions which are
required to be accommodated by applicable law, and (iv) the Leave
Expiration Date is no later than 12 weeks after such leave
commenced for all leaves other than disability and 26 weeks after
the commencement of such leave due to disability.
Notwithstanding the foregoing, a Seller Transferred Employee who
has accepted Buyer's offer of employment and met all conditions
set forth in Buyer's written offer of employment shall not be
deemed to have failed to report to work on the first work day for
such employee if the Seller Transferred Employee is absent due to
vacation approved by Seller in advance of the Closing Date or a
medical condition which results in the Seller Transferred
Employee being absent from work for five or fewer consecutive
work days on or after the Closing Date.
(d) During the period prior to the Closing Date or the
Leave Expiration Date, if applicable, all Seller Transferred
Employees, including Seller Transferred Employees accepting
conditional offers of employment extended by Buyer, will be under
the exclusive supervision of Seller and subject to Seller's
policies and procedures. Thereafter, all Hired Employees will be
under the exclusive supervision of Buyer and subject to Buyer's
policies and procedures, and Seller Transferred Employees who do
not become Hired Employees will remain under the exclusive
supervision of Seller and subject to Seller's policies and
procedures.
(e) Buyer agrees to provide reasonable accommodations
as required by applicable law for Seller Transferred Employees
accepting Buyer's conditional offer of employment.
9.02 Defined Benefit Pension Plan.
(a) Each Hired Employee will cease accruing benefits
in the Seller Pension Plan (the "Seller Pension Plan") as of the
Closing Date, or such Hired Employee's Leave Expiration Date, if
later, (such applicable date hereinafter referred to as the "Plan
Eligibility Date"), and Seller shall take all necessary action to
ensure that each Hired Employee is fully vested in his or her
accrued benefit as of the Plan Eligibility Date under the Seller
Pension Plan.
(b) Buyer has no defined benefit pension plan.
(c) No transfer of liabilities or assets shall be made
from the Seller Pension Plan to the Buyer or any plan maintained
by Buyer with respect to the accrued benefit of any Hired
Employee under the Seller Pension Plan. Seller shall remain
solely liable for the accrued benefit of any Hired Employee under
the Seller Pension Plan.
(d) Buyer agrees to provide Seller by July 31, 1995
with the names of all Hired Employees whose employment with Buyer
terminated between the Closing Date and June 30, 1995.
9.03 Defined Contribution Pension Plan.
(a) As of the Plan Eligibility Date each Hired
Employee will cease contributing to the Section 401(k) Seller
Savings and Investment Plan (the "SAVE Plan") and Seller shall
take all necessary action to ensure that each Hired Employee is
fully vested in his or her account balance under the SAVE Plan.
(b) Each Hired Employee, except for Hired Employees
who are not within a class of Buyer's employees that are eligible
to participate in the Buyer 401(k) Plan, shall be eligible to
participate in the Quantum Employee Savings and Investment Plan
(the "Buyer 401(k) Plan") as of the Plan Eligibility Date.
(c) The Buyer 401(k) Plan shall recognize as service
credit for purposes of eligibility for participation and vesting
the service of a Hired Employee that has been credited for
purposes of participation and vesting under the SAVE Plan as of
the Plan Eligibility Date.
(d) Transfer of Assets.
(i) As soon as practicable after the Closing
Date, Seller will amend its SAVE Plan to spin off and transfer an
amount equal to the account balances of the Hired Employees in
the SAVE Plan valued as of the most recent valuation date
preceding the date the transfer is made to the Buyer 401(k) Plan.
Until such valuation date occurs, the account of each Hired
Employee will continue to accrue, at the rate of return of the
investment option(s) selected by such Hired Employee in
accordance with the terms of the SAVE Plan. Anything in this
Section 9.03(d) to the contrary notwithstanding, if Buyer
provides notice to Seller that it has not in good faith been able
to arrange for the "Transfer" (as defined below in paragraph
(d)(ii)) to the Buyer 401(k) Plan or elects to defer the Transfer
until receipt by Seller of a favorable determination letter from
the Internal Revenue Service with respect to the SAVE Plan that
takes into account the Tax Reform Act of 1986 and regulations
promulgated thereunder, such Transfer shall not be executed until
appropriate arrangements are made or such favorable determination
letter is received, as the case may be.
(ii) If necessary, the Buyer 401(k) Plan will be
amended to permit the transfer of assets and liabilities from the
SAVE Plan to the Buyer 401(k) Plan and to ensure, in accordance
with Section 411(d)(6) of the Code, that no Hired Employee will
receive an accrued benefit less than the accrued benefit the
Hired Employee would be entitled to receive under the SAVE Plan
as of the date immediately prior to the date the transfer occurs.
(Such transfer of plan assets and liabilities and the acceptance
of such assets and assumptions of such liabilities shall be
hereinafter referred to as the "Transfer."
(iii) The Transfer will be accomplished in
full compliance with the applicable provisions of ERISA, the
Code, and regulations and rulings promulgated thereunder.
Further, Seller and Buyer agree to cooperate fully and to file in
a timely manner whatever reports, forms, and notices as are
necessary under applicable law as a result of, and to effect, the
Transfer. The Transfer will be accomplished by way of a single
transfer of plan assets constituting cash and liabilities, except
that any outstanding participant loans from the SAVE Plan to
Hired Employees that are not in default may be transferred in
kind to the extent not repaid prior to the Transfer. The
Transfer will not occur until the Hired Employees' account
balances under the SAVE Plan have been determined, except to the
extent that subsequent transfers between the two trusts are
required to reconcile any errors in the calculations or data.
(iv) Seller agrees to provide to Buyer in a timely
manner all information for each Hired Employee, including without
limitation, accrued benefits under the SAVE Plan as of the date
of Transfer, vesting service, and any other employee information
required by Buyer to determine benefits payable from the Buyer
401(k) Plan.
9.04 Welfare Benefit Plans.
(a) Hired Employees shall cease participating in all
employee welfare benefit plans, programs, payroll practices, or
arrangements maintained by Seller as of 12:01 a.m. on the Plan
Eligibility Date, unless a different date is required by law.
Under all of such plans, programs, or arrangements, Hired
Employees' service as recognized under the comparable Seller
plans, programs, payroll practices, and arrangements will be
credited as service with Buyer for purposes of determining
participation and benefit levels thereunder to the same extent as
credited by Seller, unless otherwise prohibited by law or the
terms of any of Buyer's plans and programs that cannot reasonably
be amended.
(b) Buyer will offer coverage for medical and dental
benefits and group life insurance as of 12:01 a.m. on the day
following the Plan Eligibility Date to all Hired Employees and
their dependents (as that term is defined by the respective Buyer
plans) in accordance with the terms of the relevant Buyer benefit
plans, except to the extent provided for herein. As of the Plan
Eligibility Date, Hired Employees who were participating in
medical and dental plans of Seller requiring the payment of
deductibles by or with respect to employees or covered dependents
will be deemed to have satisfied deductibles specified under the
Buyer medical and dental plans in which they enroll with respect
to calendar year 1994 to the extent of the dollar amount of the
deductibles under Seller's plans that had been satisfied as of
the Plan Eligibility Date. Buyer will impose no limitation on
coverage or participation with respect to a pre-existing
condition of a Hired Employee or his or her dependents, subject
to the requirement that a dependent not be "confined" within the
meaning of the applicable Buyer benefit plan and that such Hired
Employee or his or her dependents enroll in the relevant Buyer
benefit plan upon initial eligibility as specified in such plans.
Any dependent who is "confined" as of the Plan Eligibility Date
shall be eligible for coverage under respective Buyer plans on
the day following the last day of confinement. Buyer and Seller
shall coordinate (or cause insurance carriers or third party
administrators to coordinate) medical benefits claims for Hired
Employees under their respective plans so as to carry out the
provisions above with respect to Buyer's medical benefits and
carry out the other applicable provisions of this Agreement. No
physical examination or other evidence of insurability shall be
required of any Hired Employee or his or her dependents with
respect to enrolling in any of Buyer's medical, dental, life, or
disability plans or programs as long as such enrollment occurs
upon initial eligibility to participate in such Buyer plans or
programs as specified in those plans or programs.
(c) If and to the extent offered to comparably
situated employees, Buyer will initially offer short-term and
long-term disability benefit coverage to all Hired Employees. If
and to the extent available, such participation will cover
disabilities that occur or recur on or after the Plan Eligibility
Date in accordance with the terms of the relevant benefit plans.
(d) At or prior to the Closing, Seller shall pay Hired
Employees, by lump sum payment, for the amount of their accrued
but unused vacation as of the Plan Eligibility Date to the extent
such accrued vacation exceeds the maximum amount of vacation
which may be accrued by a similarly situated employee of Buyer as
of the Plan Eligibility Date under Buyer's vacation policy. Any
remaining accrued vacation not paid for in this manner shall be
retained by such Hired Employees under Buyer's vacation policy,
and each Hired Employee shall begin to accrue vacation under the
Buyer vacation policy as of the Plan Eligibility Date. Seller
shall pay Buyer for any vacation time taken by any Hired Employee
who retained vacation time accrued as of the Plan Eligibility
Date in accordance with this Section 9.04(d) up to the amount of
such retained vacation for each such Hired Employee, such
payments to be made promptly after receipt by Seller from Buyer
of monthly vacation summaries relating to the Hired Employees.
(e) Hired Employees who obtained course approval and
commenced course work under Seller's educational assistance
policy prior to the Plan Eligibility Date shall be eligible for
reimbursement by Seller under the terms of such policy whether or
not the course is completed before the Plan Eligibility Date.
Hired Employees will be eligible to participate in Buyer's
educational assistance policy, if any, as of the Plan Eligibility
Date.
9.05 Certain Representations and Warranties.
(a) Seller represents and warrants to Buyer that with
respect to Transferred Employees that it has no obligation to
make any payments or contributions to a multiemployer plan as
that term is defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), and has no actual or
potential liability under Section 4201 of ERISA for any complete
or partial withdrawal from a multiemployer plan. Seller
represents and warrants to Buyer that except for the plans,
programs, and arrangements listed on Schedule 9.05(a) hereto (the
"Plans"), and except for any statutory plans, Seller does not
maintain or contribute to any material plans, programs, or
arrangements for the benefit of Transferred Employees (i)
providing any severance or termination pay or other benefits;
(ii) providing for payment of deferred compensation or retirement
benefits; and (iii) providing for life, health, disability or
other welfare-type benefits.
(b) Each of Seller and Buyer represents and warrants
to the other party that it has obtained a favorable determination
letter from the Internal Revenue Service for its Section 401(k)
plan evidencing its compliance with applicable provisions of the
Code and that it has not amended its Section 401(k) plan since
the issuance of such determination letter, or operated its
Section 401(k) plan, in such a manner as would result in the
disqualification of its Section 401(k) plan. Further, each of
Seller and Buyer warrants and represents to the other party that
there has been no non-exempt "prohibited transaction," within the
meaning of Section 4975(c) of the Code, involving the assets of
its Section 401(k) plan. Each of Seller and Buyer has delivered
to the other party the current plan document, trust or other
funding arrangement(s), favorable determination letter, any
summaries of material modifications or summary plan description
and the last three Form 5500s filed for its Section 401(k) plan.
(c) Seller represents and warrants to Buyer that,
except for any statutory plans, none of the Subsidiaries
maintains or is the plan sponsor or plan administrator of any
material plans, programs, or arrangements for the benefit of
Subsidiary Transferred Employees (i) providing any severance or
termination pay or other benefits; (ii) providing for payment of
deferred compensation, retirement benefits or benefits in the
event of a change of control of a Subsidiary; or (iii) providing
for life, health, disability or other welfare-type benefits.
9.06 Responsibility for Non-Pension Benefit Claims.
(a) Seller will be responsible for all claims with
respect to the Hired Employees and their dependents incurred on
or before the date prior to the Plan Eligibility Date and for all
benefits or coverages to be provided in the future based on
employment with Seller through such date (including but not
limited to retiree benefits), to the extent provided under
Seller's applicable medical, dental, disability, or other welfare
benefit or similar plans or programs provided to Transferred
Employees, including payments on behalf of any persons deriving
rights under such plans through any such Hired Employees. Except
as otherwise provided in this Article IX, Buyer shall be
responsible for all claims with respect to the Hired Employees
and their dependents incurred on or after the Plan Eligibility
Date to the extent provided under Buyer's applicable medical,
dental, disability, or other welfare benefit or similar plans or
programs, including payments on behalf of any persons deriving
rights under such plans through any such Hired Employees.
Notwithstanding the above, with respect to any dependent who is
"confined" within the meaning of the applicable Buyer benefit
plan on the Plan Eligibility Date, Seller shall continue to be
responsible for such dependent's claims to the extent provided
under its medical and dental plans until such dependent is no
longer confined.
(b) Seller shall be responsible for any benefit plan
claims asserted by Transferred Employees who do not become Hired
Employees and any other current or former Seller employees who do
not become Hired Employees.
9.07 Foreign Employees and Employees of Subsidiaries and
Affiliates.
(a) Notwithstanding any provisions herein to the
contrary, Hired Employees and Subsidiary Transferred Employees
who work outside the United States at the time of Closing shall
be treated in accordance with Section 9.01(b)(i), (iii) and (iv)
as Hired Employees and otherwise shall be treated in the same
fashion as similarly situated employees of Buyer, but in no event
will their employee benefit plans, programs or arrangements be
less than those required by applicable law.
(b) Subsidiary Transferred Employees who are U.S
employees at the time of the Closing shall be treated in
accordance with Sections 9.01(b)(i)-(iv) as though such employees
were Hired Employees. Seller agrees that, if Buyer so requests
at least 20 days prior to the Closing Date, U.S. Subsidiary
Transferred Employees shall cease to participate in the Seller's
Plans and other programs, payroll practices or arrangements
maintained by Seller upon the Closing Date, and Seller shall
ensure that, effective as of the Closing Date, none of the
Subsidiaries are sponsoring or contributing employers of any such
Plans, programs, practices or arrangements. If Buyer makes the
foregoing request, Subsidiary Transferred Employees shall be
treated in accordance with Sections 9.01(b)(v), 9.02, 9.03, 9.04,
9.06 and 9.08 as though such employees were Hired Employees.
9.08 COBRA Coverage. Seller shall provide to all persons
entitled thereto, including employees and former employees of
Seller (and to their spouses and dependents where applicable),
other than Hired Employees, COBRA health care continuation
coverage in accordance with Section 4980B of the Code and
Sections 601 through 608 of ERISA, and shall comply with any
related requirements thereunder, in connection with any loss of
coverage by any person under any group health plan sponsored by
Seller. Buyer shall have no responsibility to provide COBRA
health care continuation coverage to any employees or former
employees of Seller (or to their spouses or dependents) except in
connection with a loss of coverage, under a group health plan
(within the meaning of Section 4980B(g)(2) of the Code and
Section 607(1) of ERISA) maintained or contributed to by Buyer
("Buyer Health Care Plan"), by or with respect to Hired Employees
who are eligible under such Buyer Health Plan as employees of
Buyer.
9.09 Indemnification.
(a) Buyer hereby agrees to indemnify, defend, and hold
harmless Seller, its Affiliates and their respective directors,
officers, employees, agents, successors, and assigns against and
in respect of any and all losses or liability (including damages,
costs, expenses, and reasonable attorney's fees) that result from
or relate to any claims, litigation, suit, action, investigation,
proceeding, or controversy brought by or on behalf of
(i) provided Seller complies with its obligations contained in
Section 9.03, any Hired Employee relating to the payment of the
benefit of such Hired Employee that had accrued under the SAVE
Plan and which was transferred to the Buyer 401(k) Plan; (ii) any
Transferred Employee who accepts Buyer's offer of employment and
is available to report for employment as specified in
Section 9.01(b) of this Article IX relating to Buyer's failure to
hire such Transferred Employee; (iii) any Hired Employee relating
to his or her accrued benefit under the Buyer 401(k) Plan;
(iv) any Hired Employee relating to any act or failure to act by
Buyer on or after the Plan Eligibility Date which is inconsistent
with the obligations Buyer assumes under this Article IX; and
(v) Seller or any third party relating to any breach or
obligation of Buyer made in this Article IX.
(b) Seller hereby agrees to indemnify, defend, and
hold harmless Buyer, its Affiliates and their respective
directors, officers, employees, agents, successors, and assigns
against and in respect of any and all losses or liability
(including damages, costs, expenses, and reasonable attorney's
fees) that result from or relate to any claims, litigation, suit,
action, investigation, proceeding, or controversy brought by or
on behalf of (i) any Hired Employee alleging that benefits
greater than those transferred on his or her behalf relating to
the SAVE Plan are owed to him or her; (ii) Buyer or any third
party relating to any breach of any representation or warranty to
Buyer or covenant or obligation of Seller made in this Article
IX; (iii) any Hired Employee relating to any act or failure to
act by Seller, its agents or representatives before the Plan
Eligibility Date (including, but not limited to, any claim
relating to the failure of Seller to provide any notices relating
to the termination of any person required by applicable law);
(iv) any employee, former employee or employment applicant of
Seller or an Affiliate of Seller who is not a Hired Employee
relating, directly or indirectly, to termination of employment,
prospective employment or employment with Seller (including, but
not limited to, any claim relating to the failure of Seller to
provide any notices relating to the termination of any person
required by applicable law); (v) any Hired Employee relating to
his accrued benefit under the Seller Pension Plan; (vi) any other
obligation continuing on or after the Plan Eligibility Date which
Seller has to any Hired Employee under a benefit, compensation,
or other employee plan, program, arrangement or agreement under
the terms of such plan, program, arrangement or agreement; and
(vii) any employee or former employee of Seller or any third
party relating to the administration or operations by Seller of
any employee compensation or benefits plan, program, arrangement
or agreement maintained by Seller at any time.
9.10 No Third Party Beneficiaries. No provision of this
Article IX shall create any right or benefit in any person not a
party to this Agreement. No provision of this Agreement shall
preclude the amendment or termination of any or all Buyer
benefits or benefit plans or programs and the provisions of such
plans and programs in which Hired Employees are eligible to
participate on or after the Closing Date, but no such amendment
or termination shall affect any commitments specifically made by
Buyer under this Article IX.
ARTICLE X.
CONDITIONS TO CLOSING
10.01 Conditions to the Obligations of Each Party. The
obligations of Buyer and Seller to consummate the Closing are
subject to the satisfaction of the following conditions:
(a) Any applicable waiting period under the HSR Act
relating to the transactions contemplated hereby shall have
expired or been terminated.
(b) No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing.
(c) Each of Buyer and Seller shall have executed and
delivered to the other each of the Ancillary Agreements, in each
case substantially in the form attached as, or having the
principal terms specified in, an exhibit to this Agreement.
(d) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing shall have been obtained.
(e) The right of first refusal of StorageTek pursuant
to Section 2.2 of the Stockholder's Agreement with respect to the
transfer of the RMMI Shares pursuant to the RMMI Stock Purchase
Agreement shall have been waived by StorageTek or the 60 day
offer period shall have expired without exercise by StorageTek.
If this condition is not satisfied by reason of StorageTek's
exercise of the right of first refusal, then this condition shall
not be a condition to Buyer's or Seller's obligations with
respect to the purchase and sale of the Business other than RMMI.
10.02 Conditions to Obligation of Buyer.
The obligation of Buyer to consummate the Closing is subject
to the satisfaction of the following further conditions:
(a) (i) Seller shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date, (ii) the
representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by
Seller pursuant hereto (disregarding any qualification contained
therein with respect to materiality or Material Adverse Effect),
shall be true in all material respects as of the date hereof and
at and as of the Closing Date, as if made at and as of such date
with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect, and
(iii) Buyer shall have received a certificate signed by an
officer of Seller to the foregoing effect. It is understood and
agreed that Seller's Certificate delivered pursuant to
Section 10.02(a)(ii) shall specify any representations and
warranties which to Seller's knowledge are not true as of the
Closing even if Seller certifies that the changes would not in
the aggregate reasonably be expected to have a Material Adverse
Effect, provided that, if any of the conditions referred to in
clauses (i) and (ii) above have not been fulfilled in any
respect, Seller may deliver at the Closing a certificate (a
"Seller Non-Compliance Certificate") specifying the respect in
which such condition has not been fulfilled, without prejudice to
the right, if any, of the Buyer not to consummate the
transactions contemplated hereby as a result of such
non-fulfillment of such condition.
(b) Buyer shall have received (x) an opinion of Testa,
Hurwitz & Thibeault, counsel to Seller, dated the Closing Date in
form and substance reasonably satisfactory to Buyer and (y) an
opinion of Malaysian counsel in form and substance reasonably
satisfactory to Buyer, regarding the continued tax status of the
Business in Malaysia. In rendering such opinions, such counsel
may rely upon certificates of public officers, as to matters
governed by other than the federal laws of the United States of
America, the Commonwealth of Massachusetts and the State of
Delaware, upon opinions of counsel reasonably satisfactory to
Buyer, copies of which shall be contemporaneously delivered to
Buyer, and as to matters of fact, upon certificates of officers
of Seller.
(c) Seller shall have received all Consents and all
consents, authorizations or approvals from governmental agencies
relating to the execution, delivery and performance by Seller of
this Agreement and the Ancillary Agreements, except any such
Consents or consents, authorizations or approvals the failure to
obtain which would not have a Material Adverse Effect, in each
case in form and substance reasonably satisfactory to Buyer.
(d) Buyer shall have received all documents it may
reasonably request relating to the existence of Seller and the
authority of Seller to enter into and perform this Agreement, all
in form and substance reasonably satisfactory to Buyer.
(e) All actions, proceedings, instruments and
documents required to carry out this Agreement shall be
reasonably satisfactory in form and substance to counsel for
Buyer.
(f) As of the Closing, Seller shall have assigned and
transferred to Buyer (i) all indebtedness of each of the
Subsidiaries to Seller and (ii) all payables of each of the
Subsidiaries to Seller.
(g) Buyer shall have received the audited and
unaudited financial statements specified in Section 5.04.
(h) At least 30 days prior to the Closing, Seller
shall have completed and delivered to Buyer a baseline
environmental assessment.
(i) Buyer shall have received, with respect to each of
the Purchased Assets constituting title to real property or a
leasehold interest therein, such assurance as is customary in the
jurisdiction in which the same is located (including, where
applicable, title opinion, title insurance and related survey)
that Buyer shall have acquired such title or leasehold interest
free and clear of all Liens, except Permitted Liens.
10.03 Conditions to Obligations of Seller. The
obligation of Seller to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Buyer shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date, (ii) the
representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by
Buyer pursuant hereto (disregarding any qualification contained
therein with respect to materiality or Material Adverse Effect)
shall be true in all material respects as of the date hereof and
at and as of the Closing Date, as if made at and as of such date
with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect, and
(iii) Seller shall have received a certificate signed by an
officer of Buyer to the foregoing effect, provided that, if any
of the conditions referred to in clauses (i) and (ii) above have
not been fulfilled in any respect, Buyer may deliver at the
Closing a certificate (a "Buyer Non-Compliance Certificate")
specifying the respect in which such condition has not been
fulfilled, without prejudice to the right, if any, of the Seller
not to consummate the transactions contemplated hereby as result
of such non-fulfillment of such condition.
(b) Seller shall have received an opinion of Cooley
Godward Castro Huddleson & Tatum, counsel to Buyer, dated the
Closing Date in customary form. In rendering such opinion, such
counsel may rely upon certificates of public officers, as to
matters governed by the laws of jurisdictions other than the laws
of the States of California and Delaware or the federal laws of
the United States of America, upon opinions of counsel reasonably
satisfactory to Seller, copies of which shall be
contemporaneously delivered to Seller, and as to matters of fact,
upon certificates of officers of Buyer.
(c) Buyer shall have received all consents,
authorizations or approvals from governmental agencies referred
to in Section 4.03, except any such consents, authorizations or
approvals the failure to obtain which would not have a Material
Adverse Effect, in each case in form and substance reasonably
satisfactory to Seller.
(d) Seller shall have received all documents it may
reasonably request relating to the existence of Buyer and the
authority of Buyer to enter into and perform this Agreement, all
in form and substance reasonably satisfactory to Seller.
(e) Seller shall have received the cash payment and
the Note described in Section 2.06.
ARTICLE XI.
SURVIVAL; INDEMNIFICATION
11.01 Survival. The covenants, agreements,
representations and warranties of the parties hereto contained in
this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive for one
year from the Closing, except as follows: (i) in the case of
Sections 5.06 and 6.02, for the period set forth therein, (ii) in
the case of Sections 5.10, 6.01, 9.04(d) and 11.02(a)(ii) and
(iii), indefinitely, and (iii) in the case of the covenants,
agreements, representations and warranties contained in Articles
VIII and IX, until expiration of the applicable statutory period
of limitations (giving effect to any waiver, mitigation or
extension thereof). Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of
which indemnity may be sought under Section 11.02 shall survive
the time at which it would otherwise terminate pursuant to the
preceding sentence, if notice of the inaccuracy or breach thereof
giving rise to such right to indemnity shall have been given to
the party against whom such indemnity may be sought prior to such
time.
11.02 Indemnification.
(a) Seller hereby indemnifies Buyer and its
Affiliates, officers, directors, agents and employees against and
agrees to hold each of them harmless from any and all direct,
indirect or consequential damage, loss, claim, liability and
expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively,
"Loss") incurred or suffered by Buyer or any of its Affiliates,
officers, directors, agents or employees arising out of:
(i) any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Seller pursuant
to this Agreement (except to the extent disclosed by Seller in a
Seller Non-Compliance Certificate delivered pursuant to Section
10.02(a) which is waived by Buyer);
(ii) any Excluded Liability or any obligation or
liability of the Business relating to the Excluded Assets; or
(iii) any Remedial Action required by law or
by Court Order to the extent that such Remedial Action is
performed in connection with acts or omissions occurring or
conditions existing prior to Closing;
provided that Buyer shall not be entitled to indemnification
under Section 11.02(a)(i) with respect to any event or state of
facts (including a series of related events or state of facts)
(an "Event of Loss") unless (A) the aggregate amount of Loss
arising out of such Event of Loss is $50,000 or more (a "Material
Loss") and (B) the aggregate amount of Loss with respect to all
Material Losses under this Section 11.02(a)(i) exceeds $5,000,000
and then Buyer shall have the right to seek indemnification but
only to the extent that the aggregate amount of such Material
Losses exceeds $5,000,000. Seller's maximum liability under
Section 11.02(a)(i) shall not exceed 50% of the Purchase Price.
(b) Buyer hereby indemnifies Seller and its Affiliates
against and agrees to hold each of them harmless from any and all
Loss incurred or suffered by Seller or any of its Affiliates,
officers, directors, agents and employees arising out of any
misrepresentation or breach of warranty, covenant or agreement
made or to be performed by the Buyer pursuant to this Agreement
(except to the extent disclosed by Buyer in a Buyer
Non-Compliance Certificate delivered pursuant to Section
10.03(a)) provided that Seller shall not be entitled to
indemnification under this Section 11.02(b) with respect to any
Event of Loss unless (i) such Loss is a Material Loss and (ii)
the aggregate amount of Loss with respect to all Material Losses
under this Section 11.02(b) exceeds $5,000,000 and then Seller
shall have the right to seek indemnification, but only to the
extent that the aggregate amount of such Material Losses exceeds
$5,000,000. Buyer's maximum liability under Section 11.02(b)
shall not exceed 50% of the Purchase Price.
11.03 Procedures; Exclusivity. The party seeking
indemnification under Section 11.02 (the "Indemnified Party")
agrees to give prompt written notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion
of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought under such
Section. The Indemnifying Party may, and at the request of the
Indemnified Party shall, participate in and control the defense
of any such suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 11.02 for
any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be
sought hereunder.
(a) After the Closing, Article XI shall provide the
exclusive remedy for any misrepresentation, breach of warranty
covenant or other agreement (other than those contained in
Sections 2.06, 5.04, 5.05, 5.06, 5.07, 6.01, 6.02 and 13.08 and
Articles VIII and IX) or other claim arising out of this
Agreement or the transactions contemplated hereby.
ARTICLE XII.
TERMINATION
12.01 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by either Seller or Buyer if the Closing shall not
have been consummated on or before December 15, 1994; or
(iii) by either Seller or Buyer if there shall be
any law or regulation that makes the consummation of the
transactions contemplated hereby illegal or otherwise prohibited
or if consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to
clauses (ii) or (iii) shall give notice of such termination to
the other party.
12.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 12.01, such termination shall
be without liability of either party (or any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other party to this Agreement provided that
if such termination shall result from the willful failure of
either party to fulfill a condition to the performance of the
obligations of the other party or to perform a covenant of this
Agreement or from a willful breach by either party to this
Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by the other party as a result of
such failure or breach. The provisions of Sections 13.03 and
13.09 shall survive any termination hereof pursuant to Section
12.01.
ARTICLE XIII.
MISCELLANEOUS
13.01 Notices. All notices, requests and other
communications to either party hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to Buyer, to:
Quantum Corporation
500 McCarthy Blvd.
Milpitas, CA 95035
Attention: Chief Financial Officer
Telecopy: (408) 894-3223
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
Attention: James C. Gaither, Esq.
Telecopy: (415) 951-3699
if to Seller, to:
Digital Equipment Corporation
111 Powdermill Road
Maynard, MA 01754
Attention: Charles F. Christ
Telecopy: (508) 841-3522
with a copy to:
Digital Equipment Corporation
111 Powdermill Road
Maynard, MA 01754
Attention: Molly Brennan, Esq.
Telecopy: (508) 493-6049
and:
Testa, Hurwitz & Thibeault
53 State Street
Boston, MA 02109
Attention: Linda DeRenzo, Esq.
Telecopy: (617) 248-7100
13.02 Amendments; No Waivers.
(a) Any provisions of this Agreement may be amended or
waved prior to the Closing Date if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment,
by the Buyer and Seller, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No failure or delay by either party 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 an rights or
remedies provided by law.
13.03 Expenses. Except as otherwise provided herein,
all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense. No
portion of Seller's costs and expenses shall be allocated to the
Business.
13.04 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
provided that neither party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto except that Buyer
may transfer or assign, in whole or from time to time in part, to
one or more of its Affiliates, the right to purchase all or a
portion of the Purchased Assets, but no such transfer or
assignment will relieve Buyer of its obligations hereunder.
13.05 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the Commonwealth
of Massachusetts, without regard to the conflicts of law rules of
such Commonwealth.
13.06 Counterparts; Effectiveness. This Agreement may
be signed in two counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
13.07 Entire Agreement. This Agreement, the Ancillary
Agreements and the Non-Disclosure Agreement dated as of May 11,
1994 (as supplemented on June 6, 1994) between Seller and Buyer
constitute the entire agreement between the parties with respect
to the subject matter hereof and thereof and supersede all prior
agreements, understandings and negotiations, both written and
oral, between the paries with respect to the subject matter
thereof. No representation, inducement, promise, understanding,
condition or warranty not set forth herein or therein has been
made or relied upon by either party hereto. None of this
Agreement, the Ancillary Agreements and the Non-Disclosure
Agreement dated as of May 11, 1994 (as supplemented on June 6,
1994) between Seller and Buyer, nor any provision hereof or
thereof, is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder or thereunder.
13.08 Bulk Sales Law. Buyer and Seller each hereby
waive compliance by Seller with the provisions of the "bulk
sales," "bulk transfer" or similar laws of any state. Seller
agrees to indemnify and hold Buyer harmless against any and all
claims, losses, damages, liabilities, costs and expenses incurred
by Buyer or any of its affiliates as a result of any failure to
comply with any such "bulk sales," "bulk transfer" or similar
laws.
13.09 Arbitration. Any and all disputes or
controversies, whether of law or fact of any nature whatsoever,
arising from or respecting this Agreement shall be decided by
arbitration by Judicial Arbitration Mediation Services, Inc.
("JAMS") in accordance with the rules and regulations of JAMS, or
by any other body mutually agreed upon by the parties. Pre-
arbitration discovery shall be permitted at the request of either
party under appropriate protection for proprietary and
confidential business information.
Before filing a demand for arbitration, a party must send
the other party written notice identifying the matter in dispute
and invoking the procedures in this paragraph. Such written
notice shall be sent promptly after the party knew or reasonably
should have known of an alleged violation of this Agreement.
Within fifteen (15) days after such written notice is given, the
Chief Executive Officers of each party shall meet at a mutually
agreeable location for the purpose of determining whether they
can resolve the dispute themselves by written agreement. If,
within the fifteen (15) day period, after such meeting, the
parties fail to resolve the dispute by written agreement the
complaining party may then initiate the arbitration process by
filing a demand with JAMS or such other body as the parties may
agree upon. Nothing in this paragraph shall prevent a party from
seeking temporary equitable relief, from JAMS or such other body
as the parties may mutually agree upon, during the fifteen (15)
day period if necessary to prevent irreparable harm.
The arbitrators shall be selected as follows: Buyer and
Seller shall each select one independent, qualified arbitrator
and the two arbitrators so selected shall select the third
arbitrator. Either party may disqualify any individual
arbitrator who is a present or past employee, owner, or
consultant to the opposing party or a competing organization.
Arbitration shall take place at the location (which must be
within one of the 25 largest metropolitan areas in the
continental United States) specified by the party which did not
demand arbitration hereunder. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy
and, in such case, all documents, testimony and records shall be
received, heard and maintained by the arbitrators in secrecy
under seal, available for inspection only by Buyer and Seller,
their respective attorneys, and their respective experts,
consultants or witnesses who shall agree, in advance and in
writing, to receive all such information confidentially and to
maintain such information in secrecy, and make no use of such
information except for the purposes of the arbitration, until
such information shall become generally known.
The arbitrators, who shall act by majority vote, shall be
able to decree any and all relief of an equitable nature,
including but not limited to such relief as a temporary
restraining order, a temporary injunction, or a permanent
injunction, and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an
award rendered by the arbitrators may be entered in any court
having jurisdiction over the parties.
Reasonable notice of the time and place of arbitration shall
be given to persons other than the parties, if such notice is
required by law, in which case such persons or their authorized
representatives shall have the right to attend or participate in
the arbitration hearing in such manner as the law shall require.
If any action is necessary to enforce or interpret the terms
of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which that party may be entitled.
13.10 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
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.
DIGITAL EQUIPMENT CORPORATION
By: /s/ CHARLES F. CHRIST
Title: VP, Components Division
QUANTUM CORPORATION
By: /s/ WILLIAM J. MILLER
Title: Chairman of the Board and
Chief Executive Officer
QUANTUM PERIPHERALS (EUROPE) S.A.
By: /s JOSEPH T. RODGERS
Title: Director
EXHIBIT I
NOTE TO SELLER
(SUMMARY OF TERMS)
Obligor: Quantum Corporation
Amount: $70 million
Maturity: 2 years from the Closing Date
Interest: 12% per annum, payable quarterly.
Mandatory Redemption: $35 million due on the first anniversary
of the Closing Date; and remaining $35
million due on the second anniversary of the
Closing Date.
Optional Prepayment: The Note may be prepaid during the first
120 days following the Closing Date without
premium. Callable any time thereafter at
reasonable and customary premiums to be
determined as of the Closing Date.
Subordination: Senior to existing convertible subordinated
debt of Buyer, subordinated to up to
$435,000,000 of senior debt, pari passu with
all other debt of Buyer.
Remarketing: Note shall be issued pursuant to an indenture
to allow Seller to securitize the Note.
Seller shall not make a public sale of
interests in the Note prior to 120 days
following the Closing Date. All costs and
expenses incurred in connection with
remarketing the Note shall be borne by
Seller.
Right of Offset: Seller may offset amounts owed to Buyer
under the Supply Agreement upon a default by
Buyer in the punctual payment of principal
when due or interest within ten days of the
due date.
Covenants: Reasonable and customary covenants
having such terms as will permit Seller in
its reasonable judgment to securitize and
sell the Note, including covenants regarding
additional indebtedness, use of proceeds,
issuance of preferred stock, debt of
subsidiaries, limitations on restricted
payments and negative pledge; provided that
in any event covenants shall be satisfactory
to the banks providing financing in
connection with the transaction contemplated
by this Agreement and shall not interfere
with:
(i) conduct of Buyer's business in the
ordinary course;
(ii) any financing in connection with the
transaction contemplated by this
Agreement;
(iii) maintenance of up to a total of
$635,000,000 of indebtedness for
borrowed money;
(iv) any additional equity investment by MKE;
(v) the capitalization or operations or
business of RMMI;
(vi) any restructuring of or sale or purchase
of assets by Buyer.
Defaults: (i) failure to pay interest and principal
when due (subject to reasonable and
customary cure periods);
(ii) bankruptcy;
(iii) undischarged and unstayed
judgments;
(iv) cross acceleration; and
(v) change of control.
EXHIBITS
Exhibit A: Accounting Convention
Exhibit B-1: RMMI Head Supply Agreement
Exhibit B-2: RMMI MR Head Manufacturing and Supply Agreements
Exhibit C: RMMI Stock Purchase Agreement
Exhibit D: Seller-Buyer Lease
Exhibit E: Form of Seller-Buyer Patent Assignment Agreement
Exhibit F: Form of Seller-Buyer Software Assignment and
License Agreement
Exhibit G: Form of Seller-Buyer Supply Agreement
Exhibit H: Form of Seller-Buyer Transition and Services
Agreement
Exhibit I: Note to Seller
Exhibit J: Form of Assignment and Assumption Agreement
Exhibit K: Right of Entry Agreement
Exhibit L: Transferred Employees
Exhibit M: Seller-Buyer Trademark Assignment Agreement
SCHEDULES
Schedule 3.05 Consents
Schedule 3.06(a) Financial Statements of the Business
Schedule 3.06(b) Projections
Schedule 3.07 Certain Changes
Schedule 3.08(a) Real Property
Schedule 3.08(b) Personal Property
Schedule 3.08(d) Permitted Liens
Schedule 3.09 Sufficiency of Purchased Assets
Schedule 3.12 Litigation
Schedule 3.13 Contracts
Schedule 3.14 Licenses and Permits
Schedule 3.15 Summary of Insurance Coverage
Schedule 3.17 Intellectual Property
Schedule 3.18 Certain Employees
Schedule 3.20 Environmental Matters
Schedule 3.21 Subsidiaries
Schedule 5.08 Capital Expenditure Plan
Schedule 6.02 Digital Tradename
Schedule 8.03 Tax Matters
Schedule 9.01(b) Severance Benefits
Schedule 9.05(a) Seller Benefit Plans
EXHIBIT C
STOCK PURCHASE AGREEMENT
(RMMI)
among:
QUANTUM CORPORATION,
a Delaware corporation;
DIGITAL EQUIPMENT CORPORATION,
a Massachusetts corporation;
and
ROCKY MOUNTAIN MAGNETICS, INC.,
a Delaware corporation
Dated as of July 18, 1994
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of July 18,
1994, by and among QUANTUM CORPORATION, a Delaware corporation
having its principal place of business a 500 McCarthy Boulevard,
Milpitas, California 95035 ("Purchaser"), ROCKY MOUNTAIN MAGNETICS,
INC., a Delaware corporation having its principal place of
business at 2270 South 88th Street, Louisville, Colorado 80028
("RMMI"), and DIGITAL EQUIPMENT CORPORATION, a Massachusetts
corporation having its principal place of business at 146 Main
Street, Maynard, Massachusetts 01754 ("Selling Stockholder").
RECITALS
(A) Selling Stockholder owns 810 shares of the common stock
of RMMI (the "Shares"), which constitute eighty-one percent (81%)
of the outstanding capital stock of RMMI.
(B) Selling Stockholder wishes to sell all of the Shares to
Purchaser on the terms set forth in this Agreement as one of a
number of transactions relating to the sale of its disk drive
business to Purchaser. The sale of the disk drive business is
occurring pursuant to the Stock and Asset Purchase Agreement of
even date herewith by and among Purchaser, Selling Stockholder
and Quantum Peripherals (Europe), S.A. (the "Acquisition
Agreement").
(C) The remaining 190 shares of outstanding RMMI Common
Stock are owned by Storage Technology Corporation, a Delaware
corporation ("StorageTek"). Under a Stockholders' Agreement
dated August 19, 1992 by and among StorageTek, RMMI and Selling
Stockholder (the "Stockholders' Agreement"), StorageTek has a
right of first refusal to purchase the Shares at the price and on
the terms set forth herein. Promptly following execution of this
Agreement, Selling Stockholder will submit this transaction to
StorageTek to comply with the requirements of the Stockholders'
Agreement.
(D) If the Closing hereunder occurs, the parties intend for
Selling Stockholder to assign to Purchaser, and Purchaser to
assume, the rights and obligations of Selling Stockholder under
the Stockholders' Agreement, as well as certain other agreements
specified below in Section 5.
(E) Certain defined terms used in this Agreement are
defined in Exhibit A attached hereto.
AGREEMENT
Purchaser, RMMI and Selling Stockholder, intending to
be legally bound, agree as follows:
SECTION 1. SALE AND PURCHASE OF SHARES.
1.1 Sale And Purchase Of Shares. At the Closing, Selling
Stockholder shall sell, assign, transfer and deliver all of the
Shares to Purchaser and Purchaser shall purchase the Shares from
Selling Stockholder, on the terms and subject to the conditions
set forth in this Agreement.
1.2 Purchase Price; Deposit. The purchase price for the
Shares shall be $100,000,000 in cash (the "Purchase Price").
Promptly upon execution of this Agreement, Purchaser shall
deliver to Selling Stockholder a bank or certified check in the
amount of $25,000,000, representing a prepayment of a portion of
the Purchase Price (together with accrued interest thereon, the
"Deposit"). The Deposit shall be held by the Selling Stockholder
in an interest bearing account. The Deposit shall be applied
toward the Purchase Price at Closing, provided that the Deposit
shall be returned to Purchaser upon the earlier of (i) the
termination of this Agreement in accordance with Section 8.14 and
(ii) delivery by StorageTek to Selling Stockholder of a Purchase
Notice (as defined in the Stockholders' Agreement).
1.3 Closing.
(a) The closing of the sale of the Shares to Purchaser
(the "Closing") shall take place at the offices of Testa, Hurwitz
& Thibeault in Boston, Massachusetts concurrent with the closing
under the Acquisition Agreement.
(b) At the Closing:
(i) Selling Stockholder shall deliver to
Purchaser the stock certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers) and
Purchaser shall pay the Purchase Price, less the Deposit, to
Selling Stockholder, in immediately available funds by wire
transfer to an account of Selling Stockholder with a bank in
Boston, Massachusetts designated by Selling Stockholder by notice
to Purchaser no later than two business days prior to the
Closing;
(ii) Selling Stockholder shall execute and deliver
to Purchaser and RMMI a certificate (the "Closing Certificate")
setting forth Selling Stockholder's representations and
warranties that (A) except as expressly set forth in the Closing
Certificate, each of the representations and warranties made by
RMMI and Selling Stockholder in this Agreement is accurate in all
material respects as of the Closing Date as if made on the
Closing Date, (B) each of the covenants and obligations that RMMI
and Selling Stockholder are required to have complied with or
performed pursuant to this Agreement at or prior to the Closing
has been duly complied with and performed in all material
respects, and (C) the closing condition specified in Section
6.1(a)(ii) below has been satisfied; and
(iii) the parties shall enter into an assumption
and assignment agreement as contemplated in Section 5 below.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF RMMI AND
SELLING STOCKHOLDER.
RMMI and Selling Stockholder jointly and severally represent
and warrant, to and for the benefit of Purchaser, as follows:
2.1 Certificate Of Incorporation And Bylaws; Records.
(a) RMMI has delivered to Purchaser, or will have
delivered to Purchaser prior to the Closing Date, accurate and
complete copies of:
(i) the stock records of RMMI; and
(ii) the minutes and other records of the meetings
and other proceedings (including any actions taken by written
consent or otherwise without a meeting) of the stockholders of
RMMI, the board of directors of RMMI and all committees of the
board of directors of RMMI.
There have been no meetings or other proceedings of the
stockholders of RMMI, the board of directors of RMMI or any
committee of the board of directors of RMMI that are not fully
reflected in such minutes or other records.
(b) There has not been any violation of any of the
provisions of RMMI's certificate of incorporation or bylaws or of
any resolution adopted by RMMI's stockholders, RMMI's board of
directors or any committee of RMMI's board of directors; and no
event has occurred, and no condition or circumstance exists, that
might (with or without notice or lapse of time) constitute or
result directly or indirectly in such a violation.
(c) The books of account, stock records, minute books
and other records of RMMI are accurate, up-to-date and complete,
and have been maintained in accordance with sound and prudent
business practices. All of the records of RMMI are in the actual
possession and direct control of RMMI or Selling Shareholder.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser represents and warrants, to and for the benefit of
Selling Stockholder, as follows:
3.1 Acquisition Of Shares. Purchaser is acquiring the
Shares for its own account and without the intention of making a
public distribution thereof.
3.2 Authority; Binding Nature Of Agreement. Purchaser has
the right, power and authority to enter into and perform its
obligations under this Agreement; the execution, delivery and
performance of this Agreement by Purchaser has been duly
authorized by all necessary action on the part of Purchaser and
its Board of Directors; and this Agreement will constitute the
legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms.
SECTION 4. PRE-CLOSING COVENANTS OF RMMI AND SELLING STOCKHOLDER.
4.1 Access And Investigation. RMMI and Selling Stockholder
shall ensure that, at all times during the Pre-Closing Period:
(a) RMMI and its representatives provide Purchaser and
its representatives with free and complete access to RMMI's
representatives, personnel and assets and to all existing books,
records, tax returns, work papers and other documents and
information relating to RMMI;
(b) RMMI and its representatives provide Purchaser and
its Representatives with such copies of existing books, records,
tax returns, work papers and other documents and information
relating to RMMI as Purchaser may request in good faith; and
(c) RMMI and its representatives compile and provide
Purchaser and its representatives with such additional financial,
operating and other data and information regarding RMMI as
Purchaser may request in good faith.
4.2 Operation Of Business. RMMI and Selling Stockholder
shall ensure that during the Pre-Closing Period, Purchaser will
be kept fully advised of all significant developments in the
business, operations and financial affairs of RMMI and shall not
take any action to which Purchaser may reasonably object. In
addition, without limitation of the generality of the foregoing,
RMMI and Selling Stockholder shall ensure that during the Pre-
Closing Period, other than transactions to which Purchaser gives
its prior written consent:
(a) Selling Stockholder does not directly or
indirectly sell or otherwise transfer, or offer, agree or commit
(in writing or otherwise) to sell or otherwise transfer, any of
the Shares or any interest in or right relating to any of the
Shares (except to StorageTek pursuant to exercise of StorageTek's
right of first refusal pursuant to the Stockholders' Agreement to
purchase the Shares on the terms and conditions set forth
herein);
(b) Selling Stockholder does not permit, and does not
offer, agree or commit (in writing or otherwise) to permit, any
of the Shares to become subject, directly or indirectly, to any
Encumbrance;
(c) RMMI conducts its operations exclusively in the
Ordinary Course of Business and in the same manner as such
operations have been conducted prior to the date of this
Agreement;
(d) RMMI does not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any
shares of capital stock, and does not repurchase, redeem or
otherwise reacquire any shares of capital stock or other
securities;
(e) RMMI does not sell or otherwise issue any shares
of capital stock or any other securities;
(f) RMMI does not amend its certificate of
incorporation or bylaws, and does not effect or become a party to
any Acquisition Transaction, recapitalization, reclassification
of shares, stock split, reverse stock split or similar
transaction;
(g) RMMI does not agree, commit or offer (in writing
or otherwise), and does not attempt, to take any of the actions
described in clauses (d) through (f) of this Section 4.2.
4.3 Notification.
During the Pre-Closing Period, RMMI and Selling
Stockholder shall promptly notify Purchaser of any event,
occurrence or condition that would either (i) constitute a breach
of this Agreement or (ii) have a material adverse effect on the
business of RMMI or the transactions contemplated hereunder.
4.4 Compliance With Stockholder's Agreement. Seller shall
comply with the terms of the Stockholders' Agreement.
SECTION 5. ASSIGNMENT AND ASSUMPTION OF AGREEMENTS.
5.1 At the Closing, subject to the consent condition
referred to below, Selling Stockholder shall assign and Purchaser
shall assume the rights and obligations of Selling Stockholder
under the following agreements which were entered into in
connection with the formation of RMMI:
(a) The Asset Transfer Agreement by and among Selling
Stockholder, StorageTek and RMMI dated August 19, 1992;
(b) The Stockholders' Agreement by and among Selling
Stockholder, StorageTek and RMMI dated August 19, 1992;
(c) The Technology License Option Agreement by and
between Selling Stockholder and StorageTek dated August 19, 1992;
(d) The Technology Cross License Agreement by and
between Selling Stockholder and RMMI dated August 19, 1992; and
(e) The Non-Competition and Confidentiality Agreement
by and among StorageTek, Selling Stockholder and RMMI dated
August 19, 1992.
Selling Stockholder shall cause RMMI to take any necessary
actions to effect the foregoing assignments, and shall endeavor
to obtain the consent of StorageTek to such assignments. The
assignment of agreements identified in items (a) through (c)
shall be made only with the consent of StorageTek. In the case
of the agreements identified in items (d) and (e), if the consent
of StorageTek is not obtained, then if requested by Purchaser,
Selling Stockholder shall cause RMMI to make the assignment in
any event. During the Pre-Closing Period, neither Selling
Stockholder nor RMMI shall agree to any amendment of or waiver
under the foregoing agreements without the prior written consent
of Purchaser.
SECTION 6. CONDITIONS PRECEDENT.
6.1 Obligation To Close.
(a) The purchase and sale of the Shares shall be
subject to the conditions that (i) the StorageTek right of first
refusal with respect to the Shares shall have been waived or the
60 day offer period shall have expired without exercise by
StorageTek and (ii) the closing under the Acquisition Agreement
shall occur simultaneously with the Closing hereunder.
(b) Purchaser's obligation to purchase the Shares
shall be subject to the condition that Selling Stockholder shall
have delivered the Closing Certificate specified in Section
1.3(b)(ii).
SECTION 7. INDEMNIFICATION.
In the event that the Shares are purchased by StorageTek
pursuant to the exercise of its right of first refusal under the
Stockholders' Agreement on the terms and conditions set forth
herein, then Selling Stockholder shall indemnify and hold
harmless StorageTek as and to the same extent that Selling
Stockholder indemnifies and holds harmless Purchaser under
Section 11.02 of the Acquisition Agreement (such indemnity to
apply to representations and warranties of Seller under the
Acquisition Agreement insofar as they relate to RMMI), and
subject to deductibles and maximums prorated based on the ratio
of the Purchase Price hereunder to that under the Acquisition
Agreement.
SECTION 8. MISCELLANEOUS PROVISIONS.
8.1 Further Assurances. Each party hereto shall execute
and/or cause to be delivered to each other party hereto such
instruments and other documents, and shall take such other
actions, as such other party may reasonably request (prior to, at
or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated hereby.
8.2 Notices. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall
be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier
or express delivery service or by telecopier) (i) if to Purchaser
or Selling Stockholder, to the address or telecopier number set
forth beneath the name of such party in Section 13.01 of the
Acquisition Agreement (or to such other address or telecopier
number as such party shall have specified pursuant to the terms
thereto), or (ii) if to RMMI, to the principal place of business
of RMMI addressed to the attention of the Chief Executive
Officer.
8.3 Headings. The underlined headings contained in this
Agreement are for convenience of reference only, shall not be
deemed to be a part of this Agreement and shall not be referred
to in connection with the construction or interpretation of this
Agreement.
8.4 Counterparts. This Agreement may be executed in
several counterparts, each of which shall constitute an original
and all of which, when taken together, shall constitute one
agreement.
8.5 Governing Law; Arbitration. This Agreement shall be
construed in accordance with, and governed in all respects by,
the internal laws of the Commonwealth of Massachusetts (without
giving effect to principles of conflicts of laws). Any and all
disputes or controversies whether of law or fact of any nature
whatsoever arising from or respecting this Agreement shall be
decided by arbitration by Judicial Arbitration Mediation
Services, Inc. in accordance with the provisions of Section 13.09
of the Acquisition Agreement.
8.6 Assignment. This Agreement may not be assigned by
either Purchaser or Selling Stockholder without the prior written
consent of the other party; provided, however, that Purchaser may
assign its rights hereunder to a wholly-owned subsidiary or in
connection with the sale of all or substantially all of the
assets of its business to which its ownership of Shares relates.
8.7 Remedies Cumulative; Specific Performance. The rights
and remedies of the parties hereto shall be cumulative (and not
alternative). The parties each individually agree and
acknowledge that its violation or breach of, or default under, or
its threatened violation or reach of, or default under, any of
the provisions of this Agreement will cause irreparable damage to
the other party, and that the other party will have no adequate
remedy at law for such violation, breach or default or such
threatened violation, breach or default. Accordingly, each party
hereto agrees that the non-violating party shall be entitled as a
matter of right to an injunction, specific performance, or other
appropriate equitable relief from any court of competent
jurisdiction, restraining any further violation of such provision
or affirmatively compelling such offender to carry out its
obligations hereunder. Such right to equitable relief shall be
cumulative and in addition to whatever remedies the non-violating
party may have at law or in equity.
8.8 Waiver.
(a) No failure on the part of any Person to exercise
any power, right, privilege or remedy under this Agreement, and
no delay on the part of any Person in exercising any power,
right, privilege or remedy under this Agreement, shall operate as
a waiver of such power, right, privilege or remedy; and no single
or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or
remedy under this Agreement, unless the waiver of such claim,
power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
8.9 Amendments. This Agreement may not be amended,
modified, altered or supplemented other than by means of a
written instrument duly executed and delivered on behalf of
Purchaser and Selling Stockholder.
8.10 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person
or set of circumstances, shall be determined to be invalid,
unlawful, void or unenforceable to any extent, the remainder of
this Agreement, and the application of such provision to Persons
or circumstances other than those as to which it is determined to
be invalid, unlawful, void or unenforceable, shall not be
impaired or otherwise affected and shall continue to be valid and
enforceable to the fullest extent permitted by law.
8.11 Parties In Interest. None of the provisions of this
Agreement is intended to provide any rights or remedies to any
Person other than the parties hereto and their respective
successors and assigns (if any).
8.12 Entire Agreement. This Agreement, the Acquisition
Agreement and the Ancillary Agreements (as defined therein) set
forth the entire understanding of the parties relating to the
subject matter thereof and supersede all prior agreements and
understandings among or between any of the parties relating to
the subject matter thereof.
8.13 Construction. The parties hereto agree that any rule
of construction to the effect that ambiguities are to be resolved
against the drafting party shall not be applied in the
construction or interpretation of this Agreement. As used in
this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the
words "without limitation."
8.14 Termination. This Agreement shall terminate and be of
no further force or effect:
(i) immediately upon the termination of the
Acquisition Agreement or the occurrence of the Closing
thereunder; or
(ii) immediately upon the closing of a purchase of the
Shares by StorageTek pursuant to exercise of its right of first
refusal under the Stockholders' Agreement on the terms and
conditions set forth herein.
The parties hereto have caused this Agreement to be executed
and delivered as of July 18, 1994.
"PURCHASER": QUANTUM CORPORATION,
By: /s/ WILLIAM J. MILLER
Chairman of the Board and
Chief Executive Officer
"RMMI": ROCKY MOUNTAIN MAGNETICS, INC.,
By: /s/ CHARLES F. CHRIST
Chairman of the Board
"SELLING STOCKHOLDER": DIGITAL EQUIPMENT CORPORATION
By: /s/ CHARLES F. CHRIST
VP, Components Division
<PAGE>
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this
Exhibit A):
Acquisition Transaction. "Acquisition Transaction" shall
mean any transaction involving:
(a) the sale or other disposition of all or any
portion of RMMI's business or assets (other than in the Ordinary
Course of Business);
(b) the issuance, sale or other disposition of (i) any
capital stock of RMMI, (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire any capital
stock of RMMI, or (iii) any security, instrument or obligation
that is or may become convertible into or exchangeable for any
capital stock of RMMI; or
(c) any merger, consolidation, business combination,
share exchange, reorganization or similar transaction involving
RMMI.
Closing. "Closing" shall have the meaning specified in
Section 1.3(a) of the Agreement.
Closing Certificate. "Closing Certificate" shall have the
meaning specified in Section 1.3(b)(ii) of the Agreement.
Closing Date. "Closing Date" shall have the meaning
specified in Section 1.3(a) of the Agreement.
Encumbrance. "Encumbrance" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance,
equity, trust, equitable interest, claim, preference, right of
possession, lease, tenancy, license, encroachment, covenant,
infringement, interference, order, proxy, option, right of first
refusal, preemptive right, community property interest, legend,
defect, impediment, exception, reservation, limitation,
impairment, imperfection of title, condition or restriction of
any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or
other asset, any restriction on the receipt of any income derived
from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset).
Liability. "Liability" shall mean any debt, obligation,
duty or obligation of any nature (including any unknown,
undisclosed, unmatured, unaccrued, unasserted, contingent,
indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt,
obligation, duty or liability would be required to be disclosed
on a balance sheet prepared in accordance with generally accepted
accounting principles and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
Ordinary Course Of Business. An action taken by or on
behalf of RMMI shall not be deemed to have been taken in the
"Ordinary Course of Business" unless:
(a) such action is recurring in nature, is consistent
with RMMI's past practices and is taken in the ordinary course of
RMMI's normal day-to-day operations;
(b) such action is taken in accordance with sound and
prudent business practices;
Person. "Person" shall mean any individual or Entity.
Pre-Closing Period. "Pre-Closing Period" shall mean the
period commencing as of the date of the Agreement and ending on
the Closing Date.
Purchase Price. "Purchase Price" shall have the meaning
specified in Section 1.2 of the Agreement.
Purchaser. "Purchaser" shall mean Quantum Corporation, a
Delaware corporation.
Shares. "Shares" shall have the meaning specified in
Recital "1" to the Agreement.
SUPPLEMENTAL AGREEMENT
TO STOCK AND ASSET PURCHASE AGREEMENT
This SUPPLEMENTAL AGREEMENT TO STOCK AND ASSET PURCHASE
AGREEMENT (the "Supplemental Agreement"), dated as of October 3,
1994, between DIGITAL EQUIPMENT CORPORATION, a Massachusetts
corporation ("Seller"), QUANTUM CORPORATION, a Delaware
corporation ("Buyer"), and QUANTUM PERIPHERALS (EUROPE) S.A., a
wholly owned subsidiary of Buyer ("Quantum Europe"), supplements
and modifies that certain Stock and Asset Purchase Agreement
dated as of July 18, 1994, between Seller, Buyer and Quantum
Europe, as amended by Amendment No. 1, dated as of October 3,
1994 (as so amended, the "Agreement"). Capitalized terms used
and not otherwise defined herein shall have the meanings given
such terms in the Agreement.
WITNESSETH:
WHEREAS, Seller, Buyer and Quantum Europe have entered into
the Agreement pursuant to which Buyer and Quantum Europe agreed
to purchase substantially all of the assets of the Business from
Seller, upon the terms and subject to the conditions set forth
therein;
WHEREAS, subject to the terms and conditions contained
herein, the parties desire to supplement and modify the Agreement
in the manner set forth below.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
1. Closing. The Closing shall take place on October 3,
1994 at 9:00 a.m., Boston time, or at such other date and time as
Seller and Buyer may agree, and shall be effective as of 12:01
a.m., local time, in each location of the Business, on the date
on which the Closing shall occur.
2. Real Property Survey and Title Insurance. Buyer shall
be responsible for all real property survey and title insurance
costs with respect to the Shrewsbury I and II facility related to
the Closing; provided, however, that Seller shall reimburse Buyer
at Closing for $2,400 of such costs. The facility known as
Shrewsbury I and II that is being purchased by Buyer pursuant to
the Agreement shall be valued at $16.4 million.
3. Offers to European Employees. Notwithstanding the
provisions of Article IX of the Agreement, the Transferred
Employees who are located in Europe (the "European Employees")
received written offers of employment from Buyer on September 23,
1994, and shall have until October 14, 1994 to return to Buyer a
written form of acceptance of the offered terms of employment.
Buyer shall not assume responsibility for any such Transferred
Employee unless and until such employee signs and returns to
Buyer the written form of acceptance on or before such date. The
European Employees shall be treated in the same manner as
Transferred Employees located in the United States with regard to
accrued vacation and premium benefits.
4. Intercompany Indebtedness. Notwithstanding Section
10.02(f) of the Agreement, immediately upon: (i) transfer of the
Shares of the Malaysian Subsidiary to Buyer and (ii) receipt of
any required governmental approvals for transfer of such funds:
(A) Buyer shall cause the Malaysian Subsidiary to pay
to Seller the "certified accounts payable and advances, net of
accounts receivables" as defined in Section 2.3 of the Interim
Management Agreement, dated October 3, 1994, by and between
Seller and Buyer (the "Malaysian Interim Agreement"); and
(B) Seller shall upon receipt of such payment
immediately pay to Buyer as a post purchase adjustment an amount
equal to the amount received from the Malaysian Subsidiary.
5. Funds Flow. Schedule A sets forth an accurate
description of the funds flow as of the Closing and the
transactions contemplated thereby. Any payments to be made by
Seller or Buyer to the other as a result of any adjustments
pursuant to Schedule A shall be made promptly upon agreement
between Seller and Buyer regarding the amount of such adjustment.
6. Definitions. The definitions of "Ancillary Agreements"
and "MR Heads Agreements" shall be amended in their entirety to
read as follows:
"Ancillary Agreements" means the Assignment
and Assumption Agreement, Seller-Buyer Supply
Agreement, Note, MR Heads Agreements, RMMI
Stock Purchase Agreement, Seller-Buyer Lease,
Seller-Buyer Patent Assignment Agreement,
Seller-Buyer Software Assignment and License
Agreement, Seller-Buyer Transition and
Services Agreement, Right of Entry Agreement,
Seller-Buyer Trademark Assignment Agreement,
License for Use and Agreement for
Maintenance, Etc. of Helipad, dated as of
October 3, 1994, by and between Seller and
Buyer, License for Maintaining and Agreement
for Removal of Fiber Optics Cable, dated as
of October 3, 1994 between Seller and Buyer,
Agreement for Joint Maintenance of Jointly
Owned Fire Suppression System, dated as of
October 3, 1994, by and between Seller and
Buyer, Interim Management Agreement, dated as
of October 3, 1994, by and between Seller and
Buyer, Indemnification Agreement with Respect
to Health Care Coverage, dated as of October
3, 1994, between Seller and Buyer, Japan
Interim Management Agreement, dated as of
October 3, 1994, by and between Seller and
Buyer, and Module Manufacturing Agreement
dated as of October 3, 1994, by and between
Seller and Buyer.
"MR Heads Agreements" means the Agreement
Regarding Disk Drive Heads, dated as of
October 3, 1994, by and between Seller and
Buyer; the Manufacturing Services Agreement,
dated as of October 3, 1994, by and between
Seller and Buyer; and the Heads Supply
Agreement, dated as of October 3, 1994, by
and between Seller and Buyer.
7. Transfer of Japanese and Malaysian Purchased Assets.
Seller and Buyer agree that the Shares of the Malaysian
Subsidiary, and the Business and related assets located in Japan
(the "Japanese Business") cannot be effectively transferred in
accordance with applicable law on the Closing Date. Seller and
Buyer agree that (i) Seller shall operate the Malaysian
Subsidiary and the Japanese Business in accordance with the
Malaysian Interim Agreement and the Japan Interim Agreement, each
dated as of October 3, 1994, by and between Seller and Buyer (the
"Malaysia Interim Agreement" and the "Japan Interim Agreement",
respectively), (ii) Seller shall transfer the Shares of the
Malaysian Subsidiary and the Japanese Business as soon as
practicable after the Closing Date in accordance with Article II
of the Agreement, (iii) without limiting the foregoing, Seller's
representations and warranties under Sections 3.10, 3.11 and 3.16
of the Agreement (disregarding any qualification therein with
respect to materiality or Material Adverse Effect), each as they
relate to the Shares of the Malaysian Subsidiary and the Japanese
Business, shall be true in all material respects, as if made at
and as of the respective dates of the transfers thereof with only
such exceptions as would not in the aggregate reasonably be
expected to have a Material Adverse Effect (disregarding, in the
case of Sections 3.10 and 3.16, any exceptions that do not arise
from Seller's breach of the Malaysia Interim Agreement and the
Japan Interim Agreement, respectively, and, in the case of
Section 3.11, any exceptions that arise as the result of any
Liens that are not the result of any act or omission of Seller or
its affiliates), and (iv) the obligations of the parties to
consummate the respective transfers of the Shares of the
Malaysian Subsidiary and the Japanese Business are subject to the
satisfaction of the conditions of the respective parties set
forth in Section 10.01(b) and (d), Section 10.02 (c), (e), (f)
and (i) and Section 10.03, (c) and (d). Seller covenants and
agrees that neither Seller nor the Malaysian Subsidiary shall
grant any license or make any assignment of Intellectual Property
used or owned by the Malaysian Subsidiary or the Japanese
Business without the prior written consent of Buyer. In the event
that the transfer of either the Shares of the Malaysian
Subsidiary or the Japanese Business is not consummated on or
before April 3, 1995, then in lieu of such transfer, Seller and
Buyer shall negotiate in good faith to determine the cost to
Buyer of the failure of Seller to transfer the Shares of the
Malaysian Subsidiary or the Japanese Business, as the case may
be; provided that if Seller and Buyer are not able to agree as to
such cost within a reasonable period of time, the dispute shall
be subject to arbitration in accordance with Section 13.09 of the
Agreement. Within ten days after determination of such cost,
whether by mutual agreement or by arbitration, Seller shall pay
to Buyer the determined amount by wire transfer as directed by
Buyer. Notwithstanding that the Shares of the Malaysian
Subsidiary and the Japanese Business are not transferred at the
Closing, the Closing Statement shall be prepared as if such
transfer had occurred at the Closing.
8. Indonesian Incentive Grants. Seller and Buyer agree
that with respect to the incentive grants made and to be made by
the Indonesian government in connection with capital expenditures
of the Business, the approximately S$2.5 million received by
Seller prior to the Closing Date shall be an Excluded Asset
retained by Seller and the approximately S$1.5 million to be
received by Seller after the Closing Date shall be a Purchased
Asset, to be promptly remitted to Buyer if received by Seller.
Should Buyer take any voluntary action or fail to take any action
(other than the payment of an amount of money that Seller refuses
to reimburse) that causes Seller to be required to return all or
any portion of the pre-Closing incentive grant already received
by Seller to the Indonesian government, Buyer shall pay to Seller
an amount equal to the amount so returned.
9. Benefits for Disabled Employees. The parties agree
that Buyer or RMMI shall bear the cost of any continued health,
dental and life insurance coverage ("Continued Benefits")
provided to RMMI employees who are treated as disabled under
Seller's disability plan as of the Closing Date ("RMMI Disabled
Employees"), for a period of up to the first 26 weeks of each
such RMMI Disabled Employee's disability. Thereafter, Seller
shall be responsible for providing RMMI Disabled Employees with
such Continued Benefits as Seller provides to disabled employees
of Seller from time to time. In order to implement the
foregoing, Seller and Buyer shall enter into a separate agreement
under which Seller will use its best efforts to arrange for such
Continued Benefits to be provided under Seller's employee benefit
programs, with appropriate reimbursement from Buyer or RMMI for
the entire liability incurred by Seller for coverage during the
periods for which they are to bear the cost of the Continued
Benefits. In any event, the parties agree that the expenses of
providing any Continued Benefits shall be allocated as described
above, without regard to whether Continued Benefits are provided
under Seller's or Buyer's employee benefits programs or under
other arrangements. This agreement shall not be construed as a
commitment by Seller to maintain Continued Benefits at the
current levels or for any specified period of time after it
assumes responsibility for the expenses of such Continued
Benefits.
10. Records Retention.
(a) With respect to personnel documents and related
information that is not physically turned over to Buyer upon the
Closing, Seller agrees to retain and preserve that material and
allow Buyer access to it on the following terms: (i) Seller will
maintain those records for a minimum of three years after the
Closing Date (consistent with federal EEO record keeping
requirements); (ii) during that three-year period, Buyer shall be
allowed to access those records as needed on written request of a
representative of Buyer to be designated for that purpose; (iii)
Seller shall not require Buyer to obtain a subpoena or release
from any former employee whose records accessed, absent unusual
circumstances requiring such measures; (iv) Seller shall appoint
a person responsible for facilitating Buyer's access to those
records, and all requests for access shall be accommodated
promptly, and in no event later than five business days; and (v)
at the end of the three-year retention period, Seller shall give
30 days' notice prior to destruction of any such materials, and
upon notice by Buyer to Seller within such 3,3-day period Seller
shall deliver to Buyer possession of the originals of those
materials in lieu of their destruction.
(b) With respect to the books and records referenced
in the first sentence of Section 6.01 of the Agreement, (i) Buyer
agrees to retain and preserve those books and records for a
period of three years after the Closing Date; and (ii) at the end
of the three-year retention period, Seller shall,, within two
months, identify those of such records, if any, which Seller must
be granted access to pursuant to Section 6.01 in order to allow
compliance by Seller with applicable laws or regulations, and,
with respect to such records, Buyer shall give Seller 30 days'
notice prior to any destruction of any such books and records,
and upon notice by Seller to Buyer within such 36)-day period
Buyer shall deliver to Seller possession of the copies of those
materials in lieu of their destruction.
11. Expenses for Relocation of Fiber Optic Cable. Buyer
will reimburse Seller for up to $25,000 of expenses incurred by
Seller in connection with the relocation of the fiber optic cable
described in the License for Maintaining and Agreement for
Removal of Fiber Optic Cable between Buyer and Seller dated as of
October 3, 1994.
12. Miscellaneous. Article XIII of the Agreement is
incorporated by this reference herein and shall govern this
Supplemental Agreement. This Supplemental Agreement shall
terminate and be of no further force or effect upon termination
of the Agreement.
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.
DIGITAL EQUIPMENT CORPORATION
By: /s/ CHARLES F. CHRIST
Title: VP, Components Division
QUANTUM CORPORATION
By: /s/ JOSEPH T. RODGERS
Title: Executive VP, Finance,
Chief Financial Officer
and Secretary
QUANTUM PERIPHERALS (EUROPE) S.A.
By: /s/ JOSEPH T. RODGERS
Title: Director
AMENDMENT NO.1
dated as of
October 3, 1994
to
Stock and Asset Purchase Agreement
dated as of
July 18, 1994
among
Digital Equipment Corporation,
Quantum Corporation,
and
Quantum Peripherals (Europe) S.A.
WHEREAS Digital Equipment Corporation ("Seller"), Quantum
Corporation ("Buyer") and Quantum Peripherals (Europe) S.A. have
entered into a Stock and Asset Purchase Agreement dated as of
July 18, 1994 (the "Agreement"); and
WHEREAS, the parties to the Agreement desire to amend and
supplement the agreement in certain respects as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and intending to be legally bound,
the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used herein and
not defined shall have the respective meanings set forth in the
Agreement.
Section 2. Amendments. The following sections of the
Agreement shall be amended as follows:
(a) Section 2.03(i) shall be revised to add the following
at the end of such subsection: "provided that Buyer's
obligations under purchase orders and purchase
commitments shall be limited to the assumption of the
purchase orders and purchase commitments totalling
$286 million summarized on Exhibit AA to this
Amendment."
(b) Section 2.03(ii) shall be deleted in its entirety.
(c) The definition of "Excluded Liabilities" contained in
Section 2.04 shall be amended by deleting the following
phrase from the end of clause (vi) thereof: "to the
extent that the aggregate liability for warranties for
such products assumed by Buyer assumed pursuant to
Section 2.03(ii) exceeds $10,000,000."
(d) Section 2.06(a) shall be amended by changing the cash
portion of the Purchase Price from $330,000,000 to
$290,000,000 ($190,000,000 in the event that StorageTek
shall exercise its right of first refusal pursuant to
Section 2.2 of the RMMI Stockholders' Agreement).
(e) Section 2.08(a) shall be amended by adding the
following sentence at the end thereof: "In addition,
as another adjustment to the Purchase Price, Seller
agrees to pay Buyer the amount, if any, by which the
capital expenditures made by Seller related to the
Business in the quarter ended October 1, 1994 are less
than $29,000,000 ($23,110,000 if the RMMI Shares are
Excluded Assets)."
(f) The definition of "Closing Statement" contained in
Section 2.08(b) shall be revised to read in its
entirety:
"Closing Statement means a statement of
inventories, property, plant and equipment as
of the Closing Date. Inventories shall be
calculated, after deducting reserves for
shortages, excess and obsolete inventories
(with excess and obsolescence calculated
based on the unit forecast underlying the
revenue projections dated September 11, 1994;
provided that if Buyer's own forecast as of
the Closing Date of the sales of products
formerly produced by Seller is higher than
the forecast underlying the September 11,
1994 forecast, then such higher forecast
shall be used), based upon the lower of (a)
Seller's standard cost, calculated in
accordance with the Accounting Convention and
(b) market not to exceed net realizable
value. Property, plant and equipment shall
be calculated in accordance with the
Accounting Convention."
(g) The definition of "Property, Plant and Equipment
Reference Value" contained in Section 2.08(b) shall be
amended to add the following words at the end of such
definition: "plus the amount, if any, of the payment
in respect of capital expenditures to be made by Seller
pursuant to Section 2.08(a) as amended by Amendment
No.1 hereto."
(h) The definition of "Target Inventory Reference Value"
contained in Section 2.08(b) shall be amended to read
in full as follows: "Target Inventory Reference Value"
means $160,000,000 ($158,600,000 in the event that the
RMMI Shares are Excluded Assets)."
(i) Section 2.08(c) shall be amended (i) by adding the
following phrase after the words "Accounting
Convention": "(except as to inventories which shall be
calculated, after deducting reserves for shortages,
excess and obsolete inventories (with excess and
obsolescence calculated based on the unit forecast
underlying the revenue projections dated September 11,
1994; provided that if Buyer's own forecast as of the
Closing Date of the sales of products formerly produced
by Seller is higher than the forecast underlying the
September 11, 1994 forecast, then such higher forecast
shall be used), based upon the lower of (a) Seller's
standard cost, calculated in accordance with the
Accounting Convention, and (b) market not to exceed net
realizable value"; (ii) by adding the following phrase
after the words "Property, Plant and Equipment
Reference Value": "and of the capital expenditures made
by Seller related to the Business in the quarter ended
October 1, 1994;" and (iii) by adding the words "and
Seller's accountants and employees" in lieu of the word
"accountants" after the word "Buyer's" at the beginning
of the last sentence thereof.
(j) Section 2.08(d) shall be amended by adding the phrase
"or the calculation of capital expenditures made by
Seller" after the words "Property, Plant and Equipment
Reference Value" in the first place where these words
appear and "and the calculation of capital expenditures
made by Seller" in the second place where these words
appear.
(k) Section 2.08(e) shall be amended by adding the
following sentence at the end of such section: "In a
similar manner, the capital expenditures made by Seller
related to the Business in the quarter ended October 1,
1994 shall be reviewed and determined."
(l) Section 2.08(f) shall be amended by adding the phrase
"and of the calculation of capital expenditures made by
Seller" after the words "Property, Plant and Equipment
Reference Value."
(m) Section 2.08(g) shall be amended (i) by adding the
following sentence at the beginning of such section:
"The purchase price adjustment relating to the capital
expenditures made by Seller related to the Business in
the quarter ended October 1, 1994 shall be estimated by
Seller and paid to Buyer by Seller on the Closing Date,
subject to adjustment pursuant to the terms of this
Section 2.08." and (ii) by adding the word "other"
after the word "Any" at the beginning of the section
and (iii) by adding the words "and the calculation of
capital expenditures made by Seller" after the words
"Property, Plant and Equipment Reference Value" in each
place where these words appear in this section.
(n) Section 3.06 shall be deleted in its entirety and the
following provisions shall be inserted in lieu thereof:
"3.06 Financial Statements; Projections.
(a) The Statement of Net Assets
and the unaudited consolidated statement of
operations for the Business for the fiscal
year ended July 2, 1994, and the unaudited
balance sheets and statements of operations
for the Subsidiaries and the Batam, Indonesia
operations of the Business (on a pro forma
basis) as of such date and for such period,
attached hereto as Schedule 3.06(a), with
such amendments as have been specifically
identified in Exhibit BB hereto (which
exhibit shall be delivered prior to
Closing)(as so amended, the "Financial
Statements" of the Business) report, on a
basis consistent with the accounting policies
and procedures described in the Accounting
Convention, the financial position of the
Business as of the date thereof and its
results of operations for the period then
ended. This representation shall not survive
the Closing."
(b) The projections dated
September 11, 1994 for the first quarter of
fiscal year 1995 and the forecast of unit
sales for the second quarter of fiscal year
1995 attached hereto as Exhibit CC and DD,
respectively, were prepared in good faith,
and neither the Finance Manager for the
Business nor the Vice President, Components
Division, nor the Vice President, Sales and
Marketing, of the Seller believes that such
projections and forecast are materially
incorrect or overstated, it being understood
that projections and forecasts of this nature
are not guarantees of future performance.
This representation shall not survive the
Closing."
The parties agree that no representation shall be deemed to have
been made as of the date of the Agreement under Section 3.06, or
Section 3.22 as it relates to Section 3.06, that this new
Section 3.06 (and Section 3.22 as it relates to Section 3.06)
speaks only as of the Closing Date, and that neither this new
Section 3.06 or Section 3.22 as it relates to Section 3.06 shall
give rise to any contractual claim, for indemnification or
otherwise, under the Agreement, provided that nothing contained
herein shall be deemed to limit Buyer's rights or remedies in the
case of fraud.
(o) The third and fourth sentences of Section 5.04 are
hereby amended and restated in their entirety to read
as follows:
In addition, prior to the Closing Date,
Seller and the Subsidiaries shall prepare and
deliver to Buyer (i) audited statements of
the assets and liabilities of the Business on
a carve-out basis as of the end of the fiscal
years ending on or about the end of June 1993
and 1994, (ii) audited statements of
operations for the Business on a carve-out
basis for the fiscal years ending on or about
the end of June 1992, 1993 and 1994, (iii) an
unaudited statement of the assets and
liabilities of the Business on a carve-out
basis as of the end of the last full fiscal
quarter ending more than 30 days prior to the
Closing Date and (iv) unaudited statements of
operations for the Business on a carve-out
basis for each of the fiscal quarters ending
more than 30 days prior to the Closing Date,
beginning with the fiscal quarter ending on
or about the end of June 1993, in each case
in accordance with generally accepted
accounting principles. In addition, as
promptly as practicable after the Closing
Date, Seller shall provide Buyer, and Buyer
shall cooperate with Seller in the
preparation of, (x) unaudited statements of
operations for the period from July 3, 1994
through the Closing Date, and balance sheets
as of the Closing Date, for each of RMMI and
the Malaysian Subsidiary, in each case
prepared in accordance with the Accounting
Convention, together with an analysis
thereof, and (y) an unaudited statement of
operations with respect to the operations of
the Business conducted in Batam, Indonesia on
a carve-out basis for the period referred to
in clause (x) and an unaudited statement of
the assets and liabilities of such operations
on a carve-out basis as of the Closing Date,
in each case in accordance with the
Accounting Convention, together with an
analysis thereof.
(p) Section 5.10 shall be amended (i) to insert the words
", upon request," after the words "Buyer agrees" at the
beginning of such section; (ii) to insert the words ",
digital linear tape drives and solid state memory
devices" after the words "relating to 3 1/2 inch
drives" in the first sentence thereof and (iii)
deleting the words "50% of" appearing in the first
sentence thereof .
(q) Section 11.02(a)(i) shall be amended to add the
following phrase at the end of the parenthetical clause
at the end of such section: "and excluding the
representations contained in Section 3.06, and Section
3.22 to the extent it relates to Section 3.06)."
(r) Exhibit I shall be amended to read in full as set forth
on Exhibit I to this Amendment No.1.
Section 3. Excess Material; Purchases by Seller. Seller
hereby commits to purchase, upon the written request of Buyer,
disk drives incorporating up to $12 million of excess materials
to be purchased by Buyer after October 3, 1994 identified in
Seller's Report on Excess Materials dated August 29, 1994, a copy
of which is attached as Exhibit EE, as such disk drives are
produced during such fiscal year. The purchase price for such
disk drives shall be factory cost without profit or gross margin.
This commitment shall be in addition to Seller's regular
purchases pursuant to the Seller-Buyer Supply Agreement between
the parties and shall be excluded from all calculations under
such Supply Agreement.
Section 4. Capital Expenditures. Buyer and Seller agree
that the failure by Seller to perform the covenant set forth in
Section 5.08 to adhere to the Capital Expenditure Plan shall not
be a condition to the obligations of Buyer under Section 10.02(a)
nor serve as a basis for indemnification under Section 11.02.
Section 5. Amendment of Certain Ancillary Agreements. The
forms of certain of the Ancillary Agreements have been modified
by agreement of the parties to the Agreement. The delivery of
executed forms of these Ancillary Agreements in such modified
form at the Closing shall be deemed to constitute the consent of
each such party to such amendments and shall satisfy the
requirements of Section 10.01(c) of the Agreement. The parties
hereto are simultaneously entering into a Supplemental Agreement
dated the date hereof addressing certain other issues.
Section 6. Applicable Law. This Amendment No.1 shall be
construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts, without regard to the conflicts of
law rules of such Commonwealth.
Section 7. Section Headings. Section headings are included
herein for convenience only and shall be ignored in the
construction and interpretation hereof.
Section 8. Counterparts; Effectiveness. This Amendment
No.1 may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Amendment No.1 shall
become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DIGITAL EQUIPMENT CORPORATION
By:
Name:
Title:
QUANTUM CORPORATION
By: /s/ JOSEPH T. RODGERS
Title: Executive Vice President, Finance
Chief Financial Officer
and Secretary
QUANTUM PERIPHERALS (EUROPE) S.A.
By: /s/ JOSEPH T. RODGERS
Title: Director
<PAGE>
EXHIBIT I
NOTE TO SELLER
(SUMMARY OF TERMS)
Obligor: Quantum Corporation
Amount: $70 million
Maturity: 180 days from the Closing Date
Interest: 12% per annum, payable quarterly.
Optional Prepayment: The Note may be prepaid at any time
without premium.
Subordination: Senior to existing convertible subordinated
debt of Buyer, subordinated to up to
$435,000,000 of senior debt, pari passu with
all other debt of Buyer.
Right of Offset: Seller may offset amounts owed to Buyer under
the Supply Agreement upon a default by Buyer
in the punctual payment of principal when due
or interest within ten days of the due date.
Covenants: Covenants regarding additional indebtedness,
limitations on restricted payments and liens;
provided that in any event covenants shall be
satisfactory to the banks providing financing
in connection with the transaction contem-
plated by this Agreement and shall not
interfere with:
(i) conduct of Buyer's business in the
ordinary course;
(ii) any financing in connection with the
transaction contemplated by this
Agreement;
(iii) maintenance of up to a total of
$635,000,000 of indebtedness for
borrowed money;
(iv) any additional equity investment by MKE;
(v) the capitalization or operations or
business of RMMI;
(vi) any restructuring of or sale or purchase
of assets by Buyer.
Defaults: (i) failure to pay interest and principal
when due (subject to reasonable and
customary cure periods);
(ii) bankruptcy;
(iii) undischarged and unstayed judgments;
and
(iv) cross acceleration.
<PAGE>
EXHIBIT AA
OPEN PURCHASE ORDER STATUS
<PAGE>
EXHIBIT BB
FISCAL YEAR 1994 FINANCIALS
<PAGE>
EXHIBIT CC
PROJECTIONS FOR Q1 1995
<PAGE>
EXHIBIT DD
Q2 1995 DIGITAL UNIT FORECAST
FOR DISK, TAPE, SOLID STATE DISK DRIVES AND MEDIA
<PAGE>
EXHIBIT EE
REPORT ON EXCESS MATERIALS
DATED AUGUST 29, 1994
PATENT ASSIGNMENT AND LICENSE AGREEMENT
THIS AGREEMENT is entered into as of October 3, 1994, by and
between DIGITAL EQUIPMENT CORPORATION, a corporation of the
Commonwealth of Massachusetts having its principal place of
business at 146 Main Street, Maynard, Massachusetts (hereinafter,
together with all subsidiary or affiliate companies which it now
or hereafter owns, or controls, "Digital"), and QUANTUM
CORPORATION, a company incorporated under the laws of the State
of Delaware having its principal place of business at 500
McCarthy Boulevard, Milpitas California (hereinafter, together
will all subsidiary and affiliate companies which it now or
hereafter owns or controls, "Quantum").
WHEREAS, Digital and Quantum are parties to a certain Stock
and Asset Purchase Agreement dated as of July 18, 1994, relating
to the purchase and sale of certain assets and assumption of
certain liabilities of Digital, as amended by Amendment No. 1,
dated as of October 3, 1994 (hereinafter the "Purchase
Agreement");
WHEREAS, the Purchase Agreement provides that various
agreements necessary to enable Quantum to conduct the Business
(as defined in the Purchase Agreement) will be entered into, this
agreement being one of them;
WHEREAS, Digital possesses ideas, inventions, and patents
which are used, have been used or developed in the Business;
WHEREAS, Quantum desires to receive from Digital an
assignment to certain ideas, inventions and patents and licenses
to other identified ideas, inventions and patents relating to,
and necessary to enable Quantum to engage in, the Business as
well as the future growth, expansion or evolution of the
Business;
WHEREAS, Digital desires to receive from Quantum licenses
relating to certain of such assigned ideas, inventions and
patents; and
WHEREAS, Digital and Quantum desire to grant such licenses.
NOW THEREFORE, in consideration of the Purchase Price (as
defined in the Purchase Agreement) and the mutual convents,
promises and undertakings hereinafter set forth, Digital and
Quantum hereby agree as follows:
Definitions
Terms not otherwise defined herein shall have the meaning
ascribed to them in the Purchase Agreement.
Assigned Patents All ideas, inventions, patent
applications and letters patent which
arose from the Business and are not used
by Digital in any business other than
the Business as of the date hereof. For
this purpose, "use" in a business area
shall mean that the technology in
question is an element of a current or
contemplated product in that area, has
been the subject of research activities
or a demonstration project in that area,
or is the subject of a license to a
third party other than IBM or Cray for
use in that area. A list of Assigned
Patents is attached as Schedule 1.
Digital Licensed Patents All ideas, inventions, patent
applications and letters patent owned or
controlled by Digital as of the date
hereof, whether or not they arose from
the Business, which are used by Digital
both in the Business and in other
businesses. For this purpose, "use" in
a business area shall mean that the
technology in question is an element of
a current or contemplated product in
that area, has been the subject of
research activities or a demonstration
project in that area, or is the subject
of a license to a third party other than
IBM or Cray for use in that area. A
list of Digital Licensed Patents is
attached as Schedule 2.
Licensed Field The design, manufacture and marketing of
computer disk drive, tape storage and
solid state disk products.
Article 1. - Assignment
a. Digital hereby assigns the Assigned Patents, subject to
any existing licenses, to Quantum, and Quantum hereby accepts
such assignment.
b. Quantum shall bear all costs of prosecution and
maintenance of the Assigned Patents arising after the date of
this Agreement.
Article 2. - License Grant
a. Subject to all existing licenses, Digital hereby grants
to Quantum a fully paid-up, irrevocable, transferable, world-wide
license under the Digital Licensed Patents to make, have made,
manufacture, use, lease and sell or otherwise dispose of
products, components, parts and other material, or practice any
method or process covered by any claims of the Digital Licensed
Patents, for use in the Licensed Field. Such license is
exclusive in the Licensed Field, even as to Digital, and includes
the right to grant sublicenses within the Licensed Field.
b. Quantum hereby grants to Digital a fully paid-up,
irrevocable, non-exclusive, world-wide license under the Assigned
Patents, without the right to grant sublicenses, to make, have
made, manufacture, use, lease and sell or otherwise dispose of
all products, components, parts and other material or practice
any method or process covered by any claims of the Assigned
Patents for use outside the Licensed Field. Such license is non-
transferable except in connection with the sale by Digital of one
or more business units, in which case such license may be
transferred with respect to the Assigned Patents pertinent to the
business unit in question.
c. Digital hereby assigns to Quantum its rights under all
third party licenses previously granted by Digital with respect
to the Assigned Patents within the Licensed Field, a list of
which is attached hereto as Schedule 3.
d. Neither party is obligated under any terms of this
agreement or the Purchase Agreement to prosecute or maintain any
patents assigned or licensed hereunder and may abandon same.
e. Digital shall retain exclusive control over prosecution
of any alleged infringement of the Digital Licensed Patents
outside of the Licensed Field. Within the Licensed Field,
Digital shall have the first right, but no obligation, to
prosecute alleged infringement of the Digital Licensed Patents.
If Digital fails to bring an action against an alleged infringer
within the Licensed Field within 120 days following notice from
Quantum, Quantum may, but shall not be obligated to, prosecute
any such alleged infringement of the Digital Licensed Patents.
Either party bringing an action to enforce the Digital Licensed
Patents within the Licensed Field shall indemnify hold harmless
the other party from any loss, cost or expense arising from the
action. In any prosecution of alleged infringement within the
Licensed Field under this paragraph 2(e), the party bringing the
action shall do so at its own expense and shall be solely
entitled to recovery of any money damages.
Article 3. - Representation Warranties and Indemnities
a. Digital represents and warrants that (i) it owns all
right, title, and interest in and to the Assigned Patents
assigned to Quantum under Section 1.1 hereof and that the
Assigned Patents constitute all of the patent rights (other than
those rights which have been abandoned) arising from Digital's
conduct of the Business prior to the date hereof, (ii) it owns
right, title, and interest in and to the Digital Licensed Patents
necessary to grant the licenses to Quantum under Section 2.a
hereof, (iii) it has full power and authority to undertake the
obligations set forth in this Agreement and that it has not
entered into any other agreements, nor will it enter into any
other agreements, that would render it incapable of
satisfactorily performing its obligations hereunder, or that
would place it in a position of conflict of interest or be
inconsistent or in conflict with its obligations hereunder, and
(iv) by entering into this Agreement it will not violate or
conflict with the terms or provisions of any agreement to which
it is a party.
b. DIGITAL MAKES NO REPRESENTATION OR WARRANTY WITH
RESPECT TO THE ASSIGNED PATENTS AND DIGITAL LICENSED PATENTS
OTHER THAN THOSE SET FORTH IN THIS SECTION. THE WARRANTY STATED
HEREIN IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY EXPRESS OR IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
DIGITAL SHALL NOT BE LIABLE FOR LOST PROFITS, LOSS OF GOODWILL,
OR ANY PUNITIVE, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES
(WHETHER IN TORT, CONTRACT OR OTHERWISE) PURSUANT TO THIS
AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF THE SAME.
c. Quantum represents and warrants that (i) it has full
power and authority to undertake the obligations set forth in
this Agreement and that it has not entered into any other
agreements, nor will it enter into any other agreements, that
would render it incapable of satisfactorily performing its
obligations hereunder, or that would place it in a position of
conflict of interest or be inconsistent or in conflict with its
obligations hereunder, and (ii) by entering into this Agreement
it will not violate or conflict with the terms or provisions of
any agreement to which it is a party.
Article 4. - Post-Closing Adjustments
a. Schedules 1, 2 and 3 have been prepared by the parties
on the basis of the information available to them, and their
respective understanding of the facts, as of the date of this
Agreement. The parties recognize, however, that in the process
of reviewing the Digital portfolio of patent rights, errors or
omissions may have occurred in the preparation of such schedules.
In particular, Digital acknowledges that Quantum has not reviewed
the portfolio of Digital pending patent applications or
disclosures, except to the extent that pending applications have
published outside the United States. If, on or before the first
anniversary of the date of this Agreement, or within six months
following the issuance of a United States patent which is
entitled to a filing date prior to the first anniversary of the
date of this Agreement which a party believes should be included
on a schedule, whichever is later, either party identifies what
it believes to be an error or omission on the Schedules, in view
of the criteria established above under "Definitions," it shall
notify the other party and identify the reason why it believes a
correction needs to be made. The parties shall review the facts
and negotiate in good faith any proposed changes. If the parties
fail to agree on a proposed change, either party may demand an
arbitration in accordance with Section 13.09 of the Acquisition
Agreement. Any assignment or license by Digital of patent rights
after the date of this Agreement shall be subject to the rights
of Quantum hereunder.
Article 5. - Applicable Law
a. This Agreement shall be governed by and be construed in
accordance with the laws of Massachusetts.
b. If any provisions of this Agreement is held invalid by
any rule, law, order, regulation or promulgation of any
government or by the final determination of any court, it shall
not affect any other provision of this Agreement which can be
given effect without such invalid provision or which are not
deemed void or unenforceable by such ruling, judgement, decree or
order.
Article 6. - General
a. Nothing contained in this Agreement shall be deemed or
construed to constitute or create between the parties hereto a
partnership, association, joint venture or other agency.
b. Digital shall prepare, execute and sign such documents
as required for the assignment of the Assigned Patents.
IN WITNESS HEREOF, the parties hereto have executed this
Agreement as of the date set forth at the outset hereof.
DIGITAL EQUIPMENT CORPORATION QUANTUM CORPORATION
By: /s/ JOSEPH T. RODGERS
Title: Executive VP, Finance
Chief Financial Officer and
Secretary
SCHEDULES
Schedules 1, 2 and 3 to the Patent Assignment and License
Agreement are attached. A preliminary list of
subject patents and patent applications has been prepared by
Digital and is attached hereto at the time of signing the
Purchase Agreement, but such list remains subject to review by
both parties.
<PAGE>
EXHIBIT E - SCHEDULE 3
Third Party Licenses
a) From Schedule 3.17
1. License Agreement between Dr. James White (Licensor) and
Digital Equipment Corporation (Licensee)
2. License Agreement between Mitachi, Maxell, Ltd. and Maxell Corp.
of American (Licensees) and Digital Equipment Corporation
(Licensor) dated December 1, 1993.
3. License Agreement between Fuji Photo Film U.S.A., Inc. (Licensee)
and Digital Equipment Corporation (Licensor) dated May 1,1994.
4. License Agreement between Minnesota Mining and Mfg. Company (Licensee)
and Digital Equipment Corporation (Licensor) dated January 1, 1989.
5. License Agreement between Anacomp, Inc. (Licensee) and Digital
Equipment Corporation (Licensor) dated February 1, 1989.
b) Letter from A. Cefalo to D. Harrison dated September 15, 1994
regarding the TK50 cartridge mechanism.
1. Archive Corporation dated October 16, 1984.
2. Kennedy Company dated October 15, 1984.
3. Pertec Peripherals Corporation dated October 18, 1984.
4. Data General Corporation ated September 5, 1984.
5. Perex Ltd. dated December 17, 1984.
6. Teac Corporation dated November 15, 1985.
7. Wangtek, Inc. dated July 24, 1984.
c) TK50 Cartridge License
1. License Agreement between Digital Equipment Corporation (Licensor)
and Minnesota Mining and Mfg. Company (Licensee) dated February 1,
1984.
d) From Litigation Schedule 3.12
1. Digital v. Micro Technology, Inc.
<TABLE>
<CAPTION>
QUANTUM ACQUISITION ASSIGNED PATENTS
<S> <C> <C> <C> <C> <C>
<C>
Docket # Patent # Issue Date Serial # Filing Date Countries
Technology
5,198,073 03/30/93 07/733,546 07/22/91 G.1 MAGNETIC
MEDIA MFG
4,101,969 07/18/78 803,524 06/06/77
4,390,912 06/28/83 206,008 11/12/80
23-004 4,503,420 03/05/85 CA, EPO, JP, E. ERROR CORRECTION
CODE
AU, AT, BE,
GB, DE, FR, NL
23-005 4,495,529 01/22/85 A.1 DISKS READ/WRITE/ B.
TAPES
23-006 4,484,142 11/20/84 A.1 DISKS READ/WRITE
23-033 4,695,351 09/22/87 KR, JP, EPO, D.4 MFG.
TW
53-007 4,503,530 03/05/85 A.5 DISKS
83-207 4,208,679 06/17/80 882,127 02/28/78
83-210 4,231,071 10/28/80 925,534 07/17/78 A.1 DISKS READ/WRITE
83-233 CONT1 4,321,632 05/23/82 148,055 05/19/80
83-234 4,413,339 11/01/83 E. ERROR CORRECTION CODE
83-235 4,260,914 04/07/81 JP, FR, GB, E. ERROR CORRECTION
CODE
CA, DE
83-243 4,346,416 08/24/82 126,129 02/29/80
83-244 4,338,642 07/06/82 136,541 04/02/80 A. 5 DISKS
83-245 CONT1 4,422,115 12/20/83 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
83-252 4,380,723 04/19/83 46,130 06/05/79
83-260 COT1 ETC 5,109,307 04/28/92 CA, EPO, FI, A.2 DISKS SERVO
DE, AT, BE,
SE, JP, GB,
AU, NL, FR
83-260 DIV1 5,153,786 10/06/92 A.2 DISKS SERVO
83-260 DIV10 5,115,360 05/19/92 A.2 DISKS SERVO
83-260 DIV11 5,187,619 02/16/93 A.2 DISKS SERVO
83-260 DIV2 5,202,802 04/13/93 A.2 DISKS SERVO
83-260 DIV3 5,153,787 10/06/92 A.2 DISKS SERVO
83-260 DIV4 5,136,440 08/04/92 A.2 DISKS SERVO
83-260 DIV5 5,095,471 03/10/92 A.2 DISKS SERVO
83-260 DIV6 5,099,367 03/24/92 A.2 DISKS SERVO
83-260 DIV7 5,220,468 06/15/93 A.2 DISKS SERVO
83-260 DIV8 5,115,359 05/19/92 A.2 DISKS SERVO
83-260 DIV9 5,247,398 09/21/93 A.2 DISKS SERVO
83-261 4,536,809 08/20/85 JP, AU, BE, A.2 DISKS SERVO
CA, FI, SE
83-274 4,500,958 02/19/85 370,572 04/21/82
83-319 CONT1 4,874,975 10/17/89 127,625 12/01/87
83-326 4,622,516 11/11/86 07/505,047 JP, CA, AU, A.5 DISKS
EPO, GB,SE
FR,IT,CH,DE,
BE, AT
83-332 4,631,611 12/23/86 IT, EPO, IE, A.5 DISKS
SE,CA, AU,
HK, SG, FR
83-333 4,572,460 02/25/86 IT, KR, SE, B. TAPES
CA, AT, IE,
TW, EPO, NL,
AU, DE, JP, FR,
CH
83-334 4,662,049 05/05/87 AU, IT, KR, B. TAPES
JP, CA, TW,
EPO, SE, IE,
NL, FR, CH,
GB, BE, AT
83-334 CIP 4,720,913 01/26/88 B. TAPES
83-342 4,633,488 12/30/86 NL, AU, IT, B. TAPES
JP, EPO, TW,
CA, FR, DE,
KR
83-355 4,630,158 12/16/86 CA D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS / A.5 DISKS
83-356 4,581,109 04/08/86 560,478 12/12/83 G.1 MAGNETIC MEDIA
MFG
83-356 DIV1 4,619,872 10/28/86 06/813,594 12/26/85 G.1 MAGNETIC
MEDIA
MANUFACTURING / G.2
MAGNETIC MEDIA DESIGN
83-360 CONT1 4,809,110 02/28/89 JP, IT, SE, B. TAPES
AU,EPO, CA,
NL, TW, KR, IE
83-365 4,985,985 01/22/91 06/69,408 07/01/87 EPO, NL, SE, D.1
INDUCTIVE HEADS
IT, JP, CA, INCLUDING FERRITE & THIN
DE FILM HEADS
83-366 CONT1 4,885,649 12/05/89 EPO, CA, TW, D.2 MAGNETO
KR, JP
83-366 CONT1 5,081,554 01/14/92 07/534,371 06/06/90 D.2 MAGNETO
83-366 CONT1 CIP1 5,111,352 05/05/92 D.2 MAGNETO
83-366 DIV CONT 4,972,287 11/20/90 07/449,133 12/08/89 D.1 INDUCTIVE
HEADS
INCLUDING FERRITE & THIN
FILM HEADS
83-366CONT2 CIP1 5,159,511 01/27/92 07/546,368 06/29/90 D.2 MAGNETO
83-367 CIP1 5,221,422 06/23/93 D.4 MFG.
83-367 CONT 4,877,480 10/31/89 KR, JP, EPO, D.4 MFG.
TW
83-368 4,884,155 11/28/89 D.5 FIXTURES & ACTUATORS
83-368 DIV1 4,975,795 12/04/90 07/406,692 09/13/89 D.5 FIXTURES &
ACTUATORS
D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
83-370 4,656,546 04/07/87 06/693,522 01/22/85 D.1 INDUCTIVE
HEADS
INCLUDING FERRITE & THIN
FILM HEADS
83-370 RE CONT1 RE33,949 06/02/92 DE, EPO, GB D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
83-378 4,856,003 08/08/89 EPO, KR, JP,
AU, CA E. ERROR CORRECTION CODE
86-040 4,975,867 12/04/90 CN, KR, AU,
MX, CA E. ERROR CORRECTION CODE
86-041 4,914,535 04/03/90 EPO, JP E. ERROR CORRECTION CODE
86-042 CONT 4,866,716 09/12/89 KR, CA, AI,
JP, EPO, MX E. ERROR CORRECTION CODE
86-043 4,847,705 07/11/89 US, EPO, CA E. ERROR CORRECTION
CODE
86-080 4,975,930 12/04/90 CA, EPO B. TAPES
86-087 4,908,826 03/13/90 06/141,061 01/05/88 E. ERROR
CORRECTION CODE
86-122 CONT 5,237,574 08/17/93 E. ERROR CORRECTION CODE
87-0070 CONT 5,176,965 01/05/93 NL, EPO, JP, G.2 MAGNETIC MEDIA
DE DESIGN
87-019 4,705,257 11/10/87 06/29,328 03/2387 A. 5 DISKS
87-022 5,131,619 07/21/92 A.5 DISKS
87-046 5,107,503 04/21/92 EPO, CA, JP E. ERROR CORRECTION
CODE
87-052 4,829,267 05/09/89 A.2 DISKS SERVO
87-054 4,828,966 05/09/89 06/128,947 12/04/87 JP, EPO D.1
INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS / D.4 MFG
87-055 4,908,841 03/13/90 EPO, CA A.1 DISKS READ/WRITE
87-060 5,097,468 03/17/92 US E. ERROR CORRECTION CODE
87-067 4,907,113 03/06/90 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
87-067 CONT1 ETC 5,103,553 04/14/92 IN, BR, AU, D.1 INDUCTIVE HEAD
JP, MX, KR, INCLUDING FERRITE
CA, TW, CN & THIN FILM HEADS
87-067 DIV2 5,311,387 05/10/94 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
87-068 CONT 5,108,837 04/28/92 EPO, DE D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
87-069 4,795,275 01/03/89 A.5 DISKS
87-069 CONT1 DIV1 5,067,528 11/26/91 A.5 DISKS
87-069 DIV1 CONT1 5,112,142 05/12/92 CA, FR, GB, A.5 DISKS
JP
87-080 4,788,465 11/29/88 07/95,530 09/10/87 A. 5 DISKS
87-107 4,918,548 04/17/90 B. TAPES
87-108 4,806,792 02/21/89 A.1 DISKS READ/WRITE
87-109 4,769,588 09/06/88 A.1 DISKS READ/WRITE
87-113 5,020,040 05/28/91 06/65,931 06/24/87 I. OPTICAL
87-123 4,849,711 07/18/89 CA A.1 DISKS READ/WRITE
87-124 4,947,275 08/07/90 A.6 DISKS SERVO WRITERS
87-137 4,912,584 03/27/90 JP, EPO D.4 MFG.
88-0027 5,120,603 06/09/92 07/369,713 06/22/89 I. OPTICAL
88-0029 4,821,130 04/11/89 A.5 DISKS
88-0036 4,816,119 03/28/89 06/92,952 09/04/87 G.1 MAGNETIC
MEDIA MFG
88-0038 4,905,238 02/27/90 A.1 DISKS READ/WRITE
88-0076 4,970,616 11/13/90 JP, EPO, CA D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
88-0077 5,266,409 11/30/93 07/344,990 04/28/89 G.2 MAGNETIC
MEDIA
DESIGN
88-0079 CONT1 5,068,959 12/03/91 JP, CA, EPO D.4 MFG.
88-0080 4,968,985 11/06/90 CA, EPO A.3 DISKS / A.1 DISKS
READ/WRITE
88-0080 DIV1 5,182,444 01/26/93 606,101 10/31/90
88-0125 5,105,408 04/14/92 I. OPTICAL
88-0126 5,003,420 03/26/91 EPO, CA, JP A.5 DISKS
88-0127 5,016,131 05/14/91 343,907 04/26/89
88-0128 CON1 5,053,892 10/01/91 EPO, CA, JP A.1 DISKS READ/WRITE
88-0129 5,309,303 05/03/94 851,054 03/13/92
88-0129 CIP 5,097,370 03/17/92 07/663,192 02/28/91 D.3 SLIDERS
88-0142 4,912,583 03/27/90 A.5 DISKS
88-0159 RE RE34,003 07/21/92 E. ERROR CORRECTION CODE
88-0220 4,896,777 01/30/90 06/178,295 A. 5 DISKS
88-0223 4,864,198 09/05/89 B. TAPES
88-0250 5,153,870 10/06/92 07/374,010 06/29/89 I. OPTICAL
88-0312 4,900,650 02/13/90 JP D.4 MFG.
88-0336 4,954,788 09/04/90 07/453,356 12/18/89 EPO, FR, DE, A.1
DISKS READ
GB, IT, NL, /WRITE / A. 3 DISKS
CA, JP CONTROLLERS & FIRMWARE
& CONTROL
88-0337 5,036,408 07/30/91 CA, EPO, JP A.3 DISKS CONTROLLERS
&
FIRMWARE & CONTROL
88-0347 4,935,832 06/19/90 JP, CA, EPO D.4 MFG.
88-0347 CONT 5,075,956 12/31/91 07/517,558 04/24/90 D.4 MFG.
88-0350 CONT1 5,301,329 04/05/94 C. RESERVED
88-0396 4,931,886 06/05/90 JP, CA D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
88-0400 5,191,563 03/02/93 373,939 06/29/89
88-0401 5,161,134 11/03/92 373,991 06/29/89
88-0424 CONT 5,001,715 03/19/91 EPO, JP, CA E. ERROR CORRECTION
CODE
88-0425 4,989,211 01/29/91 AU, EPO, AU, E. ERROR
JP, CA CORRECTION CODE
88-0482 4,908,721 03/13/90 CA A.1 DISKS READ/WRITE
88-0508 5,089,334 02/18/92 JP, CA, EPO D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
88-0508 CIP 5,085,935 02/04/92 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
89-0007 5,023,991 06/18/91 EPO, CA D.4 MFG.
89-0007 DIV 5,175,938 01/05/93 D.4 MFG.
89-0009 4,890,172 12/26/89 06/250,037 09/27/88 A.2 DISKS SERVO
89-0043 CON1 5,031,054 07/09/91 A.1 DISKS READ/WRITE
89-0076 4,928,075 05/22/90 A.1 DISKS READ/WRITE
89-0077 CONT1 5,330,881 07/19/94 D.4 MFG
89-0080 4,987,292 01/22/91 07/365,243 06/12/89 I. OPTICAL
89-0117 5,136,592 08/04/92 EPO, JP, CA A.3 DISKS CONTROLLERS
&
FIRMWARE & CONTROL
89-0147 4,963,836 10/16/90 A.1 DISKS READ/WRITE
89-0149 5,121,260 06/09/92 A.1 DISKS READ/WRITE
89-0151 5,103,352 04/07/92 A.1 DISKS READ/WRITE
89-0196 CIP 5,184,267 02/02/93 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
89-0196 CIP 5,311,386 05/10/94 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
89-0196 CONT1 5,195,005 03/16/93 CA, EPO, JP D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
89-0197 5,134,535 07/28/92 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
89-0201 4,987,355 01/22/91 CA, EPO, JP A.1 DISKS READ/WRITE
89-0202 5,184,125 02/02/93 07/798,858 11/22/91 E. ERROR
CORRECTION CODE
89-0226 DIV1 5,178,934 01/12/93 07/540,847 06/20/90 G.2 MAGNETIC
MEDIA
DESIGN
89-0237 CIP 5,313,464 05/17/94 878,749 05/05/92
89-0241 5,128,809 07/07/92 A.3 DISKS CONTROLLERS &
FIRMWARE & CONTROL
89-0242 5,115,363 05/19/92 08/482,027 02/16/90 D.1 INDUCTIVE
HEADS
INCLUDING FERRITE & THIN
FILM HEADS
89-0266 5,119,043 06/02/92 07/544,506 06/27/90 A. 3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
89-0267 5,243,241 09/07/93 07/494,171 03/15/90 I. OPTICAL
89-0292 5,242,761 09/07/93 JP, EPO G.2 MAGNETIC MEDIA
DESIGN
90-0015 5,272,394 12/21/93 07/925,904 08/06/92 A. 3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
90-0031 4,949,194 08/14/90 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
90-0032 5,055,959 10/08/91 462,562 01/09/90
90-0038 Des.319,050 08/13/91
90-0072 5,283,875 02/01/94 07/509,037 04/13/90 A. 3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
90-0073 5,065,053 11/12/91 CA, EPO, JP A.1 DISKS READ/WRITE
90-0074 5,093,628 03/03/92 CA, EPO, JP A.1 DISKS READ/WRITE
90-0117 5,107,506 04/21/92 EPO E. ERROR CORRECTION CODE
90-0121 Des.332,256 01/05/93
90-0144 5,249,090 09/28/93 DE A.5 DISKS
90-0145 CONT1 5,319,512 06/07/94 A.5 DISKS
90-0147 5,239,423 08/24/93 A.1 DISKS READ/WRITE
90-0153 5,247,510 09/21/93 07/545,873 06/29/90 I. OPTICAL
90-0182 5,147,679 09/15/92 07/629,191 12/26/90 G.2 MAGNETIC
MEDIA
DESIGN
90-0182A DIV1 5,226,966 07/13/93 07/797,504 03/02/92 G.2 MAGNETIC
MEDIA
DESIGN
90-0185 5,224,106 06/29/93 EPO, CA E. ERROR CORRECTION CODE
90-0224 5,162,955 11/10/92 546,386 06/29/90
90-0279 5,128,216 07/07/92 JP, CA, EPO G.2 MAGNETIC MEDIA
DESIGN
90-0304 5,157,570 10/20/92 JP, EPO, CA D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
90-0304 DIV1 5,314,596 05/24/94 888,105 05/26/92 A.5 DISKS
90-0308 5,095,613 03/17/92 REISSUE APP. D.4 MFG.
90-0311 5,153,789 10/06/92 A.2 DISKS SERVO
90-0313 CONT 5,305,161 04/19/94 A.2 DISKS SERVO
90-0317 5,182,752 01/26/93 C. RESERVED
90-0339 5,155,422 10/13/92 A.2 DISKS SERVO
90-0340 5,153,794 10/06/92 A.7 DISKS MFG.
90-0358 5,105,322 04/14/92 B. TAPES
90-0359 5,231,552 07/27/93 B. TAPES
90-0361 Des.337,760 07/27/93
90-186 CONT1 5,246,294 09/21/93 A.5 DISKS
91-0007 DIV 5,240,740 08/31/93 08/988,370 12/09/92 D.1 INDUCTIVE
HEADS
INCLUDING FERRITE & THIN
FILM HEADS
91-0009 5,208,518 05/04/93 07/792,848 11/15/91 BE A.2 DISKS
SERVO/B. TAPES
91-0011 5,173,828 12/22/92 619,893 11/29/90
91-0013 5,210,829 05/11/93 626,793 12/12/93
91-0015 5,088,172 02/18/92 620,465 11/29/90
91-0015DIV1 5,199,168 04/06/93
91-0066 5,148,338 09/15/92 612,768 11/14/90
91-0070DIV1 5,333,086 07/26/94 38,330 03/29/93
91-0080 5,214,553 05/25/93 693,449 04/29/91
91-0107 5,263,030 11/16/93 B. TAPES
91-0116 5,200,866 04/06/93 JP A.5 DISKS
91-0118 5,276,569 01/04/94 A.3 DISKS CONTROLLERS &
FIRMWARE & CONTROL
91-0146 5,216,655 06/01/93 07/721,061 06/26/91 A.7 DISKS MFG.
91-0148 5,193,039 03/09/93 D.2 MAGNETO
91-0219 5,121,085 06/09/92 A.1 DISKS READ/WRITE
91-0246 5,232,570 08/03/93 G.2 MAGNETIC MEDIA
DESIGN
91-0248 5,229,901 07/20/93 D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
91-0251 5,134,366 07/28/92 D.4 MFG / D.1 INDUCTIVE
HEADS INCLUDING FERRITE
& THIN FILM HEADS
91-0252 5,278,703 01/11/94 EPO A.3 DISKS CONTROLLERS &
FIRMWARE & CONTROL
91-0278 5,267,112 11/30/93 JP, EPO D.1 INDUCTIVE HEADS
INCLUDING FERRITE & THIN
FILM HEADS
91-0364 5,112,662 05/12/92 07/772,476 10/07/91 I. OPTICAL
91-0366 5,307,217 04/26/94 B. TAPES
91-0371 5,225,790 07/06/93 A.1 DISKS READ/WRITE
92-0015 5,223,710 06/29/93 07/847,463 03/06/92 I. OPTICAL
92-0019 5,321,703 06/14/94 DE, GB A.3 DISKS CONTROLLERS &
FIRMWARE & CONTROL
92-0069 5,307,336 04/26/94 07/847,116 03/06/92 I. OPTICAL
92-0073 5,260,926 11/09/93 I. OPTICAL
92-0074 5,243,495 09/07/93 07/856,006 03/20/92 A.5 DISKS
92-0111 5,331,496 07/19/94 837,357 02/14/92
92-0220 4,366,512 12/28/82 A.6 DISKS SERVO WRITERS
92-0224 5,202,860 04/13/93 07/266,441 11/02/88 I. OPTICAL
92-0227 5,306,994 04/26/94 A.2 DISKS SERVO
92-0248 4,325,090 04/13/82 CA, DE, EPO, A.1 DISKS READ/WRITE
GB, FR, IT
92-0252 4,072,991 02/07/78 B. TAPES
92-0255 4,391,035 07/05/83 JP A.5 DISKS
92-0309 5,289,328 02/22/94 B. TAPES
92-0413 5,223,996 06/29/93 A.5 DISKS
92-0482 5,274,509 12/28/93 A.1 DISKS READ/WRITE
93-0401 5,333,097 07/26/94 900,329 06/18/92
D-054 4,196,375 04/01/80 892,236 03/31/78
D-155 4,137,504 01/30/79 A.1 DISKS READ/WRITE
D-213 4,172,267 10/23/79 A.2 DISKS SERVO
D-224 4,183,066 01/08/80 925,596 07/17/78
D-387 CIP 4,383,283 05/10/83 191,834 09/29/80
D-662 4,965,780 10/23/90 06/84,577 08/12/87 I. OPTICAL
D-674 4,875,635 10/24/89 104,814 10/02/87
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quantum Acquisition Assigned U.S. Patent Applications
<S> <C> <C> <C> <C> <C>
<C>
Docket # Patent # Issue Date Serial # Filing Date Countries
Technology
83-366 CONT1 08/106,469 08/11/93 RMMI ?
D.2 MAGNETIC
87-0070DIV 07/945,706 09/16/92
87-039 CONT1 07/831,615 02/06/92 CA, JP,
EPO D.4 MFG.
88-0077 DIV1 08/114,917 09/01/93
88-0129 07/663,192 03/13/92 D.3 SLIDERS
88-0321 07/365,244 06/12/89
88-0350 CONT2 08/170,846 12/21/93 US C. RESERVED
88-0509 CONT1 08/017,998 02/16/93 EPO, JP, CA,
D.1 INDUCTIVE HEADS
US INCLUDING FERRITE
& THIN FILM HEADS
89-0196CIP1CI 08/181,582 US
89-0196CIP1DIV1 08/145,469
89-0237 07/376,357 07/06/89 JP, EPO
90-0031 DIV 07/518,907 05/04/90
90-0308RE 08/056,515
90-0312CONT2 08/259,361 US
90-0338 07/736,414 07/06/89
90-0342 07/686,729 04/17/91 D.5 FIXTURES
& ACTUATORS
91-0007 CONT1 08/038,330 03/29/93 D.1
INDUCTIVE HEADS
INCLUDING FERRITE
& THIN FILM HEADS
91-0033CONT1 07/967,958 10/27/92
91-0034 CONT1 08/077,711 06/15/93 A.6 DISKS
SERVO WRITERS
91-0068 07/652,870 02/08/91 F. SOLID
STATE
91-0087 07/723,149 US
91-0108CONT1 08/163,397 12/06/93 US
91-0210 CONT1 08/191,758 01/31/94 A.2 DISKS
SERVO
91-0244 08/141,906 10/22/93 A.3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
91-0365 CONT 08/222,491 06/24/92 B. TAPES
91-0368 07/772,475 10/07/91 US
91-0372 07/843,540 02/28/92 A.1 DISKS
READ/WRITE
91-0442 07/866,996 04/07/92 A.1 DISKS
READ/WRITE
92-0011 07/837,053 02/18/92 US D.1
INDUCTIVE HEADS
INCLUDING FERRITE
& THIN FILM HEADS
92-0021 07/847,113 03/06/92 GB, DE I.
OPTICAL
92-0062 07/905,749 06/26/92 US A.1 DISKS
READ/WRITE
92-0070 CONT 08/115,967 09/01/93 US H. RESERVED
92-0072 07/847,455 03/06/92 I. OPTICAL
92-0072CIP1 02/16/94 I. OPTICAL
92-0073CONT 08/079,484 06/18/93 I. OPTICAL
92-0111 DIV 08/132,016 10/05/93 D.1
INDUCTIVE HEADS
INCLUDING FERRITE
& THIN FILM HEADS
92-0224 CIP 08/020,515 02/22/93 EPO, JP I.
OPTICAL
92-0225 07/847,557 03/06/92 I. OPTICAL
92-0225 CIP 08/209,690 03/10/94 I. OPTICAL
92-0226 07/880,929 05/11/92 A.2 DISKS
SERVO
92-0229 07/918,208 07/20/92 JP, NL, DE, D.4
MFG.
GB, KR, TW
92-0305 DIV 08/212,371 03/11/94 A.5 DISKS
92-0307 CONT2 05/06/94
92-0384 CONT 08/212,334 03/14/94
92-0400 07/889,157 05/27/92 G.1 MAGNETIC
MEDIA MFG
92-0401 07/894,001 06/03/92 H. RESERVED
92-0412 07/870,135 04/16/92 A.3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
92-0414 07/855,990 03/20/92 A.5 DISKS
92-0475 08/054,652 04/23/93 A.2 DISKS
SERVO
92-0480 08/064,286 05/18/93 US E. ERROR
CORRECTION CODE
92-0481 08/023,274 02/26/93 GB, CN JP KR
D.4 MFG.
92-0515 08/089,141 07/07/93 D.4 MFG.
92-0516 08/089,142 07/07/93 D.4 MFG.
92-0523 08/052,495 04/22/93 H. RESERVED
92-0547 07/903,642 06/24/92 JP, GB, PCT, DE
B. TAPES
92-0555 08/014,962 02/08/93 US A.5 DISKS
93-0037 08/054,657 04/23/93 EPO
93-0038 08/060,388 5/11/93 A.2 DISKS
SERVO
93-0039 08/086,528 07/11/93 D.5 FIXTURES
& ACTUATORS
93-0040 08/033,271 04/16/93 H. RESERVED
93-0067 08/075,964 06/14/93 D.3 SLIDERS
93-0080 08/088,691 07/07/93 I. OPTICAL
93-0127 08/082,608 06/24/93 A.3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
93-0132 08/029,125 03/10/93 D.4 MFG.
93-0197 08/090,378 07/12/93 US A.1 DISKS
READ/WRITE
93-0201 08/135,098 10/12/93 B. TAPES
93-0203 08/084,349 06/28/93 A.1 DISKS
READ/WRITE
93-0264 08/123,502 09/17/93
93-0286 07/01/94 D.5 FIXTURES
& ACTUATORS
93-0353 08/088,933 07/07/93 I. OPTICAL
93-0354 08/223,415 04/05/94 A.3 DISKS
CONTROLLERS &
FIRMWARE & CONTROL
93-0356 08/131,836 10/05/93 A.7 DISKS
MFG.
93-0357 05/03/94 B. TAPES
93-0361 08/094,661 07/19/93 B. TAPES
93-0362 08/094,413 07/19/93 B. TAPES
93-0363 08/094,272 07/19/93 B. TAPES
94-0017 08/149,583 11/09/93 D.5 FIXTURES
& ACTUATORS
94-0018 08/130,047 09/30/93 F. SOLID
STATE DISKS
94-0097 06/28/94 D.4 MFG.
94-0183 08/259,217 06/13/94
</TABLE>
Quantum Acquisition Licensed Patents
Docket # Patent # Issue Date Application # Filing Date Countries
08/133,685 10/07/93
83-204 CA, JP, FR, GB
88-0343 JP, EPO, CA
89-0067CIP1 07/485,216 02/26/90
90-0315CONT1 08/200,931 02/22/94
90-0371 07/587,971 09/25/90 EPO, JP
91-0299 07/976,238 11/13/92 EPO
92-0128 07/828,358 01/30/92 EPO
92-0352 07/957,977 10/07/92 EPO
92-0385 CONT 08/240,795 05/10/94
92-0385 CONT 08/240,795 05/10/94
93-0039 08/086,528 07/01/93
93-0069 08/008,337 01/25/93
93-0115
94-0135
94-0184
83-189 4,055,851 10/25/77
83-189DIV2 4,149,239 04/10/79 845,220 10/25/77
83-189DIV1 4,151,593 04/24/79
D-208 4,258,967 03/31/81
83-204CP1 4,290,102 09/13/81
83-256 4,381,542 04/26/83 GB, IT, DE CA,
EPO
83-279 4,384,363 05/17/83
83-273 4,434,487 04/28/84 JP, CA, EPO
83-269 4,449,182 05/15/84 CA, JP, EPO, DE
83-268 4,475,212 10/02/84 AU, CA, JP, BE,
GB, FR, DE, NL,
IT, SE
83-299 4,490,785 12/25/84 CA, JP, DE, GB,
FR
83-274 4,500,958 02/19/85 06/370,572 04/21,82 EPO, DE, IT, GB
83-275 4,509,115 04/02/85
83-304 4,543,626 09/24/85 AU, CA, FI, JP
83-344 4,669,061 05/26/87
83-358 4,700,330 10/13/87 06/792,756 10/30/85
83-374 4,715,036 12/22/87
87-015 4,749,164 06/07/88
87-106 4,782,487 11/01/88 06/50,847 05/15/87
83-280CIP 4,811,279 03/07/89 07/58,591 03/09/87
87-105 4,817,095 03/28/89 KR, IE, EPO, GB,
JP, DE, FR
D-633 4,822,467 04/18/89 06/113,872 10/27/87
88-0339 4,841,219 06/20/89
87-051 4,846,006 07/11/89
87-043 4,881,075 11/14/89
D-670CONT1 4,954,946 09/04/90
89-0228 4,963,766 10/16/90 JP, IT, DE, GB,
FR, CA
86-101 4,980,850 12/25/90
88-0295 4,980,888 12/25/90 CA
88-0395 5,008,886 07/14/91 EPO, CA, JP
88-0343CONT1 5,033,048 07/16/91
90-0189 5,036,493 07/30/91
90-0033 5,055,910 10/28/91
88-0307 5,070,502 12/03/91
89-0207 5,099,484 03/24/92 07/364,242 03/09/89
88-0523 5,125,086 06/23/92
92-0342 5,164,916 11/17/92 08/861,276 03/31/92
D-670CONT1-DIV15,168,558 12/01/92
86-101CONT1 5,175,836 12/29/92
90-0033 CONT1 5,191,404 03/02/93 07/767,571 09/30/91
91-0421 5,199,743 04/06/93 07/834,013 02/10/92
91-0123 5,204,963 04/20/93 07/626,586 12/07/90
92-0322 5,216,672 06/01/93
89-0122 5,217,198 06/08/93
88-0205 5,239,635 08/24/93
90-0314 5,247,522 09/21/93 07/618,671 11/27/90
90-0337CIP1 5,255,381 10/19/93 CA, EPO, JP
90-0316 5,263,160 11/16/93 07/648,079 01/31/91
91-0087 5,274,783 12/28/93
90-0152 5,287,517 02/15/94 07/874,322 04/24/92
91-0453 5,305,389 04/19/94
92-0075 5,309,569 05/03/94 EPO
90-0337 5,313,623 05/17/94 CA, EPO, JP
89-0067CIP1CONT1 5,339,449 08/16/94
90-0039 D327,477 06/30/92
FOR RELEASE: July 19, 8:30 AM, EDTContacts: Quantum:
Catherine Hartsog, Director of Corporate Communications (408) 894-4334
Digital: Gloria Bates, Storage Business Unit (508) 841-6554
QUANTUM ACQUIRES SIGNIFICANT PORTIONS OFDIGITAL'S STORAGE BUSINESS
Acquisition Positions Quantum for Stronger Leadership Position in Industry,
Enables Digital to Sharpen Focus on Core Businesses MILPITAS, Calif., July
19, 1994: Quantum Corporation (NMS:QNTM) and Digital Equipment Corporation
(NYSE:DEC) today announced that they have signed an agreement for Quantum to
purchase Digital's magnetic disk drive, tape drive, solid state disk, and
thin-film heads businesses for $400 million. The transaction includes
Digital's 81% interest in Rocky Mountain Magnetics, Inc., one of the industry
leaders in the development of magneto-resistive head technology. The
transaction has been approved by the boards of directors of both companies,
but is still subject to appropriate government approval. It is expected to
close on or about October 1, 1994. In conjunction with this transaction,
Quantum and Digital will sign a supply agreement providing Quantum a
substantial percentage of Digital's internal hard disk drive requirements for
its StorageWorks subsystems and core computer systems businesses. The
specific terms of the supply agreement were not disclosed. According to
William J. Miller, Quantum's chairman and chief executive officer, this
transaction is a key step in solidifying Quantum's leadership position in the
storage industry. "We are very excited about the opportunities this
transaction presents for Quantum. Both Quantum and Digital have built strong
high-capacity drive programs based on superior technical capabilities and
strong customer acceptance. The combination of our companies' programs gives
us the critical mass to be a significant force in the high-capacity
marketplace," said Miller. "Another important benefit for Quantum is the
acquisition of Digital's expertise in developing and manufacturing traditional
thin-film and magneto-resistive heads," Miller said. "Our ownership position
in Rocky Mountain Magnetics will give us direct access to magneto-resistive
technology which is a critical technology for achieving the areal density
increases the industry will see over the next several generations of drives.
In addition, the vertical integration in heads will help us in our efforts to
continue lowering our costs." Robert B. Palmer, Digital's president and chief
executive officer, said, "Quantum's strong and growing position in the storage
market and its reputation as both a technology leader and an outstanding
employer make this transaction quite complementary and beneficial for our
customers as well as our affected employees. While these segments of our
Storage Business Unit have been highly successful and represent some of the
best technology in the world, this agreement enables Digital to sharpen our
focus on our core computer systems and components businesses and concentrate
our resources on providing our customers with Alpha AXP and Intel-based PCs,
workstations and servers, along with the networks, components and services
they need to implement open client/server computing environments."
Charles F. Christ, vice president of Digital's newly created Components
Division, said, "Digital's disk and tape drives business, along with the thin-
film heads business, are positioned to compete in worldwide markets. Their
strength and prospects for the future made the two segments a highly sought-
after operation. We consider Quantum the perfect choice to carry this
momentum forward." Christ said Digital will continue its business
activities in both the Storage Subsystems and Video and Interactive
Information Services areas, the two portions of the company's Storage Business
Unit not included in this transaction. "This agreement strengthens Quantum's
position as a major player in the storage marketplace," Christ said. "As a
purchaser of storage devices, we're pleased to have Quantum as an even
stronger supplier in the market." There are approximately 5,000 regular and
temporary Digital employees in the Digital businesses being purchased by
Quantum. Quantum will also purchase Digital facilities in Shrewsbury,
Massachusetts and Penang, Malaysia, while leasing facilities in Colorado
Springs, Colorado and Batam, Indonesia. "We are extremely proud of the
contribution these employees have made to the success of Digital's storage
business," said Christ. "We are confident that they will find Quantum to be
an outstanding employer." Added Miller, "We continue to focus on improving
our profitability in addition to growing our business. We intend to take full
advantage of the tremendous synergies between Digital's storage business and
Quantum, and will leverage the core competencies of each company as we work to
integrate the two businesses." Quantum Corporation is a leading supplier
of storage products for a broad range of computer platforms, serving OEM and
distribution customers worldwide. Widely recognized as the industry's
quality leader, Quantum is the largest supplier of hard disk drives worldwide
and has been ranked among the Fortune 500 since 1991. The company's sales for
the fiscal year ending March 1994 were $2.1 billion. Digital Equipment
Corporation is the world's leader in open client/server solutions from
personal computing to integrated worldwide information systems. Digital's
scalable Alpha AXP and Intel-based platforms, networking, software and
services, together with industry-focused solutions from business partners,
help organizations compete and win in today's global marketplace. Digital's
revenues for fiscal year 1993 were $14.4 billion.
Transaction Complete: Quantum Acquires Significant Page 1Portion of
Digital's Storage Businesses October 3, 1994Transaction Complete:
Quantum Acquires Significant Page 1Portion of Digital's Storage Businesses
October 3, 1994 - more - - more -FOR IMMEDIATE RELEASE
Contact: Catherine Hartsog Director, Corporate
Communications (408) 894-4334
TRANSACTION COMPLETE: QUANTUM ACQUIRESSIGNIFICANT PORTION OF DIGITAL'S
STORAGE BUSINESSES MILPITAS, Calif., October 3, 1994: Quantum
Corporation (NMS:QNTM) today announced that it has completed the purchase of
Digital Equipment Corporation's hard disk drive, tape drive, solid state disk,
and thin-film heads business for $360 million, subject to adjustments in
accordance with the agreement. The purchase is being financed with $290
million cash and bank debt and a note to Digital for $70 million. The
transaction includes Digital's 81% ownership position in Rocky Mountain
Magnetics, Incorporated, an industry leader in the development of
magnetoresistive head technology. According to William J. Miller, Quantum's
chairman and chief executive officer, this move puts Quantum in a position to
extend its leadership in the storage industry. "We now have the capabilities
necessary to develop a more significant position in the high-capacity, high-
performance segment of the market," Miller said. "We have a broader
technology portfolio, increased development resources, and access to critical
magnetoresistive head technology, all of which will be key factors as we move
to take advantage of the tremendous growth opportunities in the high-end
segments of the storage market. "In addition, we are pleased to be
bringing Digital's solid state disks and digital linear tape products to
market as part of the Quantum product portfolio," he continued. "These
products have significant competitive advantages which we believe will
translate to meaningful success in the marketplace." The two companies also
finalized a supply agreement covering Digital's internal storage requirements
for its core systems and StorageWorks businesses. The specific terms were not
disclosed, but the agreement guarantees Quantum a significant percentage of
Digital's internal hard drive, tape, and solid state requirements. "Digital
has been a consistent Quantum customer for the past three years, and we look
forward to strengthening that relationship and meeting their requirements
across a broader range of products," Miller said. Quantum also announced
changes in its organization to support its new and expanded business areas.
The company now has four business units which are defined by the markets they
serve: - The High Capacity Storage Group develops products for the
higher end workstation and server markets. This group, headed by Robert K.
Maeser, president, will now include Digital's disk drive business, and will
maintain development centers in Milpitas, California and Shrewsbury,
Massachusetts. - The Desktop and Portable Storage Group, headed
by Michael Brown, president, remains focused on drives designed for desktop
and notebook PCs. - The Recording Heads Group is a newly formed
organization headed by Ken Lee, Quantum's Chief Technical Officer and
executive vice president of technology and engineering. The Recording Heads
Groups encompasses Digital's thin-film heads business, including both its
Shrewsbury operations and Rocky Mountain Magnetics. Lee continues his
leadership of Quantum's advanced technology development efforts and overall
strategic technical direction. - The Specialty Storage Products Group
is a newly formed organization which comprises the digital linear tape, solid
state disk, and flash memory card businesses. It is headed by Gina Bornino as
vice president and general manager. She will also continue in her role as
vice president of corporate planning and development. "We have considerable
challenges ahead of us in integrating the businesses, but our fundamental
goals have not changed. We will continue to differentiate Quantum based on
the superior quality of our products and support capabilities and our ability
to ramp products quickly to meet customer volume requirements," Miller said.
"We also remain focused on improving our profitability and the return on the
capital invested in the business. We've led the industry in efficiency of
spending with expenses below 10% of sales the last few quarters. We intend to
maintain our leadership in that area and continue our efforts to lower our
overall cost structure as well," Miller said. Quantum Corporation is a
leading supplier of storage products for a broad range of computer platforms,
serving OEM and distribution customers worldwide. Widely recognized as the
industry's quality leader, Quantum is the largest supplier of hard disk drives
worldwide and has been ranked among the Fortune 500 since 1991. The company's
sales for the fiscal year ending March 1994 were $2.1 billion; sales for its
first fiscal 1995 quarter were $725 million. ###
