<PAGE> 1
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) MAY 16, 1997
-------------------------------
QUANTUM CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
DELAWARE 0-12390 94-2665054
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 MCCARTHY BOULEVARD, MILPITAS, CA 95035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 894-4000
-----------------------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 16, 1997, Quantum Corporation ("Quantum") and Matsushita-Kotobuki
Electronics Industries, Ltd. ("MKE") concluded a transaction to form a joint
venture company, MKE-Quantum Components LLC (f/k/a TA Diamond LLC), a Delaware
limited liability company (the "Joint Venture"). The Joint Venture will design,
develop and manufacture recording heads.
Under the terms of the transaction, Quantum agreed to assign, license
or lease substantially all of the assets related to its recording heads
operations, including all of Quantum's outstanding equity interests in Quantum
Peripherals Colorado, Inc. and P.T. Quantum Peripherals, Indonesia (subject to
government approval), to the Joint Venture in exchange for its ownership
interest in the Joint Venture. Matsushita Kotobuki Peripherals Corporation
("MKP"), a wholly-owned subsidiary of MKE, agreed to contribute $110 million
cash to the Joint Venture and paid $94 million cash to Quantum in exchange for
a 51% controlling ownership interest in the Joint Venture. In connection with
MKP's purchase of its ownership interest in the Joint Venture, the Joint
Venture agreed to assume approximately $51 million of debt payable to Quantum.
The terms of this transaction were agreed to in an arms-length negotiation
between Quantum and MKE.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information.
Giving effect to the above transaction described in Item 2 as if it had
occurred on April 1, 1996, the pro forma effect on the Company's consolidated
balance sheet at March 31, 1997, would not have been significant, and net income
for fiscal 1997 would have been approximately $180 million, or $1.23 per share,
fully diluted. This unaudited pro forma information is intended for information
purposes only and is not necessarily indicative of the future results of
operations of the Joint Venture or the results of the Company that would have
occurred had the joint venture arrangement been in effect for fiscal 1997.
(c) Exhibits.
2.1 Unit Purchase Agreement dated April 30, 1997
among Quantum Corporation, TA Diamond LLC,
Matsushita-Kotobuki Electronics Industries,
Ltd. and Matsushita Kotobuki Peripherals
Corporation.
-2-
<PAGE> 3
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.
Date: May 30, 1997 QUANTUM CORPORATION
/s/ Michael Brown
------------------------------------
Michael Brown
President and Chief Executive Officer
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<PAGE> 1
UNIT PURCHASE AGREEMENT
DATED
APRIL 30, 1997
AMONG
QUANTUM CORPORATION,
TA DIAMOND LLC,
MATSUSHITA-KOTOBUKI ELECTRONICS INDUSTRIES, LTD.
AND
MATSUSHITA KOTOBUKI PERIPHERALS CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
ARTICLE II. SALE AND TRANSFER OF UNITS; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.1 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.2 Operating Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.3 Purchase and Sale of Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.4 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.5 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.6 Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
2.7 Payment of Assumed Liabilities; Delivery of Subordinated Note. . . . . . . . . . . . . . . . . . . . . . 6.
2.8 Execution of Ancillary Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
ARTICLE III. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
3.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
3.2 Power and Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
3.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
3.4 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
3.5 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
3.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
3.7 Intercompany Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
3.8 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF QUANTUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
4.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
4.2 Title to Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
4.3 Power and Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
4.4 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
4.5 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
4.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
4.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
ARTICLE V. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
MKE AND BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.2 Corporate Power and Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
5.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
5.6 Finders' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
5.7 Investment Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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ARTICLE VI. COVENANTS OF NEWCO AND QUANTUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
6.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
6.3 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
6.4 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
6.5 Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
ARTICLE VII. COVENANTS OF MKE AND BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
7.1 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
7.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
ARTICLE VIII. COVENANTS OF NEWCO, QUANTUM, MKE AND BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
8.1 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
8.2 Certain Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
8.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
8.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
8.5 Tax Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
8.6 Trademarks; Tradenames . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
8.7 Allocation of Value to Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
8.8 Post-Closing Operation of Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
ARTICLE IX. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
9.1 Conditions to Obligation of MKE and Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
9.2 Conditions to Obligations of Newco and Quantum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
ARTICLE X. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
10.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
ARTICLE XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
11.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
11.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
11.5 Governing Law; Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
11.6 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
11.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
11.8 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
11.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
11.10 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
EXHIBITS
Exhibit A Subordinated Floating Rate Note [Exhibit has been omitted]*
Exhibit B Jurisdictions re: Qualification of Newco [Exhibit has been omitted]*
Exhibit C Form of Opinion of Cooley Godward LLP [Exhibit has been omitted]*
Exhibit D Form of Opinion of Local Real Estate Counsel [Exhibit has been omitted]*
Exhibit E Form of Opinion of Andrew Kryder, Esq. [Exhibit has been omitted]*
Exhibit F Form of Opinion of Weil, Gotshal & Manges LLP [Exhibit has been omitted]*
SCHEDULES
Schedule 3.6 Consents [Schedule has been omitted]*
Schedule 8.6 Quantum Tradenames [Schedule has been omitted]*
* The Company will furnish a copy of any omitted exhibit or schedule
to the Securities and Exchange Commission upon request.
</TABLE>
iii.
<PAGE> 5
UNIT PURCHASE AGREEMENT
UNIT PURCHASE AGREEMENT(the "Agreement") dated April 30, 1997 among TA
DIAMOND LLC, a Delaware limited liability company ("NEWCO"), QUANTUM
CORPORATION, a Delaware corporation ("QUANTUM" and together with Newco, the
"SELLERS"), MATSUSHITA-KOTOBUKI ELECTRONICS INDUSTRIES, LTD., a corporation
organized under the laws of Japan ("MKE") and MATSUSHITA KOTOBUKI PERIPHERALS
CORPORATION., a Delaware corporation ("BUYER") and a wholly-owned subsidiary of
MKE.
RECITALS:
WHEREAS, Quantum and Buyer desire to enter into a joint venture (the
"Joint Venture") in order to design, develop, manufacture, market and sell
recording heads and sliders and head gimbal assemblies for hard disk drive
applications (the "Business");
WHEREAS, Newco proposes to issue and sell 2,750,000 of its unissued
Class A Units (the "Primary Units") and Quantum proposes to sell an aggregate
of 2,350,000 Class A Units of Newco (the "Quantum Units" and together with the
Primary Units, the "Units") to Buyer on the terms set forth in this Agreement;
WHEREAS, Newco and Quantum have concurrently entered into an asset
contribution agreement ("Asset Contribution Agreement") whereby on the Closing
Date (as defined below), Quantum will contribute assets to Newco in exchange
for 4,900,000 Class B Units of Newco (the "Class B Units") and 2,350,000 Class
A Units of Newco (the "Class A Units");
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
1.1 DEFINITIONS.
(a) The following terms, as used herein, have the
following meanings:
"ADMINISTRATIVE SERVICES AGREEMENT" means the
Administrative Services Agreement between Newco and Quantum to be entered into
as of the Closing Date in the form previously delivered and agreed to by the
parties thereto, as the same may be amended and in effect from time to time.
1.
<PAGE> 6
"ASSOCIATES" means:
(I) Affiliates, stockholders, directors,
officers, employees, agents, attorneys, accountants and representatives of a
Person; and
(II) all stockholders, directors, officers,
employees, agents, attorneys, accountants and representatives of each Affiliate
of a Person.
"AFFILIATE" means with respect to any entity, any
Person, a majority of which is owned by such entity.
"ANCILLARY AGREEMENTS" means: (i) the Asset
Contribution Agreement; (ii) the Quantum Sub Purchase Agreement, (iii) the
Non-Competition Agreement; (iv) the Intellectual Property Agreement; (v) the
Restated Operating Agreement; (vi) the Heads Supply Agreement; (vii) the
Personnel Services Agreements; (viii) the Administrative Services Agreement;
(ix) the Louisville Agreement; (x) the Shrewsbury Agreement; (xi) the
Indemnification Agreement; and (xii) the Subordinated Note.
"CONSENT" means any third party consent, approval,
waiver or novation required for the consummation of the contribution of assets
from Quantum to Newco and the consummation of the transactions set forth in
this Agreement and the Ancillary Agreements.
"EFFECTIVE DATE" means April 1, 1997.
"HEADS SUPPLY AGREEMENT" means the Heads Supply
Agreement between Buyer, Newco and Quantum to be entered into as of the Closing
Date in the form previously delivered and agreed to by the parties thereto, as
the same may be amended and in effect from time to time.
"INDEMNIFICATION AGREEMENT" means the Indemnification
Agreement between Newco, Quantum, MKE and Buyer to be entered into as of the
date hereof in the form previously delivered and agreed to by the parties
thereto, as the same may be amended and in effect from time to time.
"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.
2.
<PAGE> 7
"INTELLECTUAL PROPERTY AGREEMENT" means the
Intellectual Property Agreement between Quantum and Newco to be entered into as
of the Closing Date in the form previously delivered and agreed to by the
parties thereto, as the same may be amended and in effect from time to time.
"LIEN" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest, option, right of first
refusal, easement, restriction (including transfer restriction) or other
similar encumbrance of any kind in respect of such asset.
"LOUISVILLE AGREEMENT" means the Use and Occupancy
Agreement re: Louisville, Colorado between Quantum and Newco to be entered into
as of the Closing Date in the form previously delivered and agreed to by the
parties thereto, as the same may be amended and in effect from time to time.
"MATERIAL ADVERSE EFFECT" means, with respect to any
Person, a material adverse effect on the business, assets, financial condition
or results of operations of such Person.
"NON-COMPETITION AGREEMENT" means the
Non-Competition Agreement between Quantum and Buyer to be entered into as of
the Closing Date in the form previously delivered and agreed to by the parties
thereto, as the same may be amended and in effect from time to time.
"PERMITTED LIEN" means (i) Liens for taxes not yet
due or are being contested in good faith and (ii) Liens that do not materially
detract from the value of such Contributed Asset as now used, or materially
interfere with any present or intended use of such Contributed Asset.
"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.
"PERSONNEL SERVICES AGREEMENTS" means, collectively,
(i) the Personnel Services Agreement between Newco and Quantum to be entered
into as of the Closing Date in the form previously delivered and agreed to by
the parties thereto, as the same may be amended and in effect from time to
time, and (ii) the Personnel Services Agreement between Newco and MKE to be
entered into as of the Closing Date in the form previously delivered and agreed
to by the parties thereto, as the same may be amended and in effect from time
to time, and "PERSONNEL SERVICES AGREEMENT" means either of them.
"QUANTUM COLORADO" means Quantum Peripherals
Colorado, Inc., together with any successor corporation or other successor
entity.
"QUANTUM SUB" means TA Diamond Corp., a Delaware
corporation.
"QUANTUM SUB PURCHASE AGREEMENT" means the Purchase
Agreement between Quantum and Quantum Sub to be entered into and dated as of
the Closing Date pursuant
3.
<PAGE> 8
to which Quantum Sub agrees to sell any interests of Newco held of record by
Quantum Sub to Quantum, as the same may be amended and in effect from time to
time.
"RESTATED OPERATING AGREEMENT" means the Amended and
Restated Operating Agreement, to be entered into between Quantum and Buyer as
of the Closing Date, in the form previously delivered and agreed to by the
partners thereto, as the same may be amended and in effect from time to time.
"SHREWSBURY AGREEMENT" means the Use and Occupancy
Agreement re: Shrewsbury, Massachusetts between Quantum and Newco to be entered
into as of the Closing Date in the form previously delivered and agreed to by
the parties thereto.
"SUBORDINATED NOTE" means the Subordinated Floating
Rate Note to be issued by Newco on the Closing Date and payable to Quantum, in
the form attached hereto as Exhibit A.
"SUBSIDIARIES" means Quantum Colorado and P.T.
Quantum Peripherals Indonesia.
"TAX" shall mean (i) any net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, documentary,
transfer, ad valorem, franchise, capital, paid-up capital, profits, greenmail,
license, withholding, payroll, employment, withholding, 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).
(b) Each of the following terms is defined in the Section
set forth opposite such term.
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Aggregate Purchase Price 2.4
Asset Contribution Agreement Recitals
Assumed Liabilities 6.5
Business Recitals
Class A Units Recitals
Class B Units Recitals
Closing 2.5
Closing Date 2.5
Confidential Information 8.4
Contributed Assets 6.1(j)
Joint Venture Recitals
MKE Recitals
</TABLE>
4.
<PAGE> 9
<TABLE>
<S> <C>
Newco Aggregate Purchase Price 2.4
Primary Units Recitals
Quantum Aggregate Purchase Price 2.4
Quantum Tradenames 8.6(a)
Quantum Units Recitals
Restated Operating Agreement 1.1(a)
Securities Act 5.7
Transferred Contract 3.5
Units Recitals
</TABLE>
(c) Capitalized terms used but not defined herein shall
have the meanings set forth in the Asset Contribution Agreement.
ARTICLE II.
SALE AND TRANSFER OF UNITS; CLOSING
2.1 AUTHORIZATION. All action on the part of Newco and the
members of Newco necessary for the authorization, execution, delivery and
performance of this Agreement by Newco and the admittance of Buyer as a Member
(as defined in the Restated Operating Agreement) and the issuance of the
Primary Units in connection therewith has been taken or will be taken prior to
the Closing (as defined in Section 2.5).
2.2 OPERATING AGREEMENT. As of the Closing, the Units shall have
the rights, preferences, privileges and restrictions set forth in the Restated
Operating Agreement.
2.3 PURCHASE AND SALE OF UNITS. At the Closing, Newco will sell
and transfer the Primary Units to Buyer and Quantum will sell and transfer the
Quantum Units to Buyer, and Buyer will purchase the Primary Units from Newco
and the Quantum Units from Quantum on the terms and subject to the conditions
set forth in this Agreement.
2.4 PURCHASE PRICE. The purchase price for the Units will be
$40.00 per unit. The aggregate purchase price for the Primary Units will be
$110,000,000 (the "Newco Aggregate Purchase Price"), and the aggregate purchase
price for the Quantum Units will be $94,000,000 (the "Quantum Aggregate
Purchase Price"). The Newco Aggregate Purchase Price and the Quantum Aggregate
Purchase Price are collectively referred to as the "Aggregate Purchase Price".
2.5 CLOSING. The closing of the sale of the Units to Buyer (the
"Closing") shall take place at the offices of Cooley Godward LLP, 5 Palo Alto
Square, Palo Alto, California at 9:00 a.m. (California time) on the later of
May 16, 1997, or the date five business days following the satisfaction of all
conditions set forth in Article IX hereof (or at such other place or time as
Buyer and Sellers mutually may designate). For purposes of this Agreement,
"Closing Date" shall mean the time and date as of which the Closing actually
takes place. Subject to the provisions of Section 10.1 hereof, failure to
consummate the purchase and sale provided for in
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this Agreement on the date and time and at the place determined pursuant to
this Section 2.5 will not result in the termination of this Agreement and will
not relieve any party of any obligation under this Agreement.
2.6 DELIVERY. At the Closing, subject to the terms and
conditions hereof: (a) Newco will deliver to Buyer certificates representing
the Primary Units, against payment of the Newco Aggregate Purchase Price by
federal funds wire transfer made payable to the order of Newco; and (b) Quantum
will deliver to Buyer certificates representing the Quantum Units, duly
endorsed (or accompanied by executed stock powers), against payment of the
Quantum Aggregate Purchase Price by federal funds wire transfer made payable to
the order of Quantum.
2.7 PAYMENT OF ASSUMED LIABILITIES; DELIVERY OF SUBORDINATED NOTE.
At the Closing, Newco will pay to Quantum the amounts payable pursuant to
Section 6.5. hereof and execute and deliver the Subordinated Note.
2.8 EXECUTION OF ANCILLARY AGREEMENTS. At the Closing, Quantum,
Newco, Buyer and Quantum Sub will execute and deliver to the other parties as
applicable each of the Ancillary Agreements which have not been otherwise
executed and delivered prior to the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO NEWCO
Newco and Quantum, jointly and severally, hereby represent and warrant
to Buyer that:
3.1 ORGANIZATION AND STANDING. Newco is a limited liability
company duly organized, validly existing and in good standing under the laws of
Delaware. Newco is duly qualified and authorized to do business and is in good
standing in all jurisdictions listed on the attached Exhibit B. The
jurisdictions listed on Exhibit B constitute all such jurisdictions in which
the nature of its activities and of its properties makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Newco.
3.2 POWER AND AUTHORIZATION. Newco has all requisite power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Ancillary Agreements to which it is a party, to issue
and sell the Primary Units and to carry out the provisions of this Agreement
and the Ancillary Agreements to which it is a party and to carry on its
business as currently conducted and as currently proposed to be conducted. The
execution, delivery and performance by Newco of this Agreement and each of the
Ancillary Agreements to which it is a party, and the consummation by Newco of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary action on the part of Newco. This Agreement and each of the
Ancillary Agreements to which Newco is a party constitute, or upon execution
and delivery will constitute, valid and binding agreements of Newco enforceable
in accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting
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enforcement of creditors' rights; (ii) general principles of equity restrict
the availability of equitable remedies; and (iii) to the extent that the
enforceability of the indemnification provisions contained in the
Indemnification Agreement may be limited by applicable laws. The sale of the
Primary Units are not and will not be subject to any preemptive right or right
of first refusal.
3.3 CAPITALIZATION.
(a) Immediately following the Closing, the issued and
outstanding Units of Newco shall be as specified in Schedule A to the Restated
Operating Agreement. All issued and outstanding Class B Units and Class A
Units on the Closing Date: (i) will have been duly authorized and validly
issued; and (ii) will be fully paid and non-assessable. The rights,
preferences, privileges and restrictions of the outstanding Class B Units and
Class A Units will be as stated in the Restated Operating Agreement. Except as
may be granted pursuant to the Ancillary Agreements, there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal), proxy or stockholder agreements, or agreements of any kind
for the purchase or acquisition from Newco of any of its securities.
(b) As of the date hereof, Quantum owns of record a 99%
interest in Newco, free and clear of any and all Liens, and Quantum Sub owns of
record a 1% interest in Newco free and clear of any and all Liens.
(c) Except for one share of capital stock which is owned
of record by Quantum Colorado, all of the outstanding shares of capital stock
of P.T. Quantum Peripherals Indonesia will, immediately following the Closing,
be owned of record by Newco, free and clear of any and all Liens.
(d) All of the outstanding equity interests of Quantum
Colorado will, immediately following the Closing, be owned of record by Newco,
free and clear of any and all Liens.
(e) When issued in compliance with the provisions of the
Agreement and the Restated Operating Agreement, the Quantum Units and the
Primary Units will be duly and validly issued, fully paid and nonassessable,
and will be free of any Liens other than those provided in this Agreement or
the Ancillary Agreements and under applicable state and federal securities laws
as set forth herein or as otherwise required by such laws at the time the
transfer is proposed.
3.4 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Newco 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 by Newco 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 on Newco or which
would not materially and adversely affect Newco's ability to consummate the
transactions contemplated hereby and thereby and other than: (a) such filings
as have been made prior to the Closing; (b) such post-closing filings as may be
required under applicable state securities laws, which will
7.
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be timely filed within the applicable periods therefor; and (c) compliance with
any applicable requirements under the laws of Indonesia.
3.5 NON-CONTRAVENTION. The execution, delivery and performance by
Newco of this Agreement and each of the Ancillary Agreements to which it is a
party do not and will not with notice or lapse of time or both (i) contravene
or conflict with the Restated Operating Agreement, (ii) assuming compliance
with the matters referred to in Section 3.4, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgement,
injunction order or decree binding upon or applicable to Newco which violation
would have a Material Adverse Effect on Newco, or (iii) assuming receipt of all
Consents, constitute a default under any material agreement or give rise to any
right of termination, cancellation or acceleration of any material right or
obligation relating to Newco or to a loss of any material benefit to which
Newco is entitled under any provision of any contract transferred to Newco
pursuant to the Asset Contribution Agreement (the "Transferred Contracts").
3.6 CONSENTS. Except as set forth on SCHEDULE 3.6 hereto, there
are no agreements, contracts or other instruments binding upon Newco which
require 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.
3.7 INTERCOMPANY INDEBTEDNESS. As of March 31, 1997, Newco owes
to Quantum and its Affiliates fifty million eight hundred twenty- three
thousand dollars ($50,823,000).
3.8 FINDERS' FEES. Except for Deutsche Morgan Grenfell, whose
fees will be paid by Quantum, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Newco or Quantum who might be entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement and each of the
Ancillary Agreements.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF QUANTUM
Quantum hereby represents and warrants to Buyer that:
4.1 ORGANIZATION AND STANDING.
(a) Quantum is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware. Quantum is duly
qualified and authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a Material Adverse
Effect on Quantum.
(b) Quantum Colorado is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
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(c) P.T. Quantum Peripherals Indonesia is a limited
liability company which is duly qualified to transact business in Indonesia.
4.2 TITLE TO UNITS. On or prior to the Closing Date, Quantum will
have good and clear title to Quantum Units to be sold to Buyer hereunder, free
and clear of all Liens.
4.3 POWER AND AUTHORIZATION.
(a) Quantum has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and each of the Ancillary Agreements to which it is a party and
to sell the Quantum Units and to carry out the provisions of this Agreement and
the Ancillary Agreements to which it is a party. The execution, delivery and
performance by Quantum of this Agreement and each of the Ancillary Agreements
to which it is a party, and the consummation by Quantum of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Quantum. This Agreement and each of the
Ancillary Agreements to which Quantum is a party, constitute, or upon execution
and delivery will constitute, valid and binding agreements of Quantum
enforceable in accordance with their terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; (ii) general principles
of equity restrict the availability of equitable remedies; and (iii) to the
extent that the enforceability of the indemnification provisions in the
Indemnification Agreement hereof may be limited by applicable laws. The sale
of Quantum Units to Buyer are not subject to any preemptive right or right of
first refusal.
(b) Each of the Subsidiaries has all requisite power and
authority to carry on its business as currently conducted.
4.4 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Quantum of this Agreement and each of the Ancillary Agreements
to which it is a party, does not require any action by or in respect of, or
filing with, any governmental body, agency, official or authority by Quantum
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 on
Newco or which would not materially and adversely affect Quantum's ability to
consummate the transactions contemplated hereby and thereby, and other than:
(i) such filings as have been made prior to the Closing; (ii) such post-closing
filings as may be required under applicable state securities laws, which will
be timely filed within the applicable periods therefor; and (iii) compliance
with any applicable requirements under the laws of China and Indonesia.
4.5 NON-CONTRAVENTION. The execution, delivery and performance by
Quantum of this Agreement and each of the Ancillary Agreements to which it is a
party, do not and will not (i) contravene or conflict with the Certificate of
Incorporation or bylaws of Quantum, or (ii) assuming compliance with the
matters referred to in Section 4.4, 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 Quantum, or (iii)
assuming receipt of all Consents, constitute a default under any material
contract or give rise to any right of termination, cancellation or acceleration
of any material right or obligation relating to Quantum or to a loss
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<PAGE> 14
of any material benefit to which Quantum is entitled under any provision of any
Transferred Contract.
4.6 CONSENTS. Except as set forth on SCHEDULE 3.6 hereto, there
are no agreements, contracts or other instruments binding upon Quantum which
require 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.
4.7 TAXES. Quantum repeats, and makes for the benefit of MKE and
Buyer, the representations and warranties set forth in Section 3.018 of the
Asset Contribution Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO MKE AND BUYER
MKE and Buyer, jointly and severally, hereby represent and warrant to
Newco and Quantum that:
5.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware.
Buyer is duly qualified and authorized to do business and is in good standing
as a foreign corporation in all jurisdictions in which the nature of its
activities and of its properties makes such qualification necessary, except for
those jurisdictions in which failure to do so would not have a Material Adverse
Effect on Buyer.
5.2 CORPORATE POWER AND AUTHORIZATION. Buyer has all requisite
corporate power and authority to own and operate its properties and assets, to
execute and deliver this Agreement and the Ancillary Agreements to which it is
a party and to carry out the provisions of this Agreement and the Ancillary
Agreements to which it is a party and to carry on its business as currently
conducted and as currently proposed to be conducted. The execution, delivery
and performance by Buyer of this Agreement and each of the Ancillary Agreements
to which it is a party, and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement and each of the Ancillary
Agreements to which it is a party constitute, or upon execution and delivery
will constitute, valid and binding agreements of Buyer enforceable in
accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; (ii) general principles of equity
restrict the availability of equitable remedies; and (iii) to the extent that
the enforceability of the indemnification provisions in the Indemnification
Agreement hereof may be limited by applicable laws.
5.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary Agreements to
which it is a party does not require any action by or in respect of, or filing
with, any governmental body, agency, official or authority by Buyer other than
any such action or filing the failure to obtain or complete which
10.
<PAGE> 15
would not have, individually or in the aggregate, a Material Adverse Effect on
Buyer or which would not materially and adversely affect Buyer's ability to
consummate the transactions contemplated hereby and thereby, and other than:
(i) such filings as have been made prior to the Closing; (ii) such post-closing
filings as may be required under applicable state securities laws, which will
be timely filed within the applicable periods therefor; and (iii) compliance
with any applicable requirements under the laws of Japan.
5.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement and each of the Ancillary Agreements to which it is a
party do not and will not (i) contravene or conflict with the organizational
documents of Buyer, and (ii) assuming compliance with the matters referred to
in Section 5.3, 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 Buyer.
5.5 CONSENTS. There are no agreements, contracts or other
instruments binding upon Buyer which require 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.
5.6 FINDERS' FEES. Except for The Blackstone Group and Nikko
Securities, 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 upon
consummation of the transactions contemplated by this Agreement and each of the
Ancillary Agreements.
5.7 INVESTMENT REPRESENTATIONS. Buyer understands that the Units
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"). Buyer also understands that the Units are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Buyer's representations contained in this Agreement. Buyer
hereby represents and warrants as of the date hereof and as of the Closing Date
as follows:
(a) ACCREDITED INVESTOR. Buyer represents that it is an
accredited investor within the meaning of Regulation D under the Securities
Act.
(b) BUYER BEARS ECONOMIC RISK. Buyer must bear the
economic risk of this investment indefinitely unless the Units are registered
pursuant to the Securities Act, or an exemption from registration is available.
Buyer understands that Newco has no present intention of registering the Units,
or any shares of its Class B Units. Buyer also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Buyer to
transfer all or any portion of the Units or under the circumstances, in the
amounts or at the times Buyer might propose.
(c) ACQUISITION FOR OWN ACCOUNT. Buyer is acquiring the
Units for Buyer's own account for investment only, and not with a view towards
their distribution.
11.
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(d) INVESTMENT EXPERIENCE. Buyer represents that by
reason of its, or of its management's, business or financial experience, Buyer
has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement.
(e) RECEIPT OF NEWCO INFORMATION. Buyer has had an
opportunity to discuss Newco's business, management and financial affairs with
directors, officers and management of Newco and has had the opportunity to
review Newco's operations and facilities. Buyer has also had the opportunity
to ask questions of and receive answers from, Newco and its management
regarding the terms and conditions of this investment.
(f) RESTRICTED SECURITIES. Buyer acknowledges and agrees
that the Units must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available.
(g) LEGENDS. Each certificate representing the Units
shall be stamped or otherwise imprinted with a legend substantially similar to
the following (in addition to any legend required under applicable state
securities laws or as provided elsewhere in this Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS NEWCO
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
NEWCO AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
Newco shall be obligated to reissue promptly unlegended certificates at the
request of any holder thereof if the holder shall have obtained an opinion of
counsel (which counsel may be counsel to Newco) reasonably acceptable to Newco
to the effect that the securities proposed to be disposed of may lawfully be so
disposed of without registration, qualification or legend. Any legend endorsed
on an instrument pursuant to applicable state securities laws and the
stop-transfer instructions with respect to such securities shall be removed
upon receipt by Newco of an order of the appropriate blue sky authority
authorizing such removal.
(h) Notwithstanding anything to the contrary contained
herein, nothing in this Section 5.7 shall be deemed to constitute a waiver of
the rights hereunder by or on behalf of Buyer, including, without limitation,
any rights to indemnification based on the representations and warranties set
forth in this Agreement or any Ancillary Agreement. The validity of the
representations and warranties shall not be affected by any investigation made
by or on behalf of Buyer.
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ARTICLE VI.
COVENANTS OF NEWCO AND QUANTUM
Newco and Quantum agree with Buyer that:
6.1 CONDUCT OF BUSINESS. From the date hereof until the Closing
Date, Newco shall conduct business in the ordinary course, use its best efforts
to preserve intact the business organization and relationships with third
parties, and to keep available the services of its present employees. Without
limiting the generality of the foregoing, from the date hereof until the
Closing Date, Newco will not, without the consent of Quantum and Buyer:
(a) acquire a material amount of assets from any other
Person other than: (i) capital expenditures which were committed to prior to
the date hereof; (ii) acquisitions of assets required for the conduct of the
Business; or (iii) do not exceed $5,000,000;
(b) sell, lease, license, pledge or otherwise dispose of
any assets, except for the sale of inventory items in the ordinary course of
business;
(c) enter into any contract, commitment or obligation,
except contracts or commitments which are made in the ordinary course of
business;
(d) enter into any contract, commitment or obligation
with Quantum or Buyer or any Affiliate of Quantum or Buyer, except: (i)
contracts, commitments and obligations pursuant to this Agreement or the
Ancillary Agreements; (ii) contracts, commitments or obligations to purchase
capital equipment at fair market value in accordance with the current Internal
Operating Plan; and (iii) contracts or commitments which are made in the
ordinary course of business and which have an aggregate value of less than
$5,000,000;
(e) do or omit to do any act which would result in a
material breach of any material contract, commitment or obligation;
(f) take or commence the taking of any action with
respect to dissolution, liquidation or winding up of Newco;
(g) grant any license or make any assignment of any
Intellectual Property; or
(h) sell any products related to the Business to third
parties;
(i) implement any material changes to Newco's technology
or product or market focus;
(j) subject any of the assets to be contributed to the
Business pursuant to the Asset Contribution Agreement or the Intellectual
Property Agreement to be executed at the Closing (the "Contributed Assets") to
any Lien, except for Permitted Liens;
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(k) sell, transfer or otherwise dispose of, or permit to
lapse, any license or permit included in the Contributed Assets;
(l) except as provided in this Agreement or any of the
Ancillary Agreements or as disclosed in writing to MKE prior to the date
hereof, with respect to any Transferred Employee (as defined in the Asset
Contribution Agreement): (i) increase in any manner the compensation of any
such Transferred Employee, except in the ordinary course of business and
consistent with past practice; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required or contemplated by any of the
existing employee benefit plans or existing agreement or arrangement with such
Transferred Employee; (iii) enter into any severance arrangement with any
Transferred Employee; or (iv) except as required to comply with applicable law,
(A) become obligated under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, benefit arrangement or similar plan or
arrangement, which was not in existence on the date hereof, including any
bonus, incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance payment, retirement or other
benefit plan, agreement or arrangement, or (B) amend or become obligated to
amend and employee benefit plan; or
(m) agree or commit to do any of the foregoing.
6.2 CONSENTS. Newco and Quantum shall use their best efforts
prior to Closing to obtain all Consents and to effect the approval of,
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 the Ancillary Agreements. All Consents
shall be in writing and executed counterparts shall be delivered to Buyer
promptly after receipt thereof.
6.3 ACCESS TO INFORMATION. On and after the date hereof, subject
to the terms and conditions of this Agreement, upon reasonable notice, Newco
and Quantum will afford promptly to Buyer and its agents reasonable access to
its properties, books, records, employees and auditors relating to the Business
to the extent necessary to permit Buyer to determine any matter relating to its
rights and obligations hereunder or with respect to any period ending on or
before the date hereof; provided, that any such access by Buyer shall not
unreasonably interfere with the conduct of the business of Newco or Quantum
and, provided further, that a representative of Newco and Quantum may accompany
Buyer, its representatives and agents during such investigation.
Notwithstanding the foregoing, Buyer shall not have access to personnel records
of Newco 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.
6.4 NOTICE OF CERTAIN EVENTS. Newco and Quantum shall promptly
notify Buyer of:
(a) 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 or the Ancillary
Agreements;
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(b) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting Newco or Quantum that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.013 of the Asset Contribution Agreement or that
relate to the consummation of the transactions contemplated by this Agreement
or the Ancillary Agreements.
6.5 ASSUMED LIABILITIES. Newco shall reimburse Quantum for any
liabilities which would be required to be assumed by Newco pursuant to the
Asset Contribution Agreement ("Assumed Liabilities") but which have been
discharged or paid by Quantum on and after the Effective Date and prior to the
Closing Date. Quantum shall provide to Newco and MKE five (5) days prior to
the Closing Date, a written estimate of the amount to be due at Closing
pursuant to this Section 6.5 together with reasonable detail supporting such
amounts and Newco shall pay such invoiced amounts at Closing.
ARTICLE VII.
COVENANTS OF MKE AND BUYER
7.1 CONSENTS. MKE and Buyer shall use their reasonable commercial
efforts prior to Closing to obtain all third party and governmental consents
and to effect the approval of, 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 the
Ancillary Agreements.
7.2 ACCESS TO INFORMATION. On and after the date hereof, subject
to the terms and conditions of this Agreement, upon reasonable notice Buyer and
MKE will afford promptly to Quantum and their agents reasonable access to
Newco's properties, books, records, employees and auditors to the extent
necessary to permit Quantum to determine any matter relating to its rights and
obligations hereunder; provided, that any such access by Newco or Quantum shall
not unreasonably interfere with the conduct of the business of Buyer or Newco
and, provided further, that a representative of Buyer may accompany Newco or
Quantum, its representatives and agents during such investigation.
Notwithstanding the foregoing, Quantum 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.
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ARTICLE VIII.
COVENANTS OF NEWCO, QUANTUM, MKE AND BUYER
Newco, Quantum, MKE and Buyer agree that:
8.1 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each party will use commercially reasonable 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.
Newco, Quantum, MKE 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.
8.2 CERTAIN FILINGS. Newco, Quantum, MKE 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.
8.3 PUBLIC ANNOUNCEMENTS. The parties agree not to issue any
press release or make 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.
8.4 CONFIDENTIALITY. Newco, Quantum, MKE and Buyer will hold, and
will use their best efforts to cause their Associates to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all Confidential Information concerning Newco, Quantum,
MKE and Buyer. Newco, Quantum, MKE and Buyer shall not at any time subsequent
to the Closing, except as explicitly agreed by all parties, (i) use for any
purpose other than for the operation of the Business, (ii) disclose to any
person, or (iii) keep or make copies of, any documents, tapes, disks or
programs containing Confidential Information concerning Newco, Quantum, MKE or
Buyer other than for the operation of the Business. For purposes hereof,
"Confidential Information" shall mean all trade rights in which Newco, Quantum,
MKE or Buyer have 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
Newco, Quantum, MKE or Buyer except to the extent that such information (i) is
in the public domain through no fault of Newco, Quantum, MKE or Buyer or (ii)
has been or is later lawfully acquired from other sources.
16.
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8.5 TAX COOPERATION.
(a) Newco, Quantum, MKE and Buyer agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information and assistance relating to the Contributed 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. Buyer, Quantum, MKE and Newco
shall cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Business or the Subsidiaries 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) Newco and Buyer agree (i) to retain all books and
records with respect to Tax matters pertinent to the Subsidiaries relating to
any Straddle Period (as defined in Section 5.02 of the Asset Contribution
Agreement) and any taxable period ending prior to the Effective Date, 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 Buyer, as the case may be, shall allow the other
party to take possession of such books and records.
8.6 TRADEMARKS; TRADENAMES.
(a) Except as provided in this Section 8.6, Article 12 of
the Intellectual Property Agreement or as approved by Quantum in writing from
time to time, after the date hereof, Newco and its Affiliates shall not use any
of the names listed on SCHEDULE 8.6. Such names shall be referred to,
collectively or individually, as the context requires, as the "QUANTUM
TRADENAMES."
(b) Newco agrees to cease using the Quantum Tradenames on
buildings, cars, trucks and other fixed assets as soon as possible within a
period not to exceed three months after the date hereof.
(c) Newco shall have the right to use the Quantum
tradename to the extent permitted by the Intellectual Property Agreement and
otherwise to the extent necessary as a result of the use of the Quantum
tradename in the names of the Subsidiaries; provided, however, that Newco shall
change the names of the Subsidiaries as soon as practicable following the date
hereof to names that do not include the Quantum tradename and shall thereafter
cease using the Quantum tradename in connection with the names of the
Subsidiaries.
8.7 ALLOCATION OF VALUE TO UNITS. Quantum agrees that it shall
not, without the prior written consent of MKE, for tax purposes, assign a per
Unit value to the Class A Units received by Quantum pursuant to Section 2.07 of
the Asset Contribution Agreement which exceeds three (3) times the per Unit
value Quantum assigns to the Class B Units received by Quantum pursuant to
Section 2.07 of the Asset Contribution Agreement.
17.
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8.8 POST-CLOSING OPERATION OF NEWCO.
(a) Quantum and MKE agree to operate the Business in
accordance with the current Internal Operating Plan of the Recording Heads
Group, a copy of which has previously been delivered and agreed to by MKE.
(b) Quantum and Buyer shall use commercially reasonable
efforts to prepare and deliver a Strategic Plan and an Operating Plan for Newco
which is mutually acceptable to Quantum and MKE as soon as possible after the
Closing, but in any event no later than August 28, 1997. Upon the adoption of
the Strategic Plan and Operating Plan by Quantum and MKE the current Internal
Operating Plan shall no longer govern the operations of the Business.
ARTICLE IX.
CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATION OF MKE AND BUYER.
The obligation of Buyer to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the consummation of the
Closing.
(b) Newco and Quantum shall have executed and delivered
each of the Ancillary Agreements to be executed and delivered by them, in each
case substantially in the form previously delivered and agreed to by the
parties thereto.
(c) Quantum, Newco, MKE and Buyer shall have received all
Consents and all consents, authorizations or approvals from governmental
agencies relating to the execution, delivery and performance by Quantum, Newco,
MKE and Buyer of this Agreement and the Ancillary Agreements to be executed by
them, except any such Consents or consents, authorizations or approvals where
the failure to obtain would not have a Material Adverse Effect on Newco or
adversely and materially effect the ability of Quantum, MKE or Buyer to
consummate the transactions contemplated hereby, and all such consents,
authorizations and approvals shall be in full force and effect on and as of the
Closing Date.
(d) The representations and warranties of Newco and
Quantum contained in this Agreement shall be true in all material respects
(except that those representations and warranties already qualified as to
materiality shall be true in all respects), in each case as of the date hereof
and as of the Closing Date; provided however, that the representations with
respect to Quantum Colorado set forth in Section 4.1(b) shall be deemed to be
true and correct in all material respects if, on the Closing Date, Quantum
Colorado is a limited liability company duly organized, validly existing and in
good standing under the laws of Delaware.
18.
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(e) Newco and Quantum shall have performed in all
material respects all of their obligations hereunder required to be performed
by them at or prior to the Closing Date.
(f) Buyer shall have received an opinion of Cooley
Godward LLP, counsel to Newco and Quantum, dated the Closing Date in
substantially the form attached hereto as Exhibit C and opinions of counsel,
dated the Closing Date, which counsel shall be reasonably satisfactory to Buyer
and in substantially the form attached hereto as Exhibit D. 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 laws of the state of California and the Delaware General
Corporation Law and the Delaware Limited Liability Company Act, 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 Newco or Quantum.
(g) Buyer shall have received an opinion of Andrew
Kryder, Esq., Vice President, Finance and Corporate General Counsel to Newco
and Quantum, dated the Closing Date in substantially the form attached hereto
as Exhibit E. 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 laws of the state of
California and the Delaware General Corporation Law and the Delaware Limited
Liability Company Act, 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 Newco or Quantum.
(h) Buyer shall have received certificates signed by
Chief Executive Officer and Chief Financial Officer of each of Newco and
Quantum attesting to the satisfaction of the conditions contained in Sections
9.1(d) and (e).
(i) Buyer shall have received all documents it may
reasonably request relating to the existence of Sellers and the authority of
Newco and Quantum to enter into and perform this Agreement and the Ancillary
Agreements, all in form and substance reasonably satisfactory to Buyer.
(j) The Contribution (as defined in Section 1.01 of the
Asset Contribution Agreement) shall have been consummated pursuant to the terms
of the Asset Contribution Agreement and the assignment of the intellectual
property pursuant to the terms of the Intellectual Property Agreement shall
have occurred.
(k) All material authorizations and approvals by any
federal, state, local and Japanese regulatory body, agency or official
(including without limitation, the joint approval of the Ministry of Finance of
Japan and Bank of Japan) which are required for the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements shall
have been received and shall be in full force and effect.
(l) Quantum Colorado will have merged with and into a
Delaware limited liability company.
19.
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9.2 CONDITIONS TO OBLIGATIONS OF NEWCO AND QUANTUM. The obligation
of Newco and Quantum to consummate the Closing is subject to the satisfaction
of the following further conditions:
(a) No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the consummation of the
Closing.
(b) Buyer and MKE shall have executed and delivered each
of the Ancillary Agreements to be executed by them, in each case substantially
in the form previously delivered and agreed to by the parties thereto.
(c) Newco shall have executed and delivered to Quantum
the Subordinated Note in the form attached hereto as Exhibit A.
(d) Quantum, Newco, MKE and Buyer shall have received all
Consents and all consents, authorizations or approvals from governmental
agencies relating to the execution, delivery and performance by Quantum, Newco,
MKE and Buyer of this Agreement and the Ancillary Agreements, except any such
Consents or consents, authorizations or approvals from governmental agencies
where the failure to obtain would not have a Material Adverse Effect on Newco
or adversely and materially effect the ability of Quantum, MKE or Buyer to
consummate the transactions contemplated hereby, and all such consents,
authorizations and approvals shall be in full force and effect on and as of the
Closing Date.
(e) The representations and warranties of MKE and Buyer
contained in this Agreement shall be true in all material respects (except that
those representations and warranties already qualified as to materiality shall
be true in all respects), in each case as of the date hereof and as of the
Closing Date.
(f) MKE and 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.
(g) Newco and Quantum shall have received opinions of
counsel to MKE and Buyer which counsels shall be reasonably satisfactory to
Quantum, dated the Closing Date in substantially the form attached hereto as
Exhibit F. 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 State of California and the Delaware General Corporation
Law or the federal laws of the United States of America, upon opinions of
counsel reasonably satisfactory to Newco and Quantum, copies of which shall be
contemporaneously delivered to Newco and Quantum, and as to matters of fact,
upon certificates of officers of Buyer.
(h) Newco and Quantum shall have received certificates
signed by the President or Vice President and the Secretary of Buyer and the
Managing Director, a Director or the President of MKE attesting to the
satisfaction of the conditions contained in Sections 9.2(e) and (f).
20.
<PAGE> 25
(i) Newco and Quantum shall have received all documents
they may reasonably request relating to the existence of Buyer and the
authority of Buyer to enter into and perform this Agreement and the Ancillary
Agreements, all in form and substance reasonably satisfactory to Newco and
Quantum.
(j) All actions, proceedings, instruments and documents
required to carry out this Agreement and the Ancillary Agreements shall be
reasonably satisfactory in form and substance to counsel for Newco and Quantum.
(k) At the Closing, Newco shall have paid to Quantum
amounts due to Quantum for Assumed Liabilities due pursuant Section 6.5.
(l) As of the Closing, MKE shall have paid Quantum for
all of Quantum's accounts receivable relating solely to the Business with an
invoice date more than 45 days prior to the Effective Date.
ARTICLE X.
TERMINATION
10.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(i) by Newco or Quantum if a material breach of the
representations and warranties or covenants contained in this Agreement has
been committed by MKE or Buyer and such breach has not been waived;
(ii) by MKE or Buyer if a material breach of the
representations and warranties or covenants contained in this Agreement, the
Asset Contribution Agreement or the Intellectual Property Agreement has been
committed by Newco or Quantum and such breach has not been waived;
(iii) by mutual written agreement of Newco, Quantum and
Buyer;
(iv) by Newco, Quantum or Buyer if the Closing shall not
have been consummated on or before December 31, 1997;
(v) by Quantum or Buyer if the United States Federal
Trade Commission or Department of Justice informs either Quantum or Buyer in
writing that such entity intends to commence an action challenging the
transactions contemplated by this Agreement or seeking to have Newco divest a
material portion of the Contributed Assets or the intellectual property that is
the subject of the Intellectual Property Agreement; or
(vi) by Newco, Quantum or Buyer if there shall be any law
or regulation that makes the consummation of the transactions contemplated
hereby illegal or otherwise prohibited
21.
<PAGE> 26
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
(i), (ii), (iv), (v) or (vi) shall give notice of such termination to the other
party.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 10.1 such termination shall be without liability of either
party (or any partner, stockholder, 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 (as such term is defined in the
Indemnification Agreement) incurred or suffered by the other party as a result
of such failure or breach. The provisions of Section 11.3 shall survive any
termination hereof pursuant to Section 10.1.
ARTICLE XI.
MISCELLANEOUS
11.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to MKE or Buyer, to:
Matsushita-Kotobuki Electronics Industries, Ltd.
8-1 Furujin-machi
Takamatsu City, Kagawa 760
Japan
Attention: Takashi Honjo, President
Telecopy: 011-81-878-511047
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Stephen M. Besen, Esq.
Telecopy: (212) 310-8007
if to Newco, to:
TA Diamond LLC
1450 Infinite Drive
22.
<PAGE> 27
Louisville, CO 80027
Attention: President with a copy to Chief Financial Officer
Telecopy: (303) 604-5762
with a copy to:
Cooley Godward LLP
1 Maritime Plaza, 20th Floor
San Francisco, CA 94111
Attention: James C. Gaither, Esq.
Telecopy: (415) 951-3699
if to Quantum, to:
Quantum Corporation
500 McCarthy Blvd.
Milpitas, CA 95035
Attention: Chief Financial Officer
Telecopy: (408) 894-3223
with a copy to:
Cooley Godward LLP
1 Maritime Plaza, 20th Floor
San Francisco, CA 94111
Attention: James C. Gaither, Esq.
Telecopy: (415) 951-3699
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effective (i) if
personally delivered, at the time delivered by hand, (ii) if delivered by
facsimile transmission, upon confirmation of transmission, (iii) if by courier,
on the business day such courier guarantees delivery, and (iv) if delivered by
U.S. Mail, seven business days after deposit in the U.S. Mail, postage prepaid.
11.2 AMENDMENTS AND WAIVERS.
(a) Any provisions of this Agreement may be amended or
waived 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 Buyer, Newco and
Quantum, 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.
23.
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11.3 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.
11.4 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 parties hereto, except that Buyer
may assign this Agreement to any wholly- owned subsidiary of MKE, so long as
MKE guarantees the performance by such subsidiary of all obligations under this
Agreement.
11.5 GOVERNING LAW; ARBITRATION.
(a) This Agreement shall be governed in all respects by
the laws of the United States of America and by the laws of the State of
California, excluding its conflict of law provisions.
(b) This Agreement is prepared and executed in the
English language only and any translation of this Agreement into any other
language shall have no effect.
(c) All disputes, controversy or claim arising out of or
relating to this Agreement, or the breach, termination, or invalidity thereof,
shall be settled by arbitration in Geneva, Switzerland, in accordance with the
United Nations Commission on International Trade Law (UNCITRAL) Arbitration
Rules. The arbitration shall be held in the English language. The award
rendered by the arbitrator shall include costs of the arbitration, reasonable
attorneys' fees and reasonable costs for experts and other witnesses. Judgment
on the award may be entered in any court having jurisdiction. The parties
agree that the arbitrator shall have the authority to issue interim orders for
provisional relief, including, but not limited to, orders for injunctive
relief, attachment or other provisional remedy, as necessary to protect either
party's name, proprietary information, trade secrets, know-how or any other
proprietary right. The parties agree that any interim order of the arbitrator
for any injunctive or other preliminary relief shall be enforceable in any
court of competent jurisdiction. In addition, either party shall be free to
seek provisional relief from any court of competent jurisdiction, in order to
protect that party's name or proprietary rights, prior to or after the
arbitration procedure set forth in this Section.
11.6 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.
11.7 ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements between Quantum, Newco, MKE 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 parties with respect to the subject matter
hereof. No representation, inducement, promise, understanding, condition or
warranty not set forth herein or therein has been made or relied upon by either
party hereto.
24.
<PAGE> 29
None of this Agreement or the Ancillary Agreements, nor any provision hereof or
thereof, is intended to confer upon any person other than the parties hereto
rights or remedies hereunder or thereunder.
11.8 INDEMNIFICATION. The provisions of the Indemnification
Agreement shall govern the survival of representations, warranties and
covenants and indemnification under this Agreement, together with such other
matters as are set forth in the Indemnification Agreement.
11.9 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
11.10 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
25.
<PAGE> 30
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.
QUANTUM CORPORATION
By: /s/ Michael Brown
---------------------------
Name: Michael Brown
Title: President and Chief
Executive Officer
TA DIAMOND LLC
By: /s/ Gerard Schenkann
---------------------------
Name: Gerard Schenkann
Title: Manager
MATSUSHITA-KOTOBUKI ELECTRONICS
INDUSTRIES, LTD.
By: /s/ Takashi Honjo
---------------------------
Name: Takashi Honjo
Title: President
MATSUSHITA KOTOBUKI PERIPHERALS
CORPORATION
By: /s/ Takashi Honjo
---------------------------
Name: Takashi Honjo
Title:
UNIT PURCHASE AGREEMENT
26.
