<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): November 14, 1996
TCSI Corporation
(Exact name of registrant as specified in its charter)
Nevada 0-19377 68-0140975
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
2121 Allston Way, Berkeley, California 94704
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (510) 649-3700
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On November 14, 1996, TCSI Corporation (the "Registrant") entered into
an Asset Purchase and License Agreement (the "Agreement") with Atmel
Corporation ("Atmel") pursuant to which Atmel purchased the assets and
licensed the intellectual property associated with the business of the
Registrant's Personal Communications Group ("PCG"). The PCG business
consists of developing and implementing a portfolio of software products
for communications semiconductor applications. Atmel delivered 335,000
shares of Atmel's Common Stock to the Registrant as the negotiated
consideration pursuant to the Agreement.
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro forma financial information.
TCSI Corporation
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Nine months ended September 30, 1996
(Unaudited-in thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
-------- -------- --------
<S> <C> <C> <C>
Revenues: (A)
Services $ 34,380 $ (4,017) $ 30,363
Software licensing fees 8,504 (2,746) 5,758
Equipment 7,270 - 7,270
-------- --------- --------
$ 50,154 $ (6,763) $ 43,391
======== ========= ========
Costs and expenses:
Services (B) 24,952 (2,334) 22,618
Equipment 6,810 - 6,810
-------- --------- --------
$ 31,762 $ (2,334) $ 29,428
======== ========= ========
</TABLE>
TCSI Corporation
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Year ended December 31, 1995
(Unaudited-in thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
-------- -------- --------
<S> <C> <C> <C>
Revenues: (A)
Services $ 43,790 $ (9,423) $ 34,367
Software licensing fees 11,572 (2,221) 9,351
-------- -------- --------
$ 55,362 $(11,644) $ 43,718
======== ========= ========
Costs and expenses:
Services (B) 24,945 (5,817) 19,128
-------- --------- --------
$ 24,945 $ (5,817) $ 19,128
======== ========= ========
</TABLE>
<PAGE> 4
TCSI Corporation
Notes to Pro Forma Condensed Consolidated Financial Information
For the nine months ended September 30, 1996 and
for the year ended December 31, 1995
1. Description of transaction
TCSI Corporation operates in one segment which provides integrated
software products and services for the global telecom industry.
On November 14, 1996, TCSI Corporation (the "Registrant") entered into
an Asset Purchase and License Agreement with Atmel Corporation
("Atmel") pursuant to which Atmel purchased the assets and licensed
the intellectual property associated with the business of the
Registrant's Personal Communications Group ("PCG"). The PCG business
consists of developing and implementing a portfolio of software
products for communications semiconductor applications. Atmel
delivered 335,000 shares of Atmel's Common Stock to the Registrant as
the negotiated consideration pursuant to the Agreement.
The value of the Common Stock received by the Registrant was
approximately $10 million. Costs associated with this transaction
approximated $2 million.
2. Basis of presentation
The accompanying pro forma financial statements are presented to
provide information on the impact of the disposition of assets to the
results of operations of the Registrant. Pro forma income statements
have been provided for the nine months ended September 30, 1996 and
the year ended December 31, 1995 as if the disposition had occurred
on January 1, 1996 and 1995, respectively. A pro forma balance sheet
has not been provided because the effect from the disposition on the
Registrant's consolidated financial position was not significant.
Pro forma adjustments to the historical financial information include
adjustments to remove all revenues and the direct costs of the
services and licensing provided for the Registrant's PCG business. No
other adjustments to costs and expenses are presented as the effect
from the disposition was not determinable because the Registrant
operates in one segment. All pro forma adjustments to the income
statements assume that the disposition was consummated at the
beginning of each of the periods presented.
The pro forma financial statements should be read in conjunction with
the Registrant's financial statements in the Registrant's Annual
Report on Form 10-K for 1995 and in the Registrant's Form 10-Q for the
nine months ended September 30, 1996. The pro forma information does
not purport to represent what the Registrant's results of operations
would have been had operations been conducted without the Registrant's
PCG business during the periods covered or to project the Registrant's
results of operations for any future period.
3. Pro forma adjustments
Pro forma adjustments related to the income statements have been
provided assuming the disposition was consummated on January 1 of the
respective periods. Pro forma income statements adjustments are as
follows:
(A) Adjustment to reflect total revenues without revenues related to
the Registrant's PCG business.
(B) Adjustment to reflect direct cost of services without direct cost
of services related to the Registrant's PCG business.
<PAGE> 5
(c) Exhibits.
2.1 Asset Purchase and License Agreement dated as of November
14, 1996, by and between TCSI Corporation and Atmel
Corporation (with certain schedules and exhibits omitted
pursuant to Item 601(b)(2) of Regulation S-K). The
Registrant hereby undertakes to furnish supplementally
copies of any of the omitted schedules and other attachments
upon request by the Securities and Exchange Commission.
99.1 Press release dated November 15, 1996.
<PAGE> 6
TCSI Corporation
By: /s/Roger A. Strauch
----------------------
Roger A. Strauch
President, Chief Executive Officer, and
Chairman of the Board of Directors
Date: November 27, 1996
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
----------- -------------------------------------------- ------
<S> <C> <C>
2.1 Asset Purchase and License Agreement between 8
TCSI Corporation and Atmel Corporation
99.1 Press release dated November 15, 1996 67
</TABLE>
<PAGE> 8
ASSET PURCHASE AND LICENSE AGREEMENT
Between
TCSI CORPORATION ("SELLER")
AND
ATMEL CORPORATION ("BUYER")
November 14, 1996
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS Page
ARTICLE 1- PURCHASE AND SALE OF ASSETS 1
1.1 Purchase and Sale 1
1.2 Description of Acquired Assets; Excluded Assets 1
1.3 Consents and Third-Party Licenses 3
1.4 Assumption of Liabilities 4
1.5 Intellectual Property License 4
ARTICLE 2 - PURCHASE PRICE; CLOSING 5
2.1 Purchase Price 5
2.2 Closing 6
2.3 Sales and Use Taxes 7
2.4 Allocation 7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER 7
3.1 Organization of Seller 7
3.2 Due Authorization 7
3.3 Due Execution and Enforceability 8
3.4 No Conflict 8
3.5 Consents and Approvals of Governmental Authorities 8
3.6 Seller Financial Statements 8
3.7 Proprietary Rights and Ownership 8
3.8 Restrictions on Business Activities 9
3.9 Capital Equipment and Hard Assets 9
3.10 Title to Assets 9
3.11 Intellectual Property 10
3.12 Contracts 10
3.13 Governmental Authorization 11
3.14 Compliance with Applicable Laws 11
3.15 Reliance Upon Seller's Representations 11
3.16 Material Adverse Effect 11
3.17 Taxes 11
3.18 Brokers' or Finders' Fees 12
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BUYER 12
4.1 Organization of Buyer 12
4.2 Due Authorization 12
<PAGE> 10
4.3 Due Execution and Enforceability 12
4.4 No Conflict 12
4.5 Consents and Approvals of Governmental Authorities 13
4.6 SEC Documents 13
4.7 Shares of Common Stock 13
4.8 Brokers' or Finders' Fees 13
ARTICLE 5 - COVENANTS RELATING TO CONDUCT OF BUSINESS 13
5.1 Ordinary Course 13
5.2 No Dispositions 14
ARTICLE 6 - ADDITIONAL AGREEMENTS 14
6.1 Communications 14
6.2 Update to Disclosures 14
6.3 Good Faith; Further Assurances 14
6.4 PCG Business Transition 15
6.5 Provision of Audited Financials 15
6.6 Shareholder Agreement 15
6.7 Transition Plan; PCG Employees 15
6.8 Access to Information 15
6.9 Confidentiality 16
6.10 Patent Property 16
6.11 Taxes 16
6.12 GSM Agreement 16
ARTICLE 7 - NONCOMPETITION 17
ARTICLE 8 - CONDITIONS PRECEDENT 17
8.1 Conditions to Obligations of Each Party 17
8.2 Additional Conditions to Obligations of Seller 18
8.3 Additional Conditions to the Obligations of Buyer 18
ARTICLE 9 -SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNITY; ESCROW 19
9.1 Survival of Representations and Warranties 19
9.2 Indemnification by Buyer 19
9.3 Indemnification by Seller 19
9.4 Notice and Defense of Third-Party Claims 20
9.5 Limitation of Remedies 20
<PAGE> 11
9.6 Minimum 20
9.7 Escrow Arrangements 21
ARTICLE 10 PAYMENT OF EXPENSES 25
ARTICLE 11 TERMINATION, AMENDMENT AND WAIVER 26
11.1 Termination 26
11.2 Effect of Termination 26
11.3 Amendment 26
11.4 Extension; Waiver 26
ARTICLE 12 GENERAL 27
12.1 Notices 27
12.2 Headings 27
12.3 Counterparts 27
12.4 Binding Nature 27
12.5 Merger 28
12.6 Bulk Sales 28
12.7 Incorporation of Schedules 28
12.8 Applicable Law 28
ARTICLE 13 DEFINITIONS 28
13.1 Certain Definitions 28
13.2 Other Definitions 29
</TABLE>
<PAGE> 12
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule 1 PCG Business
Schedule 1.2(a) Capital Equipment and Hard Assets
Schedule 1.2(b) Customer and Marketing Databases
Schedule 1.2(c) Software, Software Tools and Databases
Schedule 1.2(d) Component Design Databases
Schedule 1.2(e) Component Testing Hardware, Software and Databases
Schedule 1.2(f) Engineering Applications
Schedule 1.2(g) Certain Licenses and Assigned Contracts
Schedule 1.2(i) Trademarks, Trade Names and Brand Names
Schedule 1.2(j) Patents and Patent Applications
Schedule 1.3 Consents and Third Party Licenses
Schedule 1.4 Assumed Liabilities
Schedule 2.4 Allocation of Purchase Price
Schedule 3.6 Seller Financial Statements
Schedule 3.7 Proprietary Rights and Ownership
Schedule 3.8 Restriction on Business Activities
Schedule 3.10 Title to Assets
Schedule 3.11 Intellectual Property
Schedule 3.13 Governmental Authorizations
Schedule 3.14 Compliance with Applicable Laws
Schedule 6.4 Summary of Obligations and Compensation Terms
(Requirements Schedule)
Schedule 6.7 PCG Employees
EXHIBITS
Exhibit A - Assignment and Assumption Agreement
Exhibit B - Bill of Sale and General Assignment of the Acquired Assets
Exhibit C - Patent Assignment
Exhibit D - Trademark Assignment
Exhibit E - Copyright Assignment
Exhibit F - Shareholder Agreement
</TABLE>
<PAGE> 13
ASSET PURCHASE AND LICENSE AGREEMENT
THIS ASSET PURCHASE AND LICENSE AGREEMENT (this "Agreement") is made
and entered into as of the 14th day of November 1996 by and between TCSI
CORPORATION, a Nevada corporation ("Seller") and ATMEL CORPORATION, a
California corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller's Personal Communications Group ("PCG") conducts
business as described in Schedule 1 attached hereto (such business
sometimes being referred to herein as the "PCG Business"), and
WHEREAS, Seller wishes to sell or license to Buyer and Buyer wishes to
purchase or license, as the case may be, from Seller, on the terms and for
the consideration hereinafter provided, substantially all of the assets,
properties and intellectual property rights relating to the PCG Business;
and
WHEREAS, $1,000,000 shall be placed in escrow as security for Seller's
indemnity obligations under this Agreement, and the release of such amount
shall be subject to certain events and
conditions;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale. Subject to the terms and conditions contained
in this Agreement, Seller agrees to sell, license, assign, transfer and
deliver to Buyer, as the case may be, and Buyer agrees to purchase and
license, as the case may be, the assets described in Section 1.2 below on
the Closing Date (as defined in Section 2.2 hereof) free and clear of all
liens, pledges, charges, claims, security interests or other encumbrances
of any sort (collectively, "Liens"), except as set forth on Schedule 3.7
and 3.11.
1.2 Description of Acquired Assets; Excluded Assets. Subject to the
last paragraph of this Section 1.2, at the Closing (as defined in Section
2.2 hereof), Seller shall sell and deliver to Buyer, and Buyer shall
purchase and accept from Seller, all of Seller's right, title and interest
in the following:
<PAGE> 14
(a) Capital Equipment and Hard Assets. All capital equipment
and other hard assets listed on Schedule 1.2(a) attached hereto;
(b) Customer and Marketing Databases. All customer and
marketing databases listed on Schedule 1.2(b) attached hereto;
(c) Software, Software Tools and Databases. All software
products, software tools and databases listed on Schedule 1.2(c) attached
hereto;
(d) Component Design Databases. All component design databases
listed on Schedule 1.2(d) attached hereto;
(e) Component Testing Hardware, Software and Databases. All
component testing hardware, software and databases listed on Schedule
1.2(e) attached hereto;
(f) Engineering Applications. All engineering applications
listed on Schedule 1.2(f) attached hereto;
(g) Certain Licenses and Assigned Contracts. The agreements,
licenses, instruments, undertakings, or commitments set forth on Schedule
1.2(g) attached hereto, including Seller's contract rights and any accrued
or contingent claims of Seller for reimbursement or refund attached or
incident thereto (the "Assigned Contracts"); provided that Buyer shall have
no obligation pursuant to any of the Assigned Contracts which by their
terms require a consent to assignment unless and until such consent is
obtained or Buyer and Seller have reached a reasonable arrangement in
writing with respect to such obligations in accordance with Section 1.3;
(h) Products Under Development. All design specifications for
any and all products under development;
(i) Trademarks, Trade Names and Brand Names. All trademarks,
trade names, brand names, trade dress, product names and other identifying
marks or packaging relating to the PCG Business listed on Schedule 1.2(i);
(j) Patents and Patent Applications. All patents and patent
applications listed on Schedule 1.2(j) attached hereto;
(k) Seller's rights in all licenses of Intellectual Property (as
defined in Section 1.5) pursuant to which Seller is the licensor;
(l) all of Seller's rights and ownership of all existing
software products included in the Acquired Assets (the "Products"),
including but not limited to those listed on Schedule 1.2(c), any other
computer programs developed or under development by the PCG Business, and
all copies of the Products (including revisions and updates in process),
and all technical, design, development, installation, operation and
maintenance information concerning the Products, including source code,
source documentation, source listings and annotations, engineering
notebooks, test data and test results, as well as all reference manuals and
support materials normally distributed to end-users and potential end-users
in connection with the distribution of the Products;
<PAGE> 15
(m) all of Seller's claims against any parties relating to any
right, property or asset included in the Acquired Assets, or against any
party to an Assigned Contract, including without limitation, unliquidated
rights under manufacturers' and vendors' warranties or guaranties; and
(n) all of Seller's rights (including, without limitation, any
leasehold interests) under any Assigned Contract set forth on Schedule
1.2(g);
provided, however, that with respect to those Acquired Assets (as herein
defined) which are delivered to Seller by remote telecommunication or other
similar method Buyer shall not take title or possession of any tangible
manifestation of such Acquired Assets; and provided further that such
tangible manifestations to be retained by Seller shall not represent title
to intellectual property. Buyer agrees not to request to take possession
of any intangible Acquired Asset by other than remote telecommunication
means unless expressly agreed in writing by Seller.
The items, property and rights described in (a) through (n) above shall be
collectively referred to as the "Acquired Assets"; provided, however, that
the Acquired Assets do not include any items described in items (a) through
(g) above that are sold or consumed in the ordinary course of business
after the date hereof but prior to the Closing consistent with Article 5
hereof.
Without limiting the generality of this Section 1.2, the Acquired
Assets shall not include the following assets (such excluded assets
constituting, collectively, "Excluded Assets"):
(i) cash or accounts receivable relating to the PCG Business;
(ii) any rights under current customer contracts of the PCG
Business described in Schedule 6.4 and the previous customer contracts
of the PCG Business (collectively, the "Customer Contracts");
(iii) all real property, whether owned or leased, used in the PCG
Business, including the real property set forth in Schedule 3.10(a);
(iv) the Intellectual Property licensed to Buyer pursuant to
Section 1.5; and
(iv) the TCSI logo.
<PAGE> 16
1.3 Consents and Third-Party Licenses. To Seller's knowledge,
Schedules 1.2(g) and 1.3 attached hereto set forth all consents or licenses
of third parties required for Seller to sell, license, sublicense, assign
or transfer its rights in the Acquired Assets to Buyer. If any consent or
license identified on Schedule 1.2(g) or 1.3 is not obtained and the
transactions contemplated hereby are consummated, Seller agrees to use its
best efforts at Seller's cost after the Closing Date and until such consent
or license is obtained and to cooperate with Buyer in any reasonable
arrangement (such as subcontracting, sublicensing or subleasing) designed
to provide for Buyer all of the benefits of Seller under such Acquired
Asset (including enforcement of any such agreement for the benefit of
Buyer) and any and all rights of Seller arising out of the breach or
cancellation of such Acquired Asset.
1.4 Assumption of Liabilities.
(a) Buyer shall not assume any liabilities or obligations of
Seller except for those liabilities and obligations which Buyer expressly
assumes pursuant to this Section 1.4. Without limiting the foregoing, it is
expressly agreed that Buyer shall not assume any liabilities for (i)
employment, income, sales (other than as contemplated by Section 2.3),
property or other taxes incurred or accrued by Seller, whether or not
relating to the Acquired Assets, or (ii) any accrued salary, vacation,
severance, health benefits or any other employee benefits pertaining to
employees of Seller who are made offers of employment by Buyer. Seller will
indemnify and hold Buyer harmless from and against any and all losses,
costs, expenses, claims, liabilities, deficiencies, judgments and damages
incurred or suffered by Buyer or any of its affiliates related to or
arising out of any liabilities or obligations of Seller, except for those
liabilities or obligations expressly assumed by Buyer in this Section 1.4
and Section 2.3.
(b) Effective from and after the Closing, Buyer shall assume and
agree to pay, discharge or perform, as appropriate, (i) Seller's
obligations under the Assigned Contracts listed on Schedule 1.2(g) attached
hereto, (ii) the sales taxes payable by Buyer pursuant to Section 2.3,
(iii) all liabilities and obligations listed on Schedule 1.4 attached
hereto and (iv) any and all liabilities and obligations relating to the
ownership, use or operation of the Acquired Assets by Buyer arising after
the Closing (collectively, the "Assumed Liabilities"), provided that Buyer
shall have no obligation pursuant to any of the Assigned Contracts or the
liabilities and obligations listed on Schedule 1.4 attached hereto which by
their terms require a consent to assignment unless and until such consent
is obtained or Buyer and Seller have reached a reasonable arrangement in
writing with respect to such obligations in accordance with Section 1.3.
1.5 Intellectual Property License.
(a) In conjunction with the transfer and assignment of the
Acquired Assets and subject to the conditions contained herein, on the
Closing Date Seller hereby grants to Buyer an perpetual, irrevocable,
worldwide exclusive license (including as against Seller and its
affiliates) in its Intellectual Property (defined below); provided however,
that such license shall be subject to and shall not impair all existing
licenses of such Intellectual Property. In conjunction with the foregoing
license, Seller agrees to execute, at Buyer's expense, such instruments and
documents as Buyer may reasonably request. "Intellectual Property" means
all patents, patent applications, copyrights, trademarks, service marks,
trade names, trade secrets, proprietary information, technology rights and
licenses, proprietary rights and processes, know-how, research and
development in progress, and any and all other intellectual property
including, without limitation, all things authored, discovered, developed,
made, perfected, improved, designed, engineered, devised, acquired,
produced, conceived or first reduced to practice by Seller or any of its
employees in the course of their employment by Seller and that pertain to
or are used in connection with the activities of the PCG Business, or that
are relevant to the development of the PCG Business or to the performance
by the products of the PCG Business of their intended functions or
purposes, whether tangible or intangible, in any stage of development,
including without limitation enhancements, designs, technology,
improvements, inventions, works of authorship, formulas, processes,
routines, subroutines, techniques, concepts, object code, flow charts,
diagrams, coding sheets, source code, listings and annotations,
programmers' notes, information, work papers, work product and other
materials of any types whatsoever, and all rights of any kind in or to any
of the foregoing. Notwithstanding the foregoing, "Intellectual Property"
shall not include (i) any Intellectual Property that contains proprietary
information of Seller's customers or (ii) third party software that
prohibits the transfer of such software. In addition, subject to Article
7, it is agreed that Seller shall be permitted to utilize the Intellectual
Property solely to the extent reasonably necessary to satisfy its
obligations under the Customer Contracts.
<PAGE> 17
(b) If Buyer obtains any proprietary information of Seller's
customers pursuant to this Agreement, Buyer shall hold such information
confidential, refrain from using such information and delivery such
information promptly to Seller.
(c) Seller agrees not to modify, amend or expand the provisions
of any existing Intellectual Property licenses without the prior consent of
Buyer, which consent shall not be unreasonably withheld. Seller agrees
promptly to forward to Buyer all future royalty payments received by Seller
under its existing licensing agreements.
(d) As security for Buyer's license in the Intellectual Property
described in Section 1.5(a), Seller hereby grants to Buyer a security
interest in the Intellectual Property covered by such license. Seller
shall assist Buyer in executing and filing the necessary uniform commercial
code statements and continuation statements relating to the perfection of
such security interest.
ARTICLE 2
PURCHASE PRICE; CLOSING
2.1 Purchase Price.
(a) Payment of Purchase Price. As consideration for the sale,
assignment, transfer, license and delivery of the Acquired Assets by Seller
to Buyer. Buyer, on the terms and conditions set forth herein, shall
deliver to Seller 335,000 shares of Buyer's Common Stock (the "Buyer's
Shares"). An amount equal to $1,000,000 will be deposited in accordance
with Article 9 as security for Seller's indemnity obligations under Article
9 hereof.
<PAGE> 18
(b) Adjustment of Buyer's Shares. If, between the date of this
Agreement and the Closing Date, the outstanding shares of Buyer's Common
Stock shall have been changed into a different number of shares or a
different class by reason of any recapitalization, stock dividend, split-
up, combination, exchange of shares or readjustment, the number of Buyer's
Shares shall be correspondingly adjusted.
(c) Fractional Shares. No fractional shares of Buyer's Common
Stock shall be issued, but in lieu thereof Seller shall receive from Buyer
an amount of cash equal to the value of the fractional share.
2.2 Closing
(a) Date. The Closing under this Agreement (the "Closing")
shall be held on November 14, 1996, provided that the conditions precedent
specified in this Agreement have been satisfied. Such date on which the
Closing is to be held is herein referred to as the "Closing Date." The
Closing shall be held at the offices of Wilson, Sonsini, Goodrich & Rosati,
650 Page Mill Road, Palo Alto, California, at 10:00 A.M. on such date, or
at such other time and place as Buyer and Seller may agree upon in writing.
(b) Closing Deliveries. At the Closing, Buyer shall deliver
either the certificate(s) representing the Buyer's Shares registered in
Seller's name and in such denominations as Seller may reasonably request or
a copy of its letter to the Buyer's transfer agent requesting the issuance
of such certificate(s). At the Closing, Seller shall deliver to Buyer such
transfer documents as Buyer may reasonably request, with the transfer
thereunder being effective without further action on November 18, 1996. On
November 18, 1996, Seller, through its officers, agents and employees, will
put Buyer into full possession and enjoyment of all tangible Acquired
Assets, terms FOB Seller. At the Closing, Seller shall commence delivery
to Buyer of those Acquired Assets identified by Buyer to be delivered by
remote telecommunication or such other method as Buyer in its sole
discretion directs.
(c) Delivery. At the Closing or the time otherwise indicated:
(i) Buyer shall deliver to Seller an instrument of
assumption of liabilities in substantially the form of Exhibit A hereto by
which Buyer shall assume the Assumed Liabilities as of the Closing;
(ii) Seller shall deliver to Buyer all bills of sale,
endorsements, assignments, consents to assignments to the extent obtained
and other instruments and documents as Buyer may reasonably request to
sell, convey, assign, transfer and deliver to Buyer good title to all the
Acquired Assets free and clear of any and all Liens, including, without
limitation, a Bill of Sale and General Assignment of the Acquired Assets in
substantially the form attached hereto as Exhibit B;
<PAGE> 19
(iii) Within 10 days of Closing, Seller shall deliver to
Buyer Patent Assignments in substantially the form attached hereto as
Exhibit C;
(iv) Within 10 days of Closing, Seller shall deliver to
Buyer Trademark Assignments in substantially the form attached hereto as
Exhibit D; and
(v) Within 10 days of Closing, Seller shall deliver to
Buyer a Copyright Assignment in substantially the form attached hereto as
Exhibit E.
(d) Taking of Necessary Action; Further Action. If, at any time
after the Closing Date, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest Buyer with full right,
title and possession to all the Acquired Assets, and all property, rights,
privileges, powers and franchises of Seller relating thereto, the officers
of Seller are fully authorized in the name Seller or otherwise to take, and
will take, all such lawful and necessary and/or desirable action.
2.3 Sales and Use Taxes. The sales, use and transfer taxes arising
out of the transfer of the Acquired Assets (the "Transfer Taxes"), shall be
determined at Closing based on the Allocation described in Section 2.4 and
shall be borne equally by Buyer and Seller. To the extent permitted by
law, Seller and Buyer shall cooperate fully in minimizing Transfer Taxes,
which the parties hereto estimate (based on a preliminary analysis of the
assets to be transferred) to be approximately $100,000. To the extent a
taxing authority provides notice to Seller of an audit of the Transfer
Taxes, Seller shall immediately notify Buyer and Buyer and Seller shall
jointly assume responsibility for such audit and each of Buyer and Seller
shall pay when due 50% of any additional Transfer Taxes (plus interest and
penalties) ultimately assessed with respect to the transactions
contemplated by this Agreement. Buyer and Seller shall have joint
authority to control, settle or defend any proposed adjustment to the
Transfer Taxes and Buyer and Seller shall cooperate fully in the defense or
settlement of any proposed adjustment to Transfer Taxes.
2.4 Allocation. The purchase price and license fee shall be
allocated in accordance with Schedule 2.4. Each of the parties hereto
agrees to report this transaction for state and federal tax purposes in
accordance with such allocation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, subject to such exceptions as
are specifically disclosed in the disclosure schedule supplied by Seller to
Buyer (the "Disclosure Schedule"), as of the date hereof and as of the
Closing Date as follows:
<PAGE> 20
3.1 Organization of Seller. Seller is a corporation duly
incorporated and validly existing under the laws of the State of Nevada and
has full corporate power and authority to carry on the PCG Business as it
is now being conducted and to own the Acquired Assets. Seller is duly
qualified or licensed to do business as a foreign corporation in good
standing in every jurisdiction in which the ownership of the Acquired
Assets or the conduct of the PCG Business requires such qualification,
except where the failure to so qualify or be licensed would not have a
material adverse effect on the business or financial condition of the PCG
Business.
3.2 Due Authorization. Seller has the corporate power and authority
to execute and deliver this Agreement, and each document, instrument or
agreement contemplated hereby, including but not limited to the documents
delivered at Closing, and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and
each document, instrument or agreement executed pursuant to this Agreement
by Seller and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action.
3.3 Due Execution and Enforceability. This Agreement, and each
document, instrument or agreement executed pursuant to this Agreement by
Seller, including but not limited to the documents delivered at Closing,
have been duly executed and delivered by Seller, and assuming due
authorization, execution and delivery by Buyer, this Agreement and each
document, instrument or agreement executed pursuant to this Agreement by
Seller, including but not limited to the documents delivered at Closing,
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their terms.
3.4 No Conflict. The execution and delivery of this Agreement, and
each document, instrument or agreement executed pursuant to this Agreement,
including but not limited to the documents delivered at Closing, and the
performance of Seller's obligations hereunder and thereunder, (i) are not
in violation or breach of, and will not conflict with or constitute a
default under, any of the terms of the articles of incorporation or bylaws
of Seller, or, except as provided in Schedule 1.2(g), any material
contract, agreement or commitment binding upon Seller or any of the
Acquired Assets; and (ii) will not, to the best knowledge of Seller,
conflict with or violate any applicable law, rule, regulation, judgment,
order or decree of any government, governmental instrumentality or court
having jurisdiction over Seller or any of the Acquired Assets.
3.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with,
any governmental or regulatory authority is required to be made or obtained
by Seller in connection with the execution, delivery and performance of
this Agreement and each document, instrument and agreement executed
pursuant to this Agreement.
<PAGE> 21
3.6 Seller Financial Statements6 Seller Financial Statements.
Schedule 3.6 sets forth the PCG's statement of income for the nine-month
period ended September 30, 1996 (the "PCG Financials"). The PCG Financials
have been prepared in good faith applied on a basis consistent throughout
the period indicated and generally consistent with the Seller's
consolidated financial statements. The PCG Financials present fairly the
operating results of the PCG Business during the period indicated therein,
subject to normal year-end consolidation adjustments, which are not
material. Seller does not maintain separate divisional balance sheets.
3.7 Proprietary Rights and Ownership7 Proprietary Rights and
Ownership.
(a) Ownership. Subject to Schedules 1.2(g) and 1.3, Seller owns
or possesses licenses or other rights to use the Acquired Assets and the
intellectual property licensed pursuant to Section 1.5 (collectively
referred to as "Proprietary Rights") and has the rights to sell, assign,
transfer, license and deliver, as applicable, such Proprietary Rights as
contemplated herein.
(b) No Infringement. Except as set forth in Schedules 3.7 and
3.11 attached hereto, to the best knowledge of Seller, the Proprietary
Rights do not infringe, and no one has asserted to Seller that such rights
infringe, any proprietary rights owned, possessed or used by any third
party. Except as set forth on Schedule 3.7, there are no claims, disputes,
actions, proceedings, suits or appeals pending against Seller with respect
to any Proprietary Rights and, to the knowledge of Seller, none has been
threatened against Seller. Except as set forth in Schedules 3.7 and 3.11,
to the best knowledge of Seller, there are no facts or alleged facts which
would reasonably serve as a basis for any claim that Seller does not have
the right to use, free of any rights or claims of others, all Proprietary
Rights in the design, development, manufacture, use, sale and other
disposition of any or all products in the PCG Business and services
presently being used, furnished or sold in the conduct of the business of
the PCG Business as it has been and is now being conducted.
(c) Effective Transfer of Necessary Rights. Except as set forth
in Schedules 1.3, 3.7 and 3.11, by means of this Agreement, together with
the documents, instruments and agreements contemplated hereby, Seller will
transfer to Buyer good and marketable title to all Acquired Assets and the
related Proprietary Rights. Except as set forth in Schedules 1.3, 3.7 and
3.11, by means of the license in Section 1.5, together with the documents,
instruments and agreements contemplated thereby, Seller will transfer to
Buyer a good and valid license to the Intellectual Property and the related
proprietary rights covered thereby. Except as set forth in Schedules 1.3
and 3.7, the Acquired Assets and the related proprietary rights sold to
Buyer pursuant to this Agreement and the Intellectual Property and related
Proprietary rights licensed to Buyer pursuant to this Agreement, and the
documents, instruments and agreements contemplated hereby and thereby, will
transfer all necessary assets and intellectual property rights required by
Buyer to conduct the PCG Business.
3.8 Restrictions on Business Activities. Except on Schedule 3.8,
there is no agreement, commitment, judgment, injunction, order or decree
binding upon Seller, the Acquired Assets or, to Seller's knowledge, any
employee of Seller, which has or could reasonably be expected to have the
effect of prohibiting or impairing in any material respect any use by Buyer
of the Acquired Assets following the Closing to the extent used in the
manner generally used prior to the Closing Date.
<PAGE> 22
3.9 Capital Equipment and Hard Assets. All tangible assets and
equipment listed on Schedule 1.2(a) are in substantially good condition and
repair and are adequate for the uses to which they are being put or would
be put in the ordinary course of business consistent with industry
standards; all of the tangible assets will be transferred to Buyer without
any liens or encumbrances.
3.10 Title to Assets.
(a) Schedule 3.10(a) sets forth a list of all real property
currently leased by Seller relating to the Acquired Assets, the name of the
lessor, the date of the lease and each amendment thereto and the aggregate
annual rental and/or other fees payable under any such lease. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default).
(b) Seller has good and valid title to, or, in the case of
leased properties, valid leasehold interests in, all of the Acquired
Assets, free and clear of any Liens, except as reflected in Schedule
3.10(b).
3.11 Intellectual Property.
(a) Seller owns a valid right or license to use the Intellectual
Property being used or held for use to conduct the activities of the PCG
Business, and to the best knowledge of Seller the conduct of the activities
of the PCG Business currently and in the past does not conflict with and
has not conflicted with Intellectual Property rights of others. Except as
set forth on Schedule 3.11, all Intellectual Property used or held for use
in the conduct of the activities of the PCG Business owned by Seller is so
owned free and clear of all Liens and no other person, including without
limitation any present or former employee, officer or director of Seller,
has any right whatsoever therein. To the best knowledge of Seller, neither
Seller nor any present or former employee thereof has violated or, by
conducting the activities of the PCG Business in the ordinary course
consistent with past practice would violate, any of the Intellectual
Property rights of any other person or entity. Seller does not have any
obligation to compensate any person or entity for the use of any
Intellectual Property relating to the Acquired Assets. Except as set forth
in Schedule 3.11, Seller has not granted to any person or entity any
license, option or other rights to use in any manner any Intellectual
Property relating to the Acquired Assets whether requiring the payment of
royalties or not.
(b) Except as set forth on Schedule 3.11, Seller has all right,
title and interest in and to the software products and the software
technology and related documentation included in the Acquired Assets (the
"Software"). Except as set forth on Schedule 3.11, no person or entity
other than Seller owns any right, title or interest in the Software
including, without limitation, any right to manufacture, use, copy,
distribute or sublicense any object code or source code thereof. Except as
set forth on Schedule 3.11, the Software is (i) not subject to any Liens,
(ii) not subject to any pending or, to Seller's best knowledge, threatened
challenge of infringement of the rights of others, nor to the best
knowledge of Seller is there any basis for a challenge of infringement of
any such rights of others, and (iii) freely transferable and assignable to
Buyer.
<PAGE> 23
3.12 Contracts. Each of the Assigned Contracts referred to on
Schedule 1.2(g) to this Agreement, except as set forth in Schedule 1.2(g),
is a legal, binding and enforceable obligation by or against Seller,
subject to the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar federal or state laws affecting the rights of
creditors and the effect or availability of rules of law governing specific
performance, injunctive relief or other equitable remedies (regardless of
whether any such remedy is considered in a proceeding at law or in equity).
Except as set forth in Schedule 1.2(g), Seller has not breached, violated
or defaulted under, or received notice that it has breached, violated or
defaulted under, any of the terms or conditions of any agreement required
to be set forth in Schedule 1.2(g). Each Assigned Contract is in full
force and effect and, except as otherwise disclosed in Schedule 1.2(g), is
not subject to any default thereunder of which Seller has knowledge by any
party obligated to Seller pursuant thereto. Seller has obtained, or will
obtain prior to the Closing Date, all necessary consents, waivers and
approvals of parties to any Assigned Contract as are required to assign all
rights and benefits thereunder to Buyer as of the Closing.
3.13 Governmental Authorization. Schedule 3.13 accurately lists each
material consent, license, permit, grant or other authorization issued to
Seller by a Governmental Entity (i) pursuant to which Seller currently
operates or holds any interest in any of the Acquired Assets or (ii) which
is required for the operation of the activities of the PCG Business or the
holding of any such interest (herein collectively called "PCG
Authorizations"), which PCG Authorizations are in full force and effect and
constitute all PCG Authorizations required to permit Seller to operate or
conduct the activities of the PCG Business or hold any interest in the
Acquired Assets. No Governmental Entity has at any time notified Seller of
any challenge or question regarding the legal right of Seller to
manufacture, offer or sell any of the products of the PCG Business in the
present manner or style thereof.
3.14 Compliance with Applicable Laws. Seller has complied in all
material respects with all laws, regulations, rules and orders (including
those relating to environmental matters) of each court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign (each a "Governmental Entity") applicable to it which
relate to the Acquired Assets, except where the failure to so comply would
not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the PCG Business. Except as set forth in
Schedule 3.14, Seller has not received any written notice of any asserted
violation of any such laws, regulations, rules or orders. Seller has not
received any written notice that any investigation or review by any
Governmental Entity with respect to the PCG Business is pending or that any
such investigation or review is contemplated, except where the outcome of
such investigation or review would not have a material adverse effect on
the business or financial condition of the PCG Business.
<PAGE> 24
3.15 Reliance Upon Seller's Representations. Seller understands that
the Buyer's Shares are not registered under the Securities Act on the
ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to section 4(2) thereof, and that the Buyer's reliance on such
exemption is based on Seller's representations set forth in the
Shareholders Agreement attached hereto as Exhibit F.
3.16 Material Adverse Effect16 Material Adverse Effect. There is
no fact, circumstance or condition of any kind or nature whatsoever known
to Seller which reasonably would be expected to have a material adverse
effect on the PCG Business or Acquired Assets that has not been set forth
in this Agreement and the Schedules hereto, except those facts concerning
general economic, legislative, regulatory or other matters such as may
generally impact all businesses of the type operated by Seller.
3.17 Taxes. To the extent a failure to do so would materially and
adversely affect Buyer, the Acquired Assets or Buyer's use of the Acquired
Assets, (i) Seller has timely filed within the time the period for filing
or any extension granted with respect thereto, all federal, state, local
and foreign tax returns, reports and estimates ("Returns") which it is
required to file relating or pertaining to any and all taxes attributable
to or levied upon the Acquired Assets, and (ii) paid any and all taxes it
is required to pay in connection with the taxable periods to which such
Returns relate. There are (and immediately following the Closing there
will be) no Liens or similar encumbrances on the Acquired Assets relating
or pertaining to taxes, except with respect to taxes not yet due and
payable. Seller has no knowledge of any basis for the assertion of any
material claims which, if adversely determined, would result in a Lien or
other encumbrance on the Acquired Assets or otherwise materially and
adversely affect Buyer or the Acquired Assets.
3.18 Brokers' or Finders' Fees. Seller is not a party to, or in any
way obligated under, and has no knowledge of, any contract or outstanding
claim for the payment of any broker's or finder's fee in connection with
the origin, negotiation, execution or performance of this Agreement, the
nonpayment of which could result in the placement of a lien or other
encumbrance on the Acquired Assets, or a claim against Buyer or its
affiliates.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as
of the Closing Date as follows:
4.1 Organization of Buyer. Buyer is a corporation duly incorporated
and validly existing under the laws of the State of California and has full
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns.
<PAGE> 25
4.2 Due Authorization. Buyer has the corporate power and authority
to execute and deliver this Agreement and each document, instrument or
agreement contemplated hereby, including but not limited to the documents
to be delivered by it at Closing, and to perform its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement
and each document, instrument or agreement executed pursuant to this
Agreement by Buyer and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action.
4.3 Due Execution and Enforceability. This Agreement and each
document, instrument or agreement executed pursuant to this Agreement by
Buyer, including but not limited to the documents to be delivered at
Closing, have been duly executed and delivered by Buyer, and assuming due
authorization, execution and delivery by Seller, this Agreement and each
document, instrument or agreement executed pursuant to this Agreement by
Buyer, including but not limited to the documents to be delivered at
Closing, constitute the legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms.
4.4 No Conflict. The execution and delivery of this Agreement and
each document, instrument or agreement executed pursuant to this Agreement,
including but not limited to the documents to be delivered at Closing, and
the performance of Buyer's obligations hereunder and thereunder, (i) are
not in violation or breach of, and will not conflict with or constitute a
default under, any of the terms of the articles of incorporation or bylaws
of Buyer, or any material contract, agreement or commitment binding upon
Buyer or any of its assets or properties; and (ii) will not, to the
knowledge of Buyer, conflict with or violate any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over Buyer or any of its
assets or properties.
4.5 Consents and Approvals of Governmental Authorities. No consent,
approvals or authorization of, or declaration, filing or registration with,
any governmental or regulatory authority is required to be made or obtained
by Buyer in connection with the execution, delivery and performance of this
Agreement and each document, instrument and agreement executed pursuant to
this Agreement.
4.6 SEC Documents. Buyer has made available to Seller a true and
complete copy of Buyer's Form 10-K for the year ended December 31, 1995 and
Form 10-Q for the three and nine months ended September 30, 1996 and
Buyer's definitive proxy statement dated March 15, 1996 (the "Buyer SEC
Documents"). As of their respective filing dates, Buyer has made all
necessary SEC filings, the Buyer SEC Documents comply in all material
respects with the requirements of the Exchange Act, and none of the Buyer
SEC Documents contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
<PAGE> 26
4.7 Shares of Common Stock. The shares of Buyer's Common Stock, when
issued and delivered to Seller in accordance with this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable, and Buyer
will promptly make application to list such shares on the Nasdaq National
Market.
4.8 Brokers' or Finders' Fees. Buyer is not a party to, or in any way
obligated under, and has no knowledge of, any contract or outstanding claim
for the payment of any broker's or finder's fee in connection with the
origin, negotiation, execution or performance of this Agreement, the
nonpayment of which could result in the placement of a lien or other
encumbrance on the Acquired Assets, or a claim against Buyer or its
affiliates.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
During the period from the date of this Agreement and continuing until
the Closing Date, Seller agrees (except as expressly contemplated by this
Agreement or to the extent that Buyer shall otherwise consent in writing)
that:
5.1 Ordinary Course. Seller shall carry on the business of the PCG
Business in the usual, regular and ordinary course, including the payment
of all state and federal taxes, in substantially the same manner as
heretofore conducted and, to the extent consistent with such business, use
all commercially reasonable efforts consistent with past practice and
policies to preserve intact the PCG Business's present business
organization, will use its reasonable efforts to keep available the
services of the PCG Business's present key employees and preserve the PCG
Business's relationships with present and potential customers, suppliers
and others having business dealings with the PCG Business to the end that
the PCG Business's goodwill and ongoing businesses shall be unimpaired at
the Closing; provided, however that Seller shall not without Buyer's
express written consent enter into any long-term supply or volume purchase
commitments.
5.2 No Dispositions. Seller shall not sell, lease, encumber or
otherwise dispose of any of the assets of the PCG Business, individually or
in the aggregate, except in the ordinary course of business consistent with
prior practice, without the prior written consent of Buyer.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Communications. Between the date hereof and the Closing Date,
neither Seller nor Buyer will furnish any communication to its shareholders
or to the public generally if the subject matter thereof relates to the
other party or to the transactions contemplated by this Agreement without
the prior approval of the other party as to the content thereof, which
approval shall be prompt and not be unreasonably withheld, and subject to
each party's compliance with applicable law.
<PAGE> 27
6.2 Update to Disclosures. Without limiting either party's right to
rely on the representations and warranties as set forth herein, each of
Buyer and Seller shall provide the other party with updates to the
disclosures provided or made available to the other party as to material
facts which arise between the date of this Agreement and the Closing Date
and which, if they had occurred and been known prior to the date of this
Agreement, would have been required to have been disclosed in order to make
the representations and warranties contained in Article 3 and Article 4
true and correct as of the date of this Agreement.
6.3 Good Faith; Further Assurances. Each party shall act in good
faith in an attempt to cause to be satisfied the conditions precedent to
this Agreement, including obtaining any consent or license identified in
Schedule 1.3. Each party will act in good faith and take all reasonable
action to include all items on Schedules 1.2(a)-(n) to this Agreement which
were intended by the parties to be so included therein to the extent they
are discovered after the date hereof and before the Closing Date and to
take all reasonable action within its capability necessary to render
accurate as of the Closing Date its representations and warranties
contained in this Agreement. Each party, upon the request of the other
party from time to time after Closing, shall execute and deliver, and use
their reasonable efforts to cause other persons to execute and deliver, to
the other party all such further documents and instruments, and will do or
use their reasonable efforts to cause to be done such other acts, as either
party may reasonably request, more completely to consummate and make
effective the transactions contemplated hereby. After the Closing Date,
Seller shall endeavor in good faith to provide, consistent with any
contractual limitations, the information required by Buyer necessary to
understand and enforce the rights it may have with respect to Intellectual
Property under the Customer Contracts.
6.4 PCG Business Transition. Buyer and Seller shall use their best
efforts to finalize a transition plan as soon as reasonably practicable
following the date hereof. Buyer agrees to perform the obligations under
the Customer Contracts retained by Seller as described in Schedule 6.4.
Seller agrees to provide within 30 days after the Closing Date a schedule
(a "Requirements Schedule") setting forth in reasonable detail an estimate
of the man-hours and other efforts required to complete such obligations.
Promptly after the beginning of each month following delivery of the
initial Requirements Schedule, Seller shall deliver to Buyer a revised
Requirements Schedule in form and scope consistent with the initial
Requirements Schedule. As compensation for such services, Seller agrees
that Buyer shall receive the compensation specified in Schedule 6.4 (it
being understood that Buyer shall be obligated to pay for any direct costs
related to earning such compensation up to the amount of such
compensation). If the actual man-hours and efforts required of Buyer to
complete the Schedule 6.4 obligations are in excess of from those set forth
in the initial Requirements Schedule, Buyer and Seller shall negotiate in
good faith to provide additional fair compensation to Buyer.
<PAGE> 28
6.5 Provision of Audited Financials. The parties acknowledge that
audited financials have never been prepared and are not currently available
for the PCG Business. In the event Buyer shall be required under the rules
and regulations of the SEC to file, or include in any filing otherwise
required to be filed by it under the Exchange Act, historical audited
financial statements (the "Financial Statements") of the PCG Business or
the Acquired Assets, then Buyer shall notify Seller in writing of such
requirement and provide a detailed statement of all financial statements so
required by Buyer. Seller shall cause its independent auditors to assist
Buyer in preparing such Financial Statements, provided that Buyer shall pay
all of the reasonable fees charged and disbursements incurred by Seller's
independent auditors in connection with the preparation of such Financial
Statements. In connection with any claim for reimbursement, Seller shall
provide Buyer with a copy of the auditor's invoice (including such fees and
disbursements). Buyer shall promptly pay such invoice after receipt
thereof.
6.6 Shareholder Agreement. Buyer and Seller shall enter into the
Shareholder Agreement in the form attached hereto as Exhibit F, which will
become effective upon the Closing.
6.7 Transition Plan; PCG Employees. Promptly after Closing, Buyer
will make offers of employment to the PCG employees of Seller who are
identified on Schedule 6.7 hereto. Such offers of employment will provide
that the employees will have an "at will" employment relationship
(commencing on and after November 18, 1996) with Buyer and will be entitled
to participate in the employee benefit plans generally available to Buyer's
employees. The Buyer shall not assume, and the Seller shall indemnify
Buyer against, any and all obligations of Seller to such persons accepting
employment with Buyer arising as a result of their employment with Seller
prior to November 18, 1996 including, without limitation, all obligations
and liabilities related to salary, commissions, bonus or other performance-
based compensation, accrued vacation, severance or any other employee
benefits of any kind whatsoever.
6.8 Access to Information. Seller shall afford Buyer and its
accountants, counsel and other representatives, full access during normal
business hours during the period prior to the Closing Date to (a) all of
Seller's properties, books, commitments and records relating to the
Acquired Assets, (b) the employees and suppliers of the PCG Business and
(c) all other information concerning the business, properties and personnel
(subject to restrictions imposed by contract or applicable law) of the PCG
Business as Buyer may reasonably request. Seller agrees to maintain and
retain any and all information regarding the PCG Business operations on or
prior to the Closing Date necessary for Buyer to calculate the availability
to it of tax credits for research activities under Section 41 of the
Internal Revenue Code of 1986. Seller agrees to provide to Buyer and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request. No informa tion or knowledge obtained in
any investigation pursuant to this Section 6.8 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to
the obligations of the parties hereunder.
<PAGE> 29
6.9 Confidentiality. Each of the parties hereto hereby agrees to
keep such information or knowledge obtained in any investigation pursuant
to Sections 2.3 or 6.8, or pursuant to the negotiation and execution of
this Agreement or the effectuation of the transactions contemplated hereby,
confidential; provided, however, that the foregoing shall not apply to
information or knowledge which (a) a party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the other
party, (b) is generally known to the public and did not become so known
through any violation of law or this Agreement, (c) became known to the
public through no fault of such party, (d) is later lawfully acquired by
such party from other sources, (e) is required to be disclosed by order of
court or government agency with subpoena powers or (f) which is disclosed
in the course of any litigation between any of the parties hereto, (g)
required under the rules and regulations of the SEC to filed, or included
in any filing otherwise required to be filed by Seller or Buyer under the
Exchange Act or (h) any press release that describes the general provisions
of the Agreement and is mutually acceptable to Buyer and Seller.
6.10 Patent Property. With respect to all patent rights, patents and
patent applications constituting part of the Acquired Assets (the
"Transferred Patents"), at the request of Buyer, Seller shall use all
reasonable efforts to assist Buyer in the preparation, filing, prosecution,
and maintenance of the Transferred Patents at Buyer's expense except for
the value of time of Seller's employees. To the extent that any named
inventors of the Transferred Patents remain employees of Seller, Seller
shall use reasonable efforts to make the named inventors available to Buyer
for the purposes of preparing, filing, prosecuting, and maintaining
Transferred Patents.
6.11 Taxes. Subject to Section 2.3, Seller shall be responsible for
and pay when due all taxes attributable to or levied or imposed upon the
Acquired Assets relating or pertaining to the period (or that portion of
any period) ending on or prior to the Closing Date. Subject to Section
2.3, Seller shall continue to timely file within the time period for
filing, or any extension granted with respect thereto, all tax returns
required to be filed in connection with the Acquired Assets.
6.12 GSM Agreement. Buyer and Seller agree that the GSM contract
between Buyer and Seller shall be canceled upon the Closing without any
further action on the part of Buyer and Seller.
ARTICLE 7
NONCOMPETITION
In consideration for the amount received under this Agreement, from
and after the Closing Date, neither Seller nor any of its more than 50%
owned subsidiaries, or similarly controlled entities, shall, during the
period commencing on the Closing Date and ending on the completion of the
fifth (5th) full year after the Closing Date:
(a) Manufacture, sell or design for a third party, or grant
licenses with the purpose of assisting a third party to manufacture or
sell, any products competing with or similar to those products of the PCG
Business;
<PAGE> 30
(b) Act as a reseller or distributor of any products competing
with or similar to those products of the PCG Business;
(c) Invest in any company the majority of whose revenues are
derived from products competing with or similar to those products of the
PCG Business if Seller's aggregate holdings would exceed five percent (5%)
of the outstanding voting securities of such company as to a publicly-
traded company, or ten percent (10%) as to a private company; or
(d) Otherwise engage, or participate in any business or entity
that engages or participates in the design, development, production,
marketing, sales or service of any product that competes with products of
the PCG Business.
It is understood that the sale of products and services not competing with
the products of the PCG Business to entities otherwise engaged or
participating in a business which competes with the PCG Business shall not
violate the provisions of this Article 7. This covenant not to compete
shall terminate immediately and automatically in the event that the Buyer
shall no longer engage in the PCG Business. This covenant not to compete
shall not apply to Seller's use of the Intellectual Property solely to the
extent reasonably necessary to satisfy its obligations under the Customer
Contracts retained by Seller.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 Conditions to Obligations of Each Party. The obligations of each
party to this Agreement to effect the transactions contemplated hereby
shall be subject to the filing, occurrence or receipt of all
authorizations, consents, orders or approvals of, or declarations or
filings with, or expiration of waiting periods imposed by, any governmental
authority necessary for the consummation of the transactions contemplated
by this Agreement, on or prior to the Closing Date unless waived by both
Buyer and Seller.
8.2 Additional Conditions to Obligations of Seller. The obligations
of Seller to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be
waived, in writing, exclusively by Seller:
(a) Representations, Warranties and Covenants. The
representations and warranties of Buyer in this Agreement shall be true and
correct in all material respects (except to the extent any such
representation or warranty is qualified as to materiality) on and as of the
Closing Date as though such representations and warranties were made on and
as of such time, and Buyer shall have performed and complied with all
covenants, obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing Date. Seller shall
have been provided with a certificate duly executed on behalf of Buyer by
its chief financial officer to such effect as of the Closing Date.
<PAGE> 31
(b) Third Party Consents. Any and all consents, waivers, and
approvals required from third parties relating to the Assigned Contracts so
as to assign all rights of Seller thereunder to Buyer as of the Closing
shall have been obtained.
(c) No Injunctions or Restraints on Conduct of Business. No
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal or
regulatory restraint or provision challenging Buyer's proposed acquisition
of the Acquired Assets, or limiting or restricting Buyer's ability to carry
on the activities and operations of the PCG following the Closing shall be
in effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending.
8.3 Additional Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which
may be waived, in writing, exclusively by Buyer:
(a) Representations, Warranties and Covenants. The
representations and warranties of Seller in this Agreement shall be true
and correct in all material respects (except to the extent any such
representation or warranty is qualified as to materiality) on and as of the
Closing Date as though such representations and warranties were made on and
as of such time, and Seller shall have performed and complied with all
covenants, obligations and conditions of this Agreement required to be
performed and complied with by them as of the Closing Date. Buyer shall
have been provided with a certificate executed on behalf of Seller by its
Chief Financial Officer to such effect as of the Closing Date.
(b) Claims. There shall not have occurred any claims (whether
or not asserted in litigation) which may materially and adversely affect
the consummation of the transactions contemplated hereby or the Acquired
Assets.
(c) Third Party Consents. Any and all consents, waivers, and
approvals required from third parties relating to the Assigned Contracts so
as to assign all rights of Seller thereunder to Buyer as of the Closing
shall have been obtained.
(d) No Injunctions or Restraints on Conduct of Business. No
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal or
regulatory restraint or provision challenging Buyer's proposed acquisition
of the Acquired Assets, or limiting or restricting Buyer's ability to carry
on the activities and operations of the PCG following the Closing shall be
in effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending.
<PAGE> 32
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY; ESCROW
9.1 Survival of Representations and Warranties. All of Buyer's and
Seller's representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement (each as modified by the
Disclosure Schedules) shall survive the Closing and continue until 5:00
p.m., California time until the date which is one year following the date
of this Agreement (the "Expiration Date").
9.2 Indemnification by Buyer. Except as otherwise expressly provided
in this Article 9, Buyer shall defend, indemnify and hold harmless each of
Seller and its directors, officers and affiliates (collectively, "Buyer
Indemnitees"), and shall reimburse Buyer Indemnitees, for, from and against
each and every claim, loss (which shall include any diminution in value),
liability, judgment, damage, cost and expense (including, without
limitation, interest, penalties, costs of preparation and investigation,
and the reasonable fees, disbursements and expenses of attorneys,
accountants and other professional advisors) (collectively, "Loss" or
"Losses") imposed on or incurred by Buyer Indemnitees resulting from or
arising out of (including without limitation, resulting from or arising out
of any claim made by any third party) (a) a breach of Buyer's
representations, warranties or covenants in this Agreement, (b)
transactions, events, acts or omissions of or by Buyer relating to the
Acquired Assets after the Closing or (c) the Assumed Liabilities.
9.3 Indemnification by Seller. Except as otherwise expressly provided
in this Article 9, Seller shall defend, indemnify and hold harmless each of
Buyer and its directors, officers and affiliates (collectively, "Seller
Indemnitees"), and shall reimburse Seller Indemnitees, for, from and
against each and every Loss imposed on or incurred by Seller Indemnitees
resulting from or arising out of (including without limitation, resulting
from or arising out of any claim made by any third party) (a) a breach of
Seller's representations, warranties or covenants in this Agreement or (b)
transactions, events, acts or omissions of or by Seller relating to the
Acquired Assets on or before the Closing.
<PAGE> 33
9.4 Notice and Defense of Third-Party Claims. If any action, claim
or proceeding shall be brought or asserted under this Article 9 against any
Buyer Indemnitee or Seller Indemnitee (in either case, an "Indemnified
Person") in respect of any claim by a third party for which indemnity may
be sought under this Article 9 from an indemnifying person or any successor
thereto (the "Indemnifying Person"), the Indemnified Person shall give
prompt written notice of such action or claim to the Indemnifying Person
who shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of all
expenses; except that any delay or failure so to notify the Indemnifying
Person shall relieve the Indemnifying Person of its obligations hereunder
only to the extent, if at all, that (A) it is prejudiced by reason of such
delay or failure, or (B) the Indemnified Person fails to give notice of its
claim. The Indemnified Person shall have the right to employ separate
counsel in any of the foregoing actions, claims or proceedings and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless both the
Indemnified Person and the Indemnifying Person are named as parties and the
Indemnified Person shall in good faith determine that representation by the
same counsel is inappropriate. In the event that the Indemnifying Person,
within thirty (30) days after notice of any such action or claim, fails to
assume the defense thereof, the Indemnified Person shall have the right to
undertake the good faith defense of such action, claim or proceeding for
the account of and at the expense of the Indemnifying Person, subject to
the right of the Indemnifying Person to assume the defense of such action,
claim or proceeding at any time prior to the settlement, compromise or
final determination thereof. Anything in this Article 9 to the contrary
notwithstanding, (a) the Indemnifying Person shall not, without the
Indemnified Person's prior written consent, settle or compromise any action
or claim or consent to the entry of any judgment with respect to any
action, claim or proceeding for anything other than money damages paid by
the Indemnifying Person, and (b) the Indemnified Party shall not settle or
compromise any action or claim or consent to the entry of any judgment,
except where the Indemnifying Person has failed to assume the defense of
such action or claim, and then only with the prior consent of the
Indemnifying Party, which shall not be unreasonably withheld. The
Indemnifying Person may, without the Indemnified Person's prior consent,
settle or compromise any such action, claim or proceeding or consent to
entry of any judgment with respect to any such action or claim that
requires solely the payment of money damages by the Indemnifying Person.
9.5 Limitation of Remedies. Buyer acknowledges and agrees that
absent fraud its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant
to the indemnification provisions set forth in this Article 9. In
furtherance of the foregoing, Buyer hereby waives, absent fraud by Seller,
any and all rights, claims and causes of action it may have against Seller
arising under or based upon any Federal, state or local statute, law,
ordinance, rule or regulation (including, without limitation, any such
relating to environmental matters or arising under or based upon common law
or otherwise).
9.6 Minimum; Maximum. Notwithstanding the other provisions of this
Article 9 and absent fraud, neither party shall be required to indemnify
the other unless all claims individually or in the aggregate of one party
for indemnification, either actual or reasonably estimable, exceed a
minimum amount of $75,000. If the claims of one party exceed such minimum,
that party may seek indemnification for its entire claim, including such
minimum amount. Notwithstanding the other provisions of this Article 9 and
absent fraud, (a) the maximum amount of indemnity payments required to be
made by Seller in respect of any individual or group of claims relating to
any breach of a representation or warranty with respect to a category of
Intellectual Property (e.g., GSM, PDC, Lode or IS-136) or any other breach
of a representation or warranty shall be $2,500,000 and (b) the maximum
amount payable by Seller for all claims of indemnification shall be
$5,000,000.
<PAGE> 34
9.7 Escrow Arrangements.
(a) Escrow Fund. Within one business day of the Closing, Seller
shall deposit, in respect of a portion of the purchase price, $1,000,000 in
cash (the "Escrow Account") with the Escrow Agent (defined below) as
partial security for the indemnity obligations of Seller hereunder. The
Escrow Amount will be deposited with Bank of America, (or other institution
acceptable to Buyer and Seller) as Escrow Agent (the "Escrow Agent"), such
deposit to constitute an escrow fund (the "Escrow Fund") to be governed by
the terms set forth herein and at Buyer's cost and expense. The Escrow
Fund shall be available as partial security for the indemnity obligations
of Seller set forth in this Article 9 and shall constitute Buyer's initial
remedy with respect to such indemnity obligations. Buyer may not receive
any funds from the Escrow Fund unless and until Officer's Certificates (as
defined in paragraph (d) below) identifying Losses, the aggregate amount of
which exceed $75,000, have been delivered to the Escrow Agent as provided
in paragraph (e); in such case, Buyer may recover from the Escrow Fund the
total of its Losses, including the first $75,000.
(b) Escrow Period; Distribution upon Termination of Escrow
Periods. Subject to the following requirements, the Escrow Fund shall be
in existence immediately following the Effective Time and shall terminate
at 5:00 p.m., California time, on the sixth month anniversary of the
Closing Date (the "Escrow Period"); provided that the Escrow Period shall
not terminate with respect to such amount (or some portion thereof), that
together with the aggregate amount remaining in the Escrow Fund is
necessary in the reasonable judgment of Buyer, subject to the objection of
Seller and the subsequent arbitration of the matter in the manner provided
in Section 9.7(f) hereof, to satisfy any unsatisfied claims concerning
facts and circumstances existing prior to the termination of such Escrow
Period specified in any Officer's Certificate delivered to the Escrow Agent
prior to termination of such Escrow Period. As soon as all such claims
have been resolved, the Escrow Agent shall deliver to Seller the remaining
portion of the Escrow Fund not required to satisfy such claims.
(c) Protection and Investment of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of
Buyer and shall hold and dispose of the Escrow Fund only in accordance with
the terms hereof.
(ii) The Escrow Fund shall be invested by the Escrow Agent
from time to time (x) in securities which at the date of such investments
are direct obligations of, or obligations fully guaranteed by, the United
States or any agency of the United States or bank certificates of deposit
of a United States bank which is an affiliate of the Federal Reserve System
and has a net worth of at least $100,000,000, in each case with maturities
not in excess of 30 days, (y) in securities of corporate issuers having a
short- term a credit rating in the two highest rating categories as
determined by Moody's Investors Services or Standard & Poor's designated in
writing by Seller to the Escrow Agent or (z) in such securities as Buyer
and Seller shall mutually designate in writing delivered to the Escrow
Agent. Any interest received with respect to such investments of the
Escrow Fund shall be added to and shall constitute part of the Escrow Fund.
The Escrow Agent shall have the right to sell securities in order to make
payments and shall not be liable for any loss due to fluctuation in market
value or penalties due to early redemption.
<PAGE> 35
(d) Claims Upon Escrow Fund.
Upon receipt by the Escrow Agent at any time on or before the
last day of the Escrow Period of a certificate signed by any officer of
Buyer (an "Officer's Certificate"): (A) stating that Buyer has paid or
properly accrued or reasonably anticipates that it will have to pay or
accrue Losses, and (B) specifying in reasonable detail the individual items
of Losses included in the amount so stated, the date each such item was
paid or properly accrued, or the basis for such anticipated liability, and
the nature of the misrepresentation, breach of warranty or covenant to
which such item is related, the Escrow Agent shall, subject to the
provisions of Section 9.7(e) hereof, deliver to Buyer out of the Escrow
Fund, as promptly as practicable, an amount held in the Escrow Fund equal
to such Losses.
(e) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such
certificate shall be delivered to Seller and for a period of thirty (30)
days after such delivery, the Escrow Agent shall make no delivery to Buyer
of any Escrow Amounts pursuant to Section 9.7(d) hereof unless the Escrow
Agent shall have received written authorization from Seller to make such
delivery. After the expiration of such thirty (30) day period, the Escrow
Agent shall make delivery of funds from the Escrow Fund in accordance with
Section 9.7(d) hereof, provided that no such payment or delivery may be
made if Seller shall object in a written statement to the claim made in the
Officer's Certificate, and such statement shall have been delivered to the
Escrow Agent prior to the expiration of such thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case Seller shall so object in writing to any claim
or claims made in any Officer's Certificate, Seller and Buyer shall attempt
in good faith to agree upon the rights of the respective parties with
respect to each of such claims. If Seller and Buyer should so agree, a
memorandum setting forth such agreement shall be prepared and signed by
both parties and shall be furnished to the Escrow Agent. The Escrow Agent
shall be entitled to rely on any such memorandum and distribute amounts
from the Escrow Fund in accordance with the terms thereof.
<PAGE> 36
(ii) If no such agreement can be reached after good faith
negotiation, either Buyer or Seller may demand arbitration of the matter
unless the amount of the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until
such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by
three arbitrators. Buyer and Seller shall each select one arbitrator, and
the two arbitrators so selected shall select a third arbitrator. The
arbitrators shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrators,
to discover relevant information from the opposing parties about the
subject matter of the dispute. The arbitrators shall rule upon motions to
compel or limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the extent as a court of competent
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected
to without substantial justification. The decision of a majority of the
three arbitrators as to the validity and amount of any claim in such
Officer's Certificate shall be binding and conclusive upon the parties to
this Agreement, and notwithstanding anything in Section 9.7(e) hereof, the
Escrow Agent shall be entitled to act in accordance with such decision and
make or withhold payments out of the Escrow Fund in accordance therewith.
Such decision shall be written and shall be supported by written findings
of fact and conclusions which shall set forth the award, judgment, decree
or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in Santa Clara County, California under the rules
then in effect of the American Arbitration Association. For purposes of
this Section 9.7(f), in any arbitra tion hereunder in which any claim or
the amount thereof stated in the Officer's Certificate is at issue, Buyer
shall be deemed to be the Non-Prevailing Party in the event that the
arbitrators award Buyer less than one-half (1/2) of the disputed amount
plus any amounts not in dispute; otherwise, Seller shall be deemed to be
the Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall
pay its own expenses, the fees of each arbitrator, the administrative costs
of the arbitration and the expenses, including without limitation,
reasonable attorneys' fees and costs, incurred by the other party to the
arbitration.
(g) Third-Party Claims. In the event Buyer becomes aware of a
third-party claim which Buyer believes may result in a demand against the
Escrow Fund, Buyer shall notify Seller of such claim, and Seller shall be
entitled, at its expense, to participate in any defense of such claim.
Buyer shall have the right in its sole discretion to settle any such claim;
provided, however, that except with the consent of Seller, no settlement of
any such claim with third-party claimants shall alone be determinative of
the amount of any claim against the Escrow Fund. In the event that Seller
has consented to any such settlement, Seller shall have no power or
authority to object under any provision of this Article 9 to the amount of
any claim by Buyer against the Escrow Fund with respect to such settlement.
(h) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent
may receive after the date of this Agreement which are signed by an officer
of Buyer and Seller, and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed to be genuine
and to have been signed or presented by the proper party or parties. The
Escrow Agent shall not be liable for any act done or omitted hereunder as
Escrow Agent while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to the advice of counsel
shall be conclusive evidence of such good faith.
<PAGE> 37
(ii) The Escrow Agent is hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court of law,
notwithstanding any notices, warnings or other communications from any
party or any other person to the contrary. In case the Escrow Agent obeys
or complies with any such order, judgment or decree of any court, the
Escrow Agent shall not be liable to any of the parties hereto or to any
other person by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any
respect on account of the identity, authority or rights of the parties
executing or delivering or purporting to execute or deliver this Agreement
or any documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration
of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or
expenses, except for gross negligence or willful misconduct on the part of
the Escrow Agent. The Escrow Agent shall not incur any such liability for
(A) any act or failure to act made or omitted in good faith, or (B) any
action taken or omitted in reliance upon any instrument, including any
written statement or affidavit provided for in this Agreement that the
Escrow Agent shall in good faith believe to be genuine, nor will the Escrow
Agent be liable or responsible for forgeries, fraud, impersonations, or
determining the scope of any representative authority. In addition, the
Escrow Agent may consult with the legal counsel in connection with Escrow
Agent's duties under this Agreement and shall be fully protected in any act
taken, suffered, or permitted by him/her in good faith in accordance with
the advice of counsel. The Escrow Agent is not responsible for determining
and verifying the authority of any person acting or purporting to act on
behalf of any party to this Agreement.
<PAGE> 38
(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required
to determine the controversy or to take any action regarding it. The
Escrow Agent may hold all documents and Escrow Fund, and may wait for
settlement of any such controversy by final appropriate legal proceedings
or other means as, in the Escrow Agent's discretion, the Escrow Agent may
be required, despite what may be set forth elsewhere in this Agreement. In
such event, the Escrow Agent will not be liable for damage. Furthermore,
the Escrow Agent may at its option, file an action of interpleader
requiring the parties to answer and litigate any claims and rights among
themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and amounts held in escrow, except all cost,
expenses, charges and reasonable attorney fees incurred by the Escrow Agent
due to the interpleader action and which the parties jointly and severally
agree to pay. Upon initiating such action, the Escrow Agent shall be fully
released and discharged of and from all obligations and liability imposed
by the terms of this Agreement.
(vii) The parties and their respective successors and
assigns agree jointly and severally to indemnify and hold Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and
expenses, including reasonable costs of investigation, counsel fees, and
disbursements that may be imposed on Escrow Agent or incurred by Escrow
Agent in connection with the performance of its duties under this
Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter.
(viii) The Escrow Agent may resign at any time upon
giving at least thirty (30) days written notice to the parties; provided,
however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as
follows: the parties shall use their best efforts to mutually agree on a
successor escrow agent within thirty (30) days after receiving such notice.
If the parties fail to agree upon a successor escrow agent within such
time, the Escrow Agent shall have the right to appoint a successor escrow
agent authorized to do business in the State of California. The successor
escrow agent shall execute and deliver an instrument accepting such
appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow
agent as if originally named as escrow agent. The Escrow Agent shall be
discharged from any further duties and liability under this Agreement.
(i) Fees. All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by Buyer. It is understood that the fees
and usual charges agreed upon for services of the Escrow Agent shall be
considered compensation for ordinary services as contemplated by this
Agreement. In the event that the conditions of this Agreement are not
promptly fulfilled, or if the Escrow Agent renders any service not provided
for in this Agreement, or if the parties request a substantial modification
of its terms, or if any controversy arises, or if the Escrow Agent is made
a party to, or intervenes in, any litigation pertaining to this escrow or
its subject matter, the Escrow Agent shall be reasonably compensated for
such extraordinary services and reimbursed for all costs, attorney's fees,
and expenses occasioned by such default, delay, controversy or litigation.
Buyer promises to pay these sums upon demand.
ARTICLE 10
<PAGE> 39
PAYMENT OF EXPENSES
Except as specifically set forth otherwise in this Agreement, each of
Buyer and Seller shall each pay its own fees and expenses incurred incident
to the preparation and carrying out of the transactions herein contemplated
(including legal, accounting and travel).
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of Seller and Buyer; or
(b) by either Buyer or Seller if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of this Agreement or (ii) there shall be any action taken, or
any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to this Agreement by any governmental authority which
would make consummation of such transactions illegal.
(c) by Buyer if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated, issued or deemed applicable
to the transactions contemplated by this Agreement by any Governmental
Entity, which would: (i) prohibit Buyer's ownership or operation of all or
a portion of the Acquired Assets, or (ii) compel Buyer to dispose of or
hold separate all or a portion of the Acquired Assets or other businesses
of Buyer as a result of the transactions contemplated by this Agreement;
(d) by Buyer if it is not in material breach of its obligations
under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
on the part of Seller and such breach has not been cured within five (5)
business days after written notice to Seller (provided that, no cure period
shall be required for a breach which by its nature cannot be cured);
(e) by Seller if it is not in material breach of its obligations
under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
on the part of Buyer and such breach has not been cured within five (5)
business days after written notice to Buyer (provided that, no cure period
shall be required for a breach which by its nature cannot be cured).
<PAGE> 40
11.2 Effect of Termination. In the event of termination of this
Agreement by either Seller or Buyer as provided in Section 11.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the parties hereto or their respective officers
or directors except as set forth in Section 6.1 and Article 10.
11.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
11.4 Extension; Waiver. At any time prior to the Closing Date, Buyer
or Seller, by such corporate action as shall be appropriate, may, among
other things and to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties
made by the other party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 12
GENERAL
12.1 Notices1 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the other shall be in
writing and delivered personally or sent by certified mail, postage
prepaid, by telecopy, or by overnight courier service, as follows:
Seller: TCSI Corporation
2121 Allston Way
Berkeley, California 94704
Attention: Paul A. Farmer, Chief
Financial Officer
Fax: (510) 649-3887
Buyer: Atmel Corporation
2325 Orchard Parkway
San Jose, California 95131
Attention: Mike Ross, General Counsel
Fax: (408) 436-4377
or to such other persons as may be designated in writing by the parties, by
a notice given as aforesaid. Any such notice shall be deemed given when
delivered personally, four days after being sent certified mail, postage
prepaid, or the next business day if delivered by telecopy or overnight
courier service.
<PAGE> 41
12.2 Headings. The headings of the several sections of this Agreement
are inserted for convenience of reference only and are not intended to
affect the meaning or interpretation of this Agreement.
12.3 Counterparts. This Agreement may be executed in counterparts,
and when so executed each counterpart shall be deemed to be an original,
and said counterparts together shall constitute one and the same
instrument.
12.4 Binding Nature. This Agreement shall be binding upon and inure
to the benefit of the parties hereto. No party may assign or transfer any
rights under this Agreement, except that Buyer may assign this Agreement,
and any document, instrument or agreement executed pursuant to this
Agreement to a successor to substantially all of its business.
12.5 Merger. Except as set forth in the other documents, instruments
or agreements executed in connection with this Agreement, this Agreement
and the schedules referred to herein (a) set forth the entire understanding
between the parties, (b) supersede all previous written or oral
negotiations, commitments, understandings and agreements relating to the
subject matter hereof (except the agreements regarding confidential
information referred to in Section 6.9 hereof) and (c) merge all prior and
contemporaneous discussions between the parties relating to the subject
matter hereof. No party shall be bound by any definition, condition,
representation, warranty or covenant or provision other than as contained
herein or contemplated hereby.
12.6 Bulk Sales. The parties hereto agree that the transactions
contemplated hereby are not subject to the bulk transfer provisions of the
California Commercial Code.
12.7 Incorporation of Schedules. All schedules attached hereto are by
this reference incorporated herein and made a part hereof for all purposes
as if fully set forth herein.
12.8 Applicable Law. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of California as
applied to contracts entered into solely between residents of, and to be
performed entirely in, such state.
ARTICLE 13
DEFINITIONS
13.1 Certain Definitions. The terms defined in this Section 13.1
shall, for all purposes of this Agreement, have the meanings herein
specified, unless the context expressly or by necessary implication
otherwise requires:
(a) "Affiliate" shall mean with respect to any person, a person
that controls, is controlled by, or under common control with, such person.
<PAGE> 42
(b) "Buyer's Common Stock" shall mean the Common Stock of Atmel
Corporation.
(c) "Buyer's Shares" shall mean the shares of Buyer's Common
Stock delivered pursuant to Section 2.1(a) hereof.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) "SEC" shall mean the Securities and Exchange Commission.
(f) "Securities Act" shall mean the Securities Act of 1933, as
amended.
13.2 Other Definitions. In addition to the terms defined in Section
13.1, certain other terms are defined elsewhere in this Agreement, and,
whenever such terms are used in this Agreement, they shall have their
respective defined meanings, unless the context expressly or by necessary
implication otherwise requires.
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, and the
parties have each signed this Agreement, all as of the date first above
written.
TCSI CORPORATION
By: /s/ Paul A. Farmer
-------------------------------------
Paul A. Farmer
Chief Financial Officer
ATMEL CORPORATION
By: /s/ Mike Ross
-------------------------------------
Mike Ross
Vice President and General Counsel
<PAGE> 44
SCHEDULE 1
PCG BUSINESS
TCSI's PCG Business consists of developing and implementing a
portfolio of software products for communications semiconductor
applications. The software typically contains modem, error correction and
voice compression algorithms and is typically integrated into digital
signal processors (DSP) in wireless hand held consumer products. The PCG
Business also develops a DSP Integrated Circuit architecture known as
"Lode." Lode is a DSP core that serves as the basis for application-
specific integrated circuits that perform signal processing and
communications functions. Lode is used to provide voice processing with
low-power consumption for certain telecommunications applications.
<PAGE> 45
EXHIBIT A
ASSUMPTION AGREEMENT
This ASSUMPTION AGREEMENT is made, executed and delivered as of the
14th day of November 1996 and effective as of the 18th day of November
1996, by and between TCSI Corporation, a Nevada corporation (the "Seller"),
and Atmel Corporation, a California corporation (the "Buyer").
W I T N E S S E T H
WHEREAS, by Bill of Sale being executed and delivered by the Seller to
the Buyer simultaneously herewith pursuant to an Asset Purchase and License
Agreement between the Seller and the Buyer dated November 14th, 1996 (the
"Agreement"), the Seller is selling, conveying, assigning, transferring and
delivering to the Buyer all of the Acquired Assets (capitalized terms used
but not otherwise defined herein shall have the meaning set forth in the
Agreement), for the consideration, in the amount and upon the terms and
subject to the conditions contained in the Agreement; and
WHEREAS, in consideration therefor, the Agreement requires that the
Buyer undertake to assume and to agree to perform, pay or discharge certain
limited obligations of the Seller.
NOW, THEREFORE,
1. In consideration of the sale, conveyance, assignment, transfer
and delivery of the Acquired Assets by Seller to Buyer, the Buyer hereby
undertakes, assumes and agrees to perform, to the extent not heretofore
performed, the Assumed Liabilities, as described in Section 1.4 of the
Agreement.
2. The assumption by the Buyer of an obligation of the Seller shall
not be construed to defeat, impair or limit, in any way, any rights, or
remedies of the Buyer to contest or dispute in good faith the validity or
amount thereof.
3. Other than as specifically set forth above and in the Agreement,
the Buyer assumes no liability of the Seller of any kind, character or
description, including without limitation, liabilities based on tort,
contract or other claims.
4. Buyer agrees to indemnify and hold Seller, and its directors,
officers, and affiliates, harmless against and in respect of any loss,
cost, expense (including expenses of investigation), claim, liability,
deficiency, judgment or damage, including reasonable legal and accounting
fees and expenses incurred by Seller, its officers, directors, or
affiliates, by reason of Buyer's failure to satisfy or discharge in a
timely manner any of the Assumed Liabilities. This provision does not
affect Buyer's rights and remedies, including without limitation Buyer's
indemnification rights pursuant to the Agreement.
<PAGE> 46
5. This agreement shall be enforceable against and inure to the
benefit of the successors and assigns of the Buyer and shall be enforceable
against and inure to the benefit of the successors and assigns of the
Seller.
6. This agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to its conflicts of
law rules.
<PAGE> 47
EXHIBIT B
BILL OF SALE AND GENERAL ASSIGNMENT OF ASSETS
KNOW ALL MEN AND WOMEN BY THESE PRESENTS THAT:
TCSI Corporation, a Nevada corporation ("Seller"), pursuant to that
certain Asset Purchase and License Agreement dated as of November 14, 1996
(the "Agreement"), by and between the Seller and Atmel Corporation, a
California corporation ("Buyer"), for and in consideration of good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, does, effective as of November 18, 1996, hereby grant,
bargain, sell, convey, transfer, assign, set over and deliver to Buyer, its
successors and assigns, all of Seller's right, title and interest in and to
all of the Acquired Assets (capitalized terms used but not otherwise
defined herein shall have the meanings set forth in the Agreement).
TO HAVE AND TO HOLD all of the properties, assets and rights granted
and transferred hereby, with the appurtenances thereof, unto Buyer, its
successors and assigns forever, to it and their own use and benefit.
For the consideration aforesaid, Seller hereby constitutes and
appoints Buyer, its successors and assigns, the true and lawful attorney or
attorneys of Seller, with full power of substitution, for Seller and in its
name and stead, or otherwise, but on behalf and for the benefit of Buyer,
its successors and assigns, to demand and receive from time to time, any
and all properties hereby given, granted, bargained, sold, assigned,
transferred, conveyed, set over, confirmed and delivered and give receipts
and releases for and in respect of the same and any part thereof, and from
time to time to institute and prosecute in the name of Seller or otherwise,
but for the benefit of Buyer, its successors and assigns, any and all
proceedings at law, in equity or otherwise, which Buyer, its successors or
assigns, may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in and to the properties hereby given, granted,
bargained, sold, assigned, transferred, set over, conformed, delivered or
conveyed, and to defend or compromise any or all actions, suits or
proceedings in respect of any said properties and do all such acts and
things in relation thereto as Buyer, its successors and assigns, shall deem
advisable, Seller hereby declaring that the appointment made and the powers
hereby granted are coupled with an interest and are and shall be
irrevocable by Seller in any manner and for any reason.
Seller for itself and its successors and assigns, does hereby covenant
with Buyer, its successors and assigns, that Seller and its successors and
assigns will do, execute, acknowledge and deliver, or will cause to be
done, executed, acknowledged and delivered all such further acts, deeds,
bills of sale, transfers, assignments and conveyances, powers of attorney,
conveying and confirming unto Buyer, its successors and assigns, all and
singular, the properties hereby granted, sold, assigned, transferred,
conveyed and delivered as Buyer, its successors or assigns, shall
reasonably require, provided, however, that the Buyer, its successors and
assigns shall prepare all necessary documentation in conformity with the
terms and conditions of the Agreement.
<PAGE> 48
This Bill of Sale and General Assignment of Assets may be executed in
one or more counterparts, each of which shall be an original, but which
together shall constitute one and the same instrument.
<PAGE> 49
EXHIBIT C
ASSIGNMENT OF PATENTS
WHEREAS, TCSI Corporation, a Nevada corporation, having its
principal place of business at 2121 Allston Way, Berkeley, California
("Assignor"), is the owner of the patents and patent applications as listed
on Schedule A attached hereto; and
WHEREAS, Atmel Corporation, a California corporation, having its
principal place of business at 2325 Orchard Parkway, San Jose, California
("Assignee"), is desirous of acquiring the entire right, title and interest
in and to said patents and patent applications;
NOW, THEREFORE, be it known that for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
by Assignor, Assignor has, subject to the last paragraph hereof, assigned
and by these presents, does hereby sell, transfer, convey and assign unto
Assignee the entire right, title, and interest in and to said patents and
patent applications, including without limitation the right to recover for
past infringement of said patents and patent applications.
Assignor hereby covenants and agrees that Assignor shall
forthwith upon Assignee's written request and at Assignee's sole expense
take any and all steps and execute, acknowledge and deliver to the Assignee
any and all instruments and assurances necessary or expedient in order to
vest the patents and patent applications listed in Schedule A more
effectively in Assignee.
Assignor hereby confirms the representations and warranties
contained in Sections 3.4, 3.7 and 3.11 of the Agreement.
Assignor and Assignee agree that, notwithstanding any other
provision of this Assignment of Patents, this Assignment of Patents shall
be effective on and after November 18, 1996.
<PAGE> 50
EXHIBIT D
ASSIGNMENT OF TRADEMARKS
WHEREAS, TCSI Corporation, a Nevada corporation, having its principal
place of business at 2121 Allston Way, Berkeley, California ("Assignor"),
is the owner of the trademarks/service marks as listed on Schedule A
attached hereto; and
WHEREAS, Atmel Corporation, a California corporation, having its
principal place of business at 2325 Orchard Parkway, San Jose, California
("Assignee"), is desirous of acquiring said trademarks/service marks
together with the good will of the business with which said
trademark/service marks are used and which are symbolized by said marks and
any and all registrations and applications for registration of said marks;
NOW, THEREFORE, be it known that for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by Assignor,
Assignor has, subject to the last paragraph hereof, assigned and by these
presents, does hereby sell, transfer, convey and assign unto Assignee the
entire right, title, and interest in and to said marks, all registrations
and all applications for registration of said marks, including without
limitation the right to recover for past infringement of said marks, and
the good will of the business in connection with which said marks are used
and which are symbolized by said marks.
Assignor hereby covenants and agrees that Assignor shall forthwith
upon Assignee's written request and at Assignee's sole expense take any and
all steps and execute, acknowledge and deliver to the Assignee any and all
instruments and assurances necessary or expedient in order to vest the
items listed in Schedule A more effectively in Assignee.
Assignor hereby confirms the representations and warranties contained
in Sections 3.4, 3.7 and 3.11 of the Agreement.
Assignor and Assignee agree that, notwithstanding any other provision
of this Trademark Assignment, this Trademark Assignment shall be effective
on and after November 18, 1996.
<PAGE> 51
EXHIBIT E
ASSIGNMENT OF COPYRIGHTS
WHEREAS, TCSI Corporation, a Nevada corporation, having its principal
place of business at 2121 Allston Way, Berkeley, California ("Assignor"),
owns all right, title and interest in original works (whether regarded as
literary works or computer programs under applicable law) relating to
certain products designed and manufactured by Assignor, including, but not
limited to, those listed on Schedule A attached hereto (collectively, the
"Work"); and
WHEREAS, Atmel Corporation, a California corporation having its
principal place of business at 2325 Orchard Parkway, San Jose, California
("Assignee"), desires to obtain the entire right, title, and interest in,
to and under the Work including the copyright(s) thereof;
NOW, THEREFORE, for good and valuable consideration paid by the
Assignee to the Assignor simultaneously herewith, receipt of which is
hereby acknowledged by the Assignor, and for other good and valuable
consideration, the said Assignor, subject to the penultimate paragraph
hereof;
Assignor hereby assigns, transfers and sets over unto the Assignee the
entire right, title, and interest in and to the Work, the entire right,
title and interest in and to any and all statutory or common law copyrights
or copyright registrations covering the Work, including: any and all
renewals and extensions of those copyrights that may be secured under the
laws now or hereafter in force in the United States and throughout the
world; any and all causes of action heretofore accrued in the Assignor's
favor for infringement of the aforesaid copyright(s); and any and all
rights, including but not limited to, the rights to reproduce the Work in
copies or other embodiment; to prepare derivative works based upon the
Work; to distribute copies or other embodiments of the Work to the public
by sale or other transfer of ownership, or by rental, lease or lending; to
perform the Work publicly; and to display the Work publicly;
To have and to hold the same unto the Assignee, its successors, legal
representatives and assigns, for and during the existence of all
copyright(s) and any and all renewals and extensions thereof absolutely and
forever; and Assignor hereby authorizes and requests the Register of
Copyrights of the United States, and any official of any country or
countries foreign to the United States, and any official of any country or
countries foreign to the United States, whose duty it is to issue copyright
registrations or similar indicia of copyright, to issue such copyright,
registrations for said Work to Assignee, its successors, legal
representatives and assigns.
Assignor hereby confirms the representations and warranties contained
in Sections 3.4, 3.7 and 3.11 of the Agreement.
Assignor hereby covenants and agrees that Assignor shall forthwith
upon Assignee's written request and at Assignee's sole expense take any and
all steps and execute, acknowledge, and deliver to the Assignee any and all
further instruments and assurances necessary or expedient in order to vest
the aforesaid Work and copyright(s) and causes of action more effectively
in the Assignee.
<PAGE> 52
Assignor hereby constitutes and appoints the Assignee its true and
lawful attorney-in-fact with full power of substitution, in Assignor's name
and stead, but for the Assignee's benefit, to take any and all steps
(including proceeding at law, in equity or otherwise), and to execute,
acknowledge and deliver any and all instruments and assurances necessary or
expedient in order to vest the aforesaid Work and copyright(s) and causes
of action more effectively in the Assignee, or to protect the same, or to
enforce any claim or right of any kind with respect thereto. The Assignor
hereby declares that the foregoing power is coupled with an interest and is
irrevocable.
Assignor and assignee agree that, notwithstanding any other provision
of this Copyright Assignment, this Copyright Assignment shall be effective
on and after November 18, 1996.
<PAGE> 53
EXHIBIT F
SHAREHOLDER AGREEMENT
THIS AGREEMENT is made and entered into as of November 14, 1996,
between Atmel Corporation, a California corporation ("Atmel"), and TCSI
Corporation, a Nevada corporation ("TCSI"). All capitalized terms used and
not otherwise defined herein shall have the meanings given them in the
Purchase Agreement.
RECITALS:
Atmel and TCSI have entered into an Asset Purchase Agreement dated as
of November 13, 1996 (the "Purchase Agreement") which provides for the
sale by TCSI of the Acquired Assets to Atmel in exchange for 335,000 shares
of Common Stock of Atmel (the "Atmel Stock"). The Atmel Stock to be so
issued has not been registered under the Securities Act of 1933, as amended
("Securities Act") in reliance upon the exemption therefrom provided by in
Section 4(2) of the Securities Act.
In consideration of the premises and the mutual representa tions,
warranties and covenants herein contained, the parties hereto have agreed
and do hereby agree as follows:
1. Restricted Stock; Legend.
1.1 Each certificate for shares of Atmel Stock shall be stamped
or otherwise imprinted with a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES ARE SUBJECT TO
AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, OR OTHERWISE
DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO, (II) IN COMPLIANCE WITH RULE 144 OR (III) PURSUANT TO AN
OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933."
1.2 In connection with the limitations on disposition with
respect to the Atmel Stock contained in this Agreement, Atmel will issue
stop transfer instructions to its transfer agent with respect to such
shares.
1.3 TCSI understands that Atmel is under no obligation to
register the sale, transfer or other disposition of Atmel Stock, except as
specifically provided in this Agreement.
<PAGE> 54
1.4 In connection with any sales by TCSI of the shares of Atmel
Stock in compliance with the limitations on disposition set forth in this
Agreement, Atmel agrees to notify its transfer agent that the legend set
forth in Section 1.1 may be removed from such shares of Atmel Stock being
sold by TCSI at the time of such sales.
2. TCSI's Representations. TCSI represents, warrants and covenants
to Atmel that:
2.1 The Purchase Agreement has been made with TCSI in reliance
upon TCSI's representation to Atmel, which by TCSI's execution of this
Agreement TCSI hereby confirms, that the Atmel Stock to be acquired by TCSI
will be acquired for investment for TCSI's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part
thereof.
2.2 TCSI understands that the shares of Atmel Stock to be issued
under the Purchase Agreement are not registered under the Securities Act on
the ground that the sale provided for in the Purchase Agreement and the
issuance of securities hereunder is exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act") pursuant to
Section 4(2) thereof, and that Atmel's reliance on such exemption is based
on TCSI's representations set forth herein.
2.3 TCSI believes it has received all the information it
considers necessary or appropriate for deciding whether to acquire the
Atmel Stock. TCSI further represents that it has had an opportunity to ask
questions and receive answers from Atmel regarding the business,
properties, prospects and financial condition of Atmel and to obtain
additional information necessary to verify the accuracy of any information
furnished to it or to which it had access.
2.4 TCSI is experienced in evaluating and investing in
securities and acknowledges that is able to fend for itself, can bear the
economic risk of acquiring the Atmel Stock, and has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of acquiring the Atmel Stock.
2.5 TCSI understands that the Atmel Stock may not be sold,
transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering such shares or an available
exemption from registration under the Securities Act, such shares must be
held indefinitely. TCSI covenants that, except to the extent the
restrictions set forth in Section 1.1 are waived by Atmel, TCSI shall not
transfer the shares represented by any such certificate without complying
with the restrictions on transfer described in such legend. TCSI agrees to
provide Atmel with notice of any sale of Atmel Stock no later than
immediately prior to placing an order with a broker or, if not sold through
a broker, at the time of closing an agreement to sell such shares, and, to
the extent practicable, TCSI will use its best efforts to provide Atmel 48
hours advance notice of any such sale.
<PAGE> 55
2.6 TCSI will not make any sale, transfer, or other disposition
of Atmel Stock unless (i) such sale, transfer, or other disposition is
within the limitations of and in compliance with Rule 144 under the
Securities Act, or (ii) some other exemption from registration under the
Securities Act is available with respect to any such proposed sale,
transfer or other disposition of Atmel Stock, or (iii) such distribution of
Atmel Stock has been registered under the Securities Act.
2.7 TCSI is aware of Atmel's business affairs and financial
condition and has sufficient information about Atmel to reach an informed
and knowledgeable decision to acquire the Atmel Stock in the transaction
contemplated by the Purchase Agreement. TCSI acknowledges it has previously
received Atmel's Annual Report to Shareholders for the fiscal year ended
December 31, 1995, a copy of its Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, and a copy of its Quarterly Report on Form 10-
Q for the three and nine month periods ended September 30, 1996, and that
it has had the opportunity to receive additional information concerning
Atmel. TCSI is acquiring the Atmel Stock for investment and not with a
view to resale or distribution.
2.8 TCSI agrees to accurately complete and execute the
Questionnaire attached hereto as Exhibit A as promptly as possible after
receipt from Atmel of the draft of the Form S-3 registration statement
contemplated to be filed as set forth in Section 4 of this Agreement, and
in any case, prior to Atmel's filing of such Form S-3.
3. Transfers of Atmel Stock. With respect to any disposition or
attempted disposition of any shares of Atmel Stock, TCSI will comply with
the following procedure:
3.1 With respect to any sale of Atmel Stock made pursuant to
Rule 144, TCSI will provide Atmel with copies of appropriate documentation
evidencing compliance with Rule 144.
3.2 With respect to a proposed disposition of Atmel Stock not
registered under the Securities Act and other than pursuant to Rule 144,
TCSI will give prior written notice to Atmel describing the manner and
circumstances of the proposed disposition in sufficient detail to enable
Atmel to evaluate whether the proposed disposition of such shares satisfies
the requirements of the Securities Act and this Agreement. Upon receipt of
such written notice, Atmel shall promptly notify TCSI either (i) that the
Atmel Stock may be disposed of in the manner and under the circumstances
described, or (ii) that on the basis of the information provided the Atmel
Stock may not be disposed of prior to the receipt by Atmel of an opinion of
counsel reasonably satis factory to Atmel and its counsel to the effect
that the proposed disposition of Atmel Stock may be effected without
registration under the Securities Act, or in lieu thereof, a "no action"
letter or other communication from the Commission reasonably satisfactory
to Atmel and its counsel to that effect.
3.3 With respect to a disposition of Atmel Stock registered
under the Securities Act, TCSI will dispose of such Common Stock as
provided in the Form S-3 registration statement.
4. Registration Rights.
<PAGE> 56
4.1 Certain Definitions. As used in this Section 4, the
following terms shall have the following meanings:
(a) The term "Commission" means the Securities and Exchange
Commission;
(b) The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended;
(c) The term "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any registration form
under the Securities Act subsequently adopted by the Commission which
similarly permits inclusion or incorporation of substantial information by
reference to other documents filed by Atmel with the Commission;
(d) The terms "register", "registered" and "regis tration"
refer to preparing and filing a registration statement covering the resale
of the Atmel Stock in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration
statement;
(e) The term "Registrable Securities" means the Atmel Stock
issued to TCSI pursuant to the Purchase Agreement, and any other shares of
Atmel Common Stock issued in respect thereof by way of a stock dividend,
stock split, recapitalization or similar distribution; provided, however,
that such shares of Common Stock shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act
under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation
of such sale;
(f) The term "Restricted Securities" means the shares of
Atmel Stock required to bear the legend set forth in Section 1.1 hereof;
and
(g) The term "Securities Act" means the Securities Act of
1933, as amended.
4.2 Registration on Form S-3. Within 3 business days
following the Closing Date (as defined in the Purchase Agreement), Atmel
will file a registration statement to register the Atmel Stock issued to
TCSI pursuant to the Purchase Agreement, and will use its best efforts to
have such registration statement become effective and to keep such
registration statement effective for the lesser of 90 days or until TCSI
has informed Atmel in writing that the distribution of such securities has
been completed; provided, however, that, TCSI agrees, by acquisition of the
Atmel Stock, that:
<PAGE> 57
(a) Upon receipt of any notice from Atmel of (i) the
happening of any event which makes any statements made in the registration
statement or related prospectus filed pursuant to this Section 4, or any
documents incorporated or deemed to be incorporated therein by reference,
untrue in any material respect or which requires the making of any changes
in such registration statement or prospectus so that, in the case of such
registration statement it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the prospectus, it will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (ii) that, in the judgment of
Atmel's Board of Directors, it is advisable to suspend use of the
prospectus for a discrete period of time due to pending corporate
developments, public filings with the Commission or that there exists
material nonpublic information about Atmel that the Board of Directors,
acting in good faith, determines not to disclose in a registration
statement, then TCSI will forthwith discontinue, for a period not to exceed
sixty (60) days, disposition of such Atmel Stock covered by such
registration statement or prospectus until it is advised in writing by
Atmel that use of the applicable prospectus may be resumed, and has
received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such prospectus.
Atmel shall use its reasonable efforts to insure that the use of the
prospectus may be resumed as soon as practicable.
(b) TCSI shall provide all such information and materials
to Atmel and take all such action as may be required in order to permit
Atmel to comply with all applicable requirements of the Commission and to
obtain any desired acceleration of the effective date of such registration
statement. Such provision of information and materials is a condition
precedent to the obligations of Atmel pursuant to this Agreement. TCSI
will effect the sale of the Registrable Securities through Alex. Brown &
Sons Incorporated or other broker to be selected by TCSI with the approval
of Atmel, which approval will not be unreasonably withheld. The offerings
made pursuant to such registration shall not be underwritten.
4.3 Registration and Selling Expenses. For purposes of this
Section 4, "Registration Expenses" means all expenses incurred in
connection with the registration or qualification of the Atmel Stock
pursuant to this Section 4, including, without limitation, all
registration, filing and qualification fees, printing expenses, transfer
agent and registration fees, and fees and disbursements of counsel for
Atmel. "Selling Expenses" means all underwriting discounts and commissions
or broker fees and commissions applicable to the sale of Registrable
Securities, and any fees and disbursements of counsel to TCSI in connection
with the registration and sale of such securities. All Registration
Expenses incurred in connection with the registration of the Atmel Stock
pursuant to Section 4.2 will be borne by Atmel, and all Selling Expenses
will be borne by TCSI.
<PAGE> 58
4.4 Information by TCSI. TCSI will furnish to Atmel such
information regarding TCSI and the distribution of the Atmel Stock as Atmel
may reasonably request in connection with the registration referred to in
this Section 4. In connection with the preparation and filing of the
registration statement under the Securities Act pursuant to this Agreement,
Atmel will give TCSI and its counsel the opportunity to participate in the
preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or
supplement thereto.
4.5 Transfer of Registration Rights. The registration rights
granted to TCSI under this Section 4 are solely for the benefit and use of
TCSI and are not transferable to any other person or entity, except a
transfer by operation of law to a successor entity.
5. Obligations of Atmel.
5.1 Subject to the limitations of Sections 2, 3 and 4 above,
Atmel shall (i) prepare and file with the Commission the Form S-3
registration statement in accordance with Section 4.2 hereof with respect
to the shares of Registrable Securities; (ii) prepare and file with the
Commission such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary, and to
comply with the provisions of the Securities Act with respect to the sale
or other disposition of all securities proposed to be registered in each
such registration statement for 90 days; (iii) furnish to TCSI such number
of copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of
the Securities Act, and such other documents as TCSI may reasonably request
in order to effect the offering and sale of the Registrable Securities to
be offered and sold, but only while Atmel shall be required under the
provisions hereof to cause the registration statement to remain current;
and (iv) use its commercially reasonable efforts to register or qualify
the shares of the Registrable Securities covered by such registration
statement under the securities or blue sky laws of such jurisdictions as
TCSI shall reasonably request (provided that Atmel shall not be required in
connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such jurisdiction
where it has not been qualified).
5.2 Atmel shall notify TCSI, (A) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to the registration statement or any post- effective amendment,
when the same has become effective; (B) of any request by the Commission or
any other federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or supplements
to the registration statement or related prospectus or for additional
information relating to the registration statement, (C) of the issuance by
the Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the registration statement or
the initiation of any proceedings for that purpose, (D) of the receipt by
Atmel of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; or (E) of the happening of any event which
makes any statement made in the registration statement or related
prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or which requires the
making of any changes in the registration statement or prospectus so that,
in the case of the registration
<PAGE> 59
statement, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and that in the case of the
prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Atmel may, upon the happening of any
event (i) of the kind described in clauses B, C, D, or E hereof, or (ii)
that, in the judgment of Atmel's Board of Directors, renders it advisable
to suspend use of the prospectus for no more than sixty (60) days due to
pending corporate developments, public filings with the Commission or
similar events, suspend use of the prospectus on written notice to TCSI, in
which case TCSI shall discontinue disposition of Registrable Securities
covered by the registration statement or prospectus until copies of a
supplemented or amended prospectus are distributed to TCSI or until TCSI is
advised in writing by Atmel that the use of the applicable prospectus may
be resumed. Atmel shall use its rea sonable efforts to ensure that the use
of the prospectus may be resumed as soon as practicable. Atmel shall use
every reasonable effort to obtain the withdrawal of any order suspending
the effectiveness of the registration statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of
the securities for sale in any jurisdiction, at the earliest practicable
time. Atmel shall, upon the occurrence of any event contemplated by clause
E above, prepare a supplement or post- effective amendment to the
registration statement or a supplement to the related prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
5.3 In connection with any offering of shares of Registrable
Securities registered on Form S-3 pursuant to this Agreement, Atmel shall
instruct the transfer agent and registrar of the Atmel Common Stock to
remove the restricted legend and release any stop transfer orders with
respect to the shares of Registrable Securities being sold.
5.4 Atmel shall apply for listing on the Nasdaq National Market
the shares of Registrable Securities registered on Form S-3 pursuant to
this Agreement.
6. Availability of Form S-3. Atmel represents that it believes it
is currently eligible to utilize Form S-3 and currently believes that there
is no material nonpublic information which would preclude it from filing a
registration statement on Form S-3.
7. Indemnification.
<PAGE> 60
7.1 Indemnification by the Company. To the extent permitted by
law, Atmel will indemnify and hold harmless TCSI, and each person, if any,
who controls TCSI within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, or liabilities (joint or several)
to which they may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (a) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement hereunder, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (b) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (c) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act,
any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law; and the
Company will pay to TCSI or such controlling person any legal or other
expenses reasonably incurred by them in connection with investigating,
defending or settling any such loss, claim, damage, liability, or action,
as such expenses are incurred; provided, however, that the indemnity
agreement contained in this Section 7.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
case for any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished by TCSI expressly
stated for use in connection with such registration.
7.2 Indemnification by TCSI. To the extent permitted by law,
TCSI will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement and each
person, if any, who controls the Company within the meaning of the
Securities Act, severally but not jointly, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by TCSI expressly stated for use in connection with
such registration; and each TCSI will pay any legal or other expenses as
such expenses are incurred by any person intended to be indemnified
pursuant to this Section 7.2, in connection with investigating, defending
or settling any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 7.2 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
TCSI, which consent shall not be unreasonably withheld; provided further,
that, in no event shall any indemnity by TCSI under this Section 7.2 exceed
the gross proceeds from the offering received by TCSI.
<PAGE> 61
7.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 7 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party
under this Section 7, deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with one counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 7 unless the failure to deliver notice
is materially prejudicial to its ability to defend such action. Any
omission to so deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.
8. Notices. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied, sent by overnight courier or mailed by registered
or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses set forth below or to such other address as the
party to whom notice is to be given may have furnished to the other party
hereto in writing in accordance herewith. Any such notice or communication
shall be deemed to have been received (A) in the case of personal delivery
or notice by telecopier, on the date of such delivery or transmission, (B)
in the case of overnight courier, on the next business day after the date
when sent and (C) in the case of mailing, on the third business day
following that on which the mail containing such communication is posted:
To Atmel: Atmel Corporation
2325 Orchard Parkway
San Jose, CA 95131
Attention: Mike Ross
Telephone: (408) 441-0311
Telecopy: (408) 436-4377
To TCSI: TCSI Corporation
2121 Allston Way
Berkeley, CA 94704
Attention: Paul A. Farmer
Telephone: (510) 649-3446
Telecopy: (510) 649-3887
9. Miscellaneous.
9.1 This Agreement shall be binding upon and shall inure to the
benefit of Atmel and TCSI and their respective successors in interest.
<PAGE> 62
9.2 This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
9.3 This Agreement may be executed in counterparts, and all of
such counterparts, taken together, shall constitute a single instrument.
9.4 This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject hereof. This
Agreement or any term hereof may only be amended, waived or discharged by a
written instrument signed by Atmel and TCSI.
<PAGE> 63
EXHIBIT A
ATMEL CORPORATION
S-3 Registration Statement
SELLING SHAREHOLDER QUESTIONNAIRE
November __, 1996
PLEASE COMPLETE AND SIGN THE QUESTIONNAIRE AND RETURN IT TO MIKE ROSS,
ATMEL CORPORATION, 2325 ORCHARD PARKWAY, SAN JOSE, CALIFORNIA 95131. WHERE
SUPPLEMENTARY INFORMATION IS REQUESTED, KINDLY ANNEX THE SAME TO THIS
QUESTIONNAIRE. IF ANY QUESTION IS INAPPLICABLE, SO INDICATE, BUT PLEASE
RESPOND TO ALL QUESTIONS. IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT MIKE
ROSS AT (408) 441-0311.
B. General Information.
1. The numbers of shares shown in the Registration Statement
represent the total number of the shares of Atmel Stock held by TCSI. Are
the numbers of shares of Atmel Stock listed opposite your name in the
Prospectus correctly stated?
Yes _______
No _______, the correct number(s) should be:
2. Do you intend to include in the Registration Statement, for
potential sale, the total number of shares of Atmel Stock set forth after
your name on page __ of the Prospectus?
Yes _______
No, the number to be included should be _______
3. Are all shares of Atmel Stock to be included in the Registration
Statement to be offered for your account?
Yes _______ No _______
<PAGE> 64
4. If the answer to Question 3 was "No," please described below the
number of shares of Atmel Stock to be offered for the account of another
person or organization, the name and address of such person or
organization, and the reasons for such proposed action:
5. Describe any discounts or commissions, other than usual broker's
commissions, to be allowed or paid to dealers, including all cash,
securities, contracts or other consideration to be received by any dealer
in connection with any sales of Atmel Stock pursuant to the Registration
Statement:
6. Please indicate the proposed method(s) by which shares of Atmel
Stock to be sold pursuant to the Registration Statement will be sold (more
than one may be checked):
_In the over-the-counter market at prices prevailing at the time of
sale
_Directly through privately negotiated transactions
_Privately negotiated transactions through brokers
<PAGE> 65
C. Representations and Covenants of TCSI.
TCSI hereby represents, warrants, covenants, and agrees with Atmel
that:
(1) TCSI has not taken and will not take, directly or indirectly, any
action designed to constitute or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation
of the price of any security issued by Atmel to facilitate the sale or
resale of any of Atmel's securities in violation of Rules 10b-6 and 10b-7
under the Securities Exchange Act of 1934, copies of which are attached
hereto. TCSI will effect transactions in Atmel's securities only within
the confines of such rules and such other federal or state securities laws
as may be applicable. TCSI has not, and will not without the prior written
consent of Atmel, during the period any securities are being offered for
the account of TCSI under the Registration Statement filed by Atmel
including any amendments thereto, directly or indirectly, purchase, bid for
or induce (or attempt to induce) any other person to purchase any of
Atmel's Common Stock or Atmel's securities convertible into such Common
stock unless such action by TCSI is specifically permitted under any of the
exemptions set forth in Rule 10b-6 under the Securities and Exchange Act of
1934, and TCSI has not and will not pay or offer to pay any person any
compensation for soliciting purchases of Atmel's Common Stock or Atmel's
securities convertible into such Common Stock, except for ordinary
brokerage commissions to be paid to any broker or dealer effecting the sale
of securities being offered for its account under the Registration
Statement.
(2) Until all securities being offered for its account under the
Registration Statement are sold, TCSI will not disseminate any information
concerning Atmel other than through the most recent Prospectus included in
the most recent Registration Statement filed with the Securities and
Exchange Commission. TCSI is aware of its duty to deliver a Prospectus in
connection with each sale by it of shares of Atmel Stock under the
Registration Statement. TCSI will inform any broker or dealer requested by
TCSI to effect the sale of any securities being offered for its account
under the Registration Statement, that such securities are part of a
distribution of Atmel's securities which is covered by that Prospectus, and
that such broker or dealer may be subject to the provisions of Rules 10b- 6
and 10b-7 under the Securities Exchange Act of 1934 during the period TCSI
sells or offers to sell such securities. In addition, TCSI will furnish
any such broker or dealer with such number of copies of the Prospectus as
such broker or dealer may reasonably require.
(3) TCSI will not make any sales of its securities covered by the
Registration Statement other than within the conditions set forth herein
and will notify Atmel upon the completion of any and all sales of its
securities covered by the Registration Statement.
(4) TCSI has received a copy of the Registration Statement and has
reviewed the Registration Statement and will review any amendments thereto
promptly after receipt thereof and agrees to inform Atmel of any material
misstatements or omissions of fact known and relating to TCSI.
<PAGE> 66
The above information is supplied by TCSI, and TCSI understands that
such information has been furnished specifically for use in a Registration
Statement and may be submitted by Atmel to the Securities and Exchange
Commission and the NASD. TCSI will immediately notify Atmel of any changes
in the above information from the date of signature until the conclusion of
the offering of securities to be made under the Registration Statement.
Date: _______, 1996
TCSI CORPORATION
By: /s/ Paul A. Farmer
-------------------------------------
Paul A. Farmer
Chief Financial Officer
<PAGE> 67
TCSI TO LICENSE WIRELESS TECHNOLOGY TO ATMEL CORPORATION
For additional information contact:
TCSI Corporation
Investor Inquiries:
Leigh Salvo - (510) 649-3800
Atmel Corporation
Press Inquiries:
Kris Chellam - (408) 436-4360
BERKELEY, California - November 15, 1996 - TCSI Corporation (Nasdaq: TCSI),
a global provider of software to the telecom industry, today announced that
Atmel Corporation (Nasdaq: ATML) has signed an agreement to perpetually
license the intellectual property associated with TCSI's wireless
technology. Accordingly, TCSI will no longer market this technology. As
part of the agreement, Atmel will hire certain development and support
personnel, purchase related equipment and furniture, and perform the
support requirements of the currently installed wireless customer base.
TCSI received approximately $10 million of Atmel Common stock for this
transaction.
TCSI's wireless technology includes a portfolio of software products for
communications semiconductor applications. The software is typically
integrated into digital signal processors (DSP) in wireless hand held
consumer products.
"Being a part of the emerging wireless industry has generally been a
rewarding and integral part of TCSI's history. However, we believe this
agreement enables the Company to strengthen its focus on its network and
service management software technology for the telecom industry," said
Roger Strauch, TCSI's president and chief executive officer. "We are
confident that Atmel will successfully advance the development and
deployment of sophisticated wireless solutions utilizing the intellectual
property licensed from TCSI."
"We believe that TCSI's wireless technology will complement Atmel's product
and process expertise to deliver integrated solutions to our customers in
the wireless communications market," said George Perlegos, Atmel's
president and chief executive officer.
<PAGE> 68
Atmel Corporation
Headquartered in San Jose, California, with principal manufacturing
facilities in Colorado Springs, Colorado and in Rousset, France, Atmel
designs, develops, manufactures, and markets on a worldwide basis Flash,
EEPROMs, and EPROMs, as well as programmable logic, microcontrollers, and
application-specific devices. Atmel product and financial information can
be retrieved from its Fax-on-Demand service. In North America call 1-(800)
29 ATMEL / 1-(800) 292-8635. International, from a fax phone, call 1-(408)
441-0732. You can send your request via e-mail to [email protected] or
visit Atmel's Web site at http://www.atmel.com
TCSI Corporation
TCSI is a leading provider of integrated software products and services for
the global telecom industry. A pioneer in object-oriented technology, TCSI
products and services enable telecom service providers and equipment
manufacturers to rapidly meet the demand for integrated and automated
management of a wide range of networks and services. TCSI serves its
customers in offices throughout North America, Europe, and the Pacific Rim.
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