<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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)
FEBRUARY 23, 1998
JTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE COMMISSION FILE NUMBER 77-0364572
(STATE OR OTHER JURISDICTION OF 0-21085 (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
166 BAYPOINTE PARKWAY, SAN JOSE, CA 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(408) 468-1800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
- ------------------------------------------------
On February 23, 1998, JTS Corporation (the "Company") sold substantially
all of the assets of the Company's Atari Division, consisting primarily of Atari
home computer games and the intellectual property rights and license agreements
associated with such games (the "Atari Assets"), to HIACXI, Corp. ("HIAC"), a
wholly-owned subsidiary of Hasbro Interactive, Inc., for $5,000,000 in cash.
The purchase price was determined based upon arm's-length negotiations between
the Company and HIAC. The Atari Assets were acquired by the Company in July
1996 when the Company merged with Atari Corporation. There is no material
relationship between HIAC and the Company, any of its affiliates, any director
or officer of the Company, or any associate of any such director or officer.
Item 7. Financial Statements and Exhibits.
- -------------------------------------------
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Unaudited Pro Forma Condensed Combined Financial Statements of the
Company.
(c) Exhibits
99.1 Asset Purchase Agreement, dated February 23, 1998, between the Company
and HIAC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, JTS
Corporation has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JTS CORPORATION
Date: March 9, 1998 BY /s/ Joseph Prezioso
----------------------------
Joseph Prezioso
Chief Financial Officer
<PAGE>
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements give
effect to the disposition of the Atari Division which was consummated on
February 23, 1998. The accompanying pro forma condensed balance sheet as of
November 2, 1997 assumes that the disposition of the Atari Division by the
Company took place on November 2, 1997. The accompanying pro forma condensed
statements of operations for the year ended February 2, 1997 and the nine
months ended November 2, 1997 assumes that the disposition took place as of
the beginning of the periods. The pro forma condensed statements of
operations do not include the effect of any nonrecurring charges directly
attributable to the disposition. The results are not necessarily indicative
of what would have occurred had the disposition actually been made at the
beginning of each of the respective periods presented or of future operations
of the Company.
<PAGE>
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF NOVEMBER 2, 1997
-------------------------------------------------
HISTORICAL PRO FORMA PRO
JTS ADJUSTMENTS FORMA
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, and cash equivalents and
restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,986 5,000 (b) $ 6,986
Trade and other receivable. . . . . . . . . . . . . . . . . . . . . . . 6,644 6,644
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,463 7,463
Prepaid and other current assets. . . . . . . . . . . . . . . . . . . . . 1,006 1,006
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 17,099 22,099
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET . . . . . . . . . . . . . . . . 26,440 26,440
OTHER INTANGIBLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 383
--------- ---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,922 48,922
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank line of credit and short-term borrowing. . . . . . . . . . . . . . $ 8,833 $ 8,833
Accounts payable -- Trade . . . . . . . . . . . . . . . . . . . . . . . 60,553 60,553
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 23,836 23,836
Current portion of capitalized lease obligations and long-term debt . . 3,152 3,152
--------- ---------
Total current liabilities . . . . . . . . . . . . . . . . . 96,374 96,374
LONG-TERM LIABILITES. . . . . . . . . . . . . . . . . . . . . . . . . . . 52,305 52,305
STOCKHOLDERS' DEFICIT:
Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 165
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . 364,317 364,317
Notes receivable from stockholders. . . . . . . . . . . . . . . . . . . (2,460) (2,460)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (466,779) 5,000 (b) (461,779)
--------- ---------
Total Stockholders Equity. . . . . . . . . . . . . . . . . . . . (104,757) (99,757)
--------- ---------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,922 48,922
--------- ---------
--------- ---------
</TABLE>
See notes to unaudited pro forma condensed financial statements.
<PAGE>
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED NOVEMBER 2, 1997
-------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
JTS ADJUSTMENTS
<S> <C> <C> <C>
REVENUES............................. 125,806 (1,689)(a) 124,117
COST OF SALES........................ (174,092) (174,092)
--------- ---------
GROSS MARGIN (DEFICIT)............... (48,286) (49,975)
OPERATING EXPENSES:
Write off of in process R&D........ (38,008) (38,008)
Research and development........... (15,880) (15,880)
Selling, general and
administrative.................... (17,488) 879 (a) (16,609)
Amortisation of existing
technology & goodwill............. (2,388) (2,388)
--------- ---------
OPERATING LOSS....................... (122,050) (122,860)
OTHER INCOME (EXPENSE):
Interest expense................... (6,038) (6,038)
Other, net......................... (2,566) 5,000 (b) 2,433
--------- ---------
NET LOSS............................. (130,654) (126,464)
Dividends............................ (975) (975)
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS........................ (131,629) (127,439)
--------- ---------
--------- ---------
NET LOSS PER COMMON SHARE............ $ (1.04) $ (1.01)
SHARES USED IN COMPUTING NET LOSS
PER SHARE........................... 126,429 126,429
--------- ---------
--------- ---------
</TABLE>
See notes to unaudited pro forma condensed financial statements.
<PAGE>
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
NOTE 1.
The disposition of the Atari Division assets was effective February 23,
1998. These pro forma condensed financial statements illustrate the impact
on the nine months ended November 2, 1997 as if the disposition occurred on
November 2, 1997 for the pro forma condensed balance sheet and as at February
2, 1997 for the pro forma condensed statement of operations.
NOTE 2. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro forma
condensed balance sheet and statement of operations as described below:
(a) Elimination of the revenue and expenses for the Atari Division.
(b) Reflects the profit on disposal of the Atari Assets.
<PAGE>
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 2, 1997
---------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
JTS ADJUSTMENTS
<S> <C> <C> <C>
REVENUES.............................................. 90,530 (4,479)(a) 86,051
COST OF SALES......................................... (100,328) 5,655 (a) (94,673)
--------- ---------
GROSS MARGIN (DEFICIT)................................ (9,798) (8,622)
OPERATING EXPENSES:...................................
Write off of in process R&D......................... (110,012) (110,012)
Research and development............................ (12,849) 679 (a) (12,170)
Selling, general and administrative................. (13,067) 3,647 (a) (9,420)
Amortization of existing technology & goodwill...... (3,923) (3,923)
--------- ---------
OPERATING LOSS........................................ (149,649) (144,147)
OTHER INCOME (EXPENSE):
Interest expense.................................... (3,545) (3,545)
Other, net.......................................... 699 5,000 (b) 1,564
(4,135)(a)
--------- ---------
NET LOSS.............................................. (152,495) (146,128)
DIVIDENDS............................................. (227) (227)
--------- ---------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS......................................... (152,722) (146,355)
--------- ---------
--------- ---------
NET LOSS PER COMMON SHARE............................. $ (1.81) $ (1.74)
SHARES USED IN COMPUTING NET LOSS
PER SHARE............................................ 84,322 84,322
--------- ---------
--------- ---------
</TABLE>
See notes to unaudited pro forma condensed financial statements.
<PAGE>
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
NOTE 1.
The disposition of the Atari Division assets was effective February 23,
1998. These pro forma condensed financial statements illustrate the impact on
the year ended February 2, 1997 as if the disposal occurred at the beginning of
the period.
NOTE 2. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro forma
condensed balance sheet and statement of operations as described below:
(a) Elimination of the Atari Division revenue and associated cost of
sales and expenses from the 1997 results.
(b) Reflects the gain on sale of the Atari Assets.
<PAGE>
Exhibit 99.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (THIS "AGREEMENT") IS ENTERED INTO ON
FEBRUARY 23, 1998, BY HIAC XI, CORP., A DELAWARE CORPORATION ("BUYER"), AND JTS
CORPORATION, A DELAWARE CORPORATION ("SELLER").
RECITALS
This Agreement contemplates a transaction in which Buyer shall purchase
certain assets (and assume certain future obligations) of Seller in return for
the consideration described herein. Buyer is a wholly-owned subsidiary of
Hasbro Interactive, Inc.
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
I. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
have the meaning given to them below:
"Acquired Assets" means the following assets of Seller:
A. All right, title and interest in and to the Seller's Products;
A. All Intellectual Property associated with the Seller's Products,
including the Intellectual Property identified on SCHEDULE 1, and remedies past
and future against infringements thereof and rights to protection of interest
therein;
A. The license agreements listed on SCHEDULE 2 (the "License
Agreements");
(d) All of Seller's claims, causes of action, choses in action,
rights of recovery, set-off and recoupment relating to or arising out of any
right, property or asset included in the Acquired Assets; and
(e) all business and financial records, books, files, plans,
documents, correspondence, lists, drawings, notebooks, specifications, creative
materials, advertising and promotional materials, marketing materials, studies
and reports of Seller, whether written or electronically stored or otherwise
recorded if, and only to the extent, that such foregoing items relate to the
Acquired Assets (not including the items of this clause (e) for these purposes)
or Assumed Liabilities (subject to Section 5(b)).
Notwithstanding the foregoing, the Acquired Assets shall not include the
Excluded Assets.
<PAGE>
"Assumed Liabilities" means only liabilities and obligations arising
after the Closing under each License Agreement actually assigned to Buyer
pursuant to this Agreement.
"Atari Hardware Platforms" means the following hardware platforms:
Atari 2600, 5200, 7800, Lynx hand-held and Jaguar game system hardware, Atari
800, ST and Falcon 030 computer family hardware, TOS operating system, 8-bit
operating system, and Portfolio palmtop computer.
"Excluded Assets" means the following assets:
(a) inventory, receivables, furniture, fixtures and equipment;
(b) any tax assets of Seller, including pre-paid taxes, tax credits
and tax carryovers;
(c) all tax returns and tax records whether or not related to the
Acquired Assets;
(d) the $45,000 balance of the royalty guarantee owed to Seller on
December 31, 1997 by Interplay Productions, Inc. under Amendment One to the Game
License Agreement dated July 29, 1996, between Atari Corporation and Interplay
Productions, Inc. and as otherwise identified in SCHEDULE 3;
(e) software developed by or for Seller or its predecessor under
license of intellectual property rights from a third party or third parties for
use on the Atari Hardware Platforms to the extent that such software is not
related to or associated with any of the trademarks and copyrights set forth in
SCHEDULE 1 or any of the game titles set forth in SCHEDULE 3;
(f) Hardware embodying Intellectual Property (other than Seller's
Intellectual Property) that is licensed from third Persons.
(g) all assets associated with or related to Seller's disk drive
business.
"Hardware" means equipment, components, circuitry, integrated
circuits, processors, casings, layouts (including synthesizable code), mask
works, manufacturing data, and all designs, schematics, tooling, formulae,
processes, and know how therefor (whether or not any such items are presently
embodied in physical components) and related Intellectual Property.
"Intellectual Property" means any or all of the following and all
statutory and/or common law rights throughout the world in, arising out of, or
associated therewith: (i) all patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures and improvements, all trade
<PAGE>
secrets, proprietary information, know-how and technology; (iii) all works of
authorship, "moral rights", copyrights (including derivative works thereof),
mask works, copyright and mask work registrations and applications; (iv) all
industrial designs and any registrations and applications therefor; (v) all
trade names, logos, trademarks and service marks, trademark and service mark
registrations and applications together with the good will of the business
symbolized by the names and the marks; (vi) all computer software including all
source code, object code, firmware, development tools, files, records and data,
all media on which any of the foregoing is recorded; (vii) Uniform Resource
Locators, World Wide Web site addresses and domain names; (viii) any similar,
corresponding or equivalent rights to any of the foregoing; (ix) all
documentation related to any of the foregoing; and (x) all goodwill associated
with any of the foregoing.
"Key Marks" means each of the following marks: Atari, the Fuji logo,
Asteroids, Battlezone, Breakout, Centipede, Combat, Crystal Castles, Millipede,
Missile Command, Night Driver, Pong, Ultra Pong, Tempest, Warlords and Yar's
Revenge.
"Knowledge" means actual knowledge of (i) the senior executives of
Seller or (ii) John Skruch.
"Lien" means any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, restriction on transfer, conditional sale or other
title retention device or arrangement (including a capital lease), transfer for
the purpose of subjection to the payment of any indebtedness, or restriction on
the creation of any of the foregoing, whether relating to any property or right
or the income or profits therefrom.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Registered Intellectual Property" means all United States,
international and foreign: (i) utility and design patents, design registrations
and utility models and all pending applications (both regular and provisional)
for any of the foregoing; (ii) registered trademarks, service marks or trade
names, applications to register trademarks, service marks or trade names,
intent-to-use applications, or other registrations or applications related to
trademarks, service marks or trade names; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work registrations and
applications to register mask works; (v) Uniform Resource Locators, World Wide
Web site addresses and domain names and (vi) any other Seller Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by, any state,
government or other public legal authority.
"Seller Hardware" means Hardware included in the Acquired Assets.
<PAGE>
"Seller's Intellectual Property" means Intellectual Property of Seller
that constitutes an Acquired Asset.
"Seller's Products" means (i) those products of Seller acquired by
Seller pursuant to the merger of Atari Corporation, a Nevada corporation, with
and into Seller on July 30, 1996, and any other products of Seller thereafter
derived therefrom, including products relating to or associated with the
trademarks set forth in SCHEDULE 1 (including video and computer games, games
for handheld devices, consoles, Internet play, all other games for play on any
platform whatsoever (subject to the License Agreements), and merchandise bearing
any Intellectual Property relating to or associated with the foregoing, whether
now offered for sale or license by Seller or discontinued) and (ii) all of
Seller's products that are listed on SCHEDULE 3.
I. SALE AND PURCHASE; ASSUMPTION OF LIABILITIES; PURCHASE PRICE; CLOSING.
A. SALE AND PURCHASE OF THE ACQUIRED ASSETS. At the Closing (as
defined below), on the terms and subject to the conditions of this Agreement,
Seller shall sell and Buyer shall purchase all of the Acquired Assets for the
sum of $5 million to be paid at the Closing by wire transfer to an account
designated by Seller.
A. ASSUMPTION OF LIABILITIES. In addition, at the Closing, on the
terms and subject to the conditions of this Agreement, Buyer agrees to assume
and become responsible for all of the Assumed Liabilities at the Closing. Buyer
shall not assume or have any responsibility, however, with respect to any other
obligation or liability of Seller that is not an Assumed Liability. Without
limiting the foregoing, Buyer shall not assume or be responsible for any
liabilities relating to events arising or occurring prior to the Closing,
regardless of when payable, and all such liabilities shall be for the account of
Seller.
A. CLOSING; CLOSING DELIVERABLES. The closing shall occur in the
offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California 94304 upon the execution and delivery of this Agreement by the
parties hereto ("Closing"). At the Closing the parties will deliver the
following documents, and such additional documents as the parties may agree to
transfer ownership of the Acquired Assets to Buyer (which shall be in form
satisfactory to both parties) :
1. Seller shall deliver:
(A) A bill of sale for the Acquired Assets.
(B) Global trademark assignments.
(C) Country-specific trademark assignments.
<PAGE>
(D) Patent assignments in recordable form.
(E) Assignment of the License Agreements.
(F) Copyright assignment.
(G) Global powers of attorney respecting trademarks.
(H) Country-specific powers of attorney respecting
trademarks.
(I) Assignment of Internet domain name.
(J) Disclosure Schedule (as defined below).
1. Buyer shall deliver:
(A) The purchase price by wire transfer.
(B) An instrument of assumption of the Assumed Liabilities.
A. ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor the consummation of
the transactions contemplated hereby shall constitute an assignment, or an
agreement to assign, any Acquired Asset or any claim or right or any benefit
arising thereunder or resulting therefrom (a "Consent-Required Asset") if an
attempted assignment of such Consent-Required Asset, without consent of one or
more third parties, would constitute a breach or other contravention thereof or
would in any way adversely affect the rights of Buyer or Seller thereunder;
PROVIDED, HOWEVER, that once all such consents are obtained, this Agreement
shall automatically effect an immediate assignment of such Consent-Required
Asset without further action by either party hereto. Buyer and Seller will use
their commercially reasonable efforts (which shall not be deemed to require any
payment of money or other value by Seller or Buyer) to obtain the consent of the
other parties to any such Consent-Required Asset for the assignment thereof to
Buyer as Buyer may reasonably request. If such consent is not obtained, or if
an attempted assignment thereof would be ineffective or would adversely affect
the rights of Seller thereunder so that Buyer would not in fact receive all such
rights, Seller and Buyer will cooperate in a mutually agreeable arrangement
under which Buyer would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement, including sub-contracting or
sub-licensing to Buyer, or under which Seller would enforce for the benefit of
Buyer, with Buyer assuming Seller's obligations, any and all rights of Seller
against a third party thereto. Seller will promptly pay or assign to Buyer when
received all monies received by Seller with respect to any Consent-Required
Asset and any claim or right or any benefit arising thereunder, except to the
extent the same
<PAGE>
represents an Excluded Asset. Nothing in this Section 2(d) shall be construed
to diminish the representations, warranties and covenants of Seller respecting
such consents.
I. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer that the statements contained in this Section 3 are correct
and complete as of the Closing, except as set forth in the disclosure schedule
separately delivered by Seller to Buyer with this Agreement, which schedule
shall be initialed for identification by the parties (the "Disclosure
Schedule"). Except as expressly set forth in this Agreement and the Disclosure
Schedule, Seller hereby expressly disclaims any and all other warranties of any
kind or nature, whether express, implied or statutory, relating to the Acquired
Assets, including the implied warranties of title, non-infringement,
merchantability and fitness for a particular purpose. Buyer acknowledges that
the Seller Hardware is transferred "as is" and that, notwithstanding anything to
the contrary in this Agreement and the Disclosure Schedule, Seller makes no
representation or warranty of any kind with respect to the Seller Hardware.
A. ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
A. AUTHORIZATION OF TRANSACTION. Seller has full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Without limiting the generality of the foregoing, Seller
has taken all corporate and other action required for the execution, delivery
and performance of this Agreement by Seller, including the sale of the Acquired
Assets as provided herein. This Agreement constitutes the valid and legally
binding obligation of Seller, enforceable in accordance with its terms. The
persons who have executed this Agreement on behalf of Seller have been duly
authorized to do so.
A. NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, shall
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which Seller is subject or any provision of the charter or bylaws of
Seller or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require a notice under any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest, or
other arrangement to which Seller is a party or by which it is bound or to which
any of its assets is subject, except where the violations, conflicts, breaches,
defaults, accelerations, terminations, modifications, cancellations or failures
to give notice, individually or in the aggregate, would not have a material
adverse effect on the Acquired Assets, the Assumed Liabilities or the ability of
the parties to consummate the transactions contemplated by this Agreement (a
"Material Adverse Effect"). Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the parties to consummate the transactions
<PAGE>
contemplated by this Agreement, except where the failure to do so, individually
or in the aggregate, would not have a Material Adverse Effect.
A. CONSENTS. No approvals or consents of or assignments by any
person (including any federal, state or local governmental or administrative
authorities) are necessary in connection with the execution, delivery or
performance of this Agreement.
A. TITLE TO THE ACQUIRED ASSETS. Seller has good and marketable
title, free and clear of all Liens, (i) to the Acquired Assets identified on
SCHEDULE 1 (other than copyrights that are not identified on SCHEDULE 4),
SCHEDULE 3 and SCHEDULE 4 and (ii) to its Knowledge, to all other Acquired
Assets. At the Closing, Buyer shall obtain good and marketable title, free and
clear of all Liens (i) to the Acquired Assets identified on SCHEDULE 1 (other
than copyrights that are not identified on SCHEDULE 4), SCHEDULE 3 and SCHEDULE
4 and (ii) to its Knowledge, to all other Acquired Assets.
A. MATERIAL CONTRACTS. True, correct and complete copies of the
License Agreements have been delivered to Buyer. Seller has performed in all
material respects all obligations required to be performed by Seller under the
License Agreements. To the Knowledge of Seller, each of the other parties to
the License Agreements has performed in all material respects all the
obligations required to be performed by them thereunder to date. Each License
Agreement (i) is valid, binding and enforceable in accordance with its terms,
(ii) is in full force and effect with no default or dispute existing or, to the
Knowledge of Seller, threatened with respect thereto, and (iii) shall not be
terminated or otherwise affected by the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby. No consent of any
third party is required for the assignment of any License Agreement to Buyer.
Seller has provided Buyer with a complete and accurate list of payments paid to
Seller by each licensee under the License Agreements, indicating the licensee
and the month paid, from June 30, 1996 to present. Seller has not received any
advanced payments (including prepayments of royalties, or other payments by
reason of which a licensee is entitled to reduce its current or future royalty
or payment obligations) under the License Agreements which have not been earned
by Seller.
A. INTELLECTUAL PROPERTY.
1. To the Knowledge of Seller, SCHEDULE 1 contains a list of
all trademarks and service marks and applications therefor included in the
Acquired Assets that have not lapsed and that are, except as qualified therein,
Registered Intellectual Property (the "Registered Marks"), all patents and
applications therefor that are included in the Acquired Assets that are
Registered Intellectual Property (the "Registered Patents"), and United States
copyrights included in the Acquired Assets, certain of which are Registered
Intellectual Property. SCHEDULE 3 contains certain game titles that are
included in the Acquired Assets. To the Knowledge of Seller, (A) the
description of the Registered Marks on SCHEDULE 1 contains, to the extent set
forth and
<PAGE>
except as qualified therein, the true and accurate date of registration,
registration number, registered owner and the class of the Registered Marks,
(B) the description of the Registered Patents on SCHEDULE 1 contains the true
and accurate patent number and file date of the Registered Patents, and (C) the
description of the United States registered copyrights on SCHEDULE 1 included in
the Acquired Assets that are Registered Intellectual Property contains the
number of such copyright registration.
1. Since July 30, 1996, to the extent that any Seller's
Intellectual Property has been developed by any Person other than Seller for
which Seller has, directly or indirectly, paid, Seller has a written agreement
with such Person with respect thereto and thereby has obtained ownership of, and
recordable title to, and is the exclusive owner of, all developed Seller's
Intellectual Property by operation of law or by valid assignment.
1. Except as set forth in any License Agreement, Seller has not
transferred ownership of or granted any license of or right to use or authorized
the retention of any rights to use any Seller's Intellectual Property to any
other Person.
1. The Seller's Intellectual Property constitutes all
Intellectual Property used in and/or necessary to the conduct of Seller's Atari
division business as currently being conducted by Seller.
1. To the Knowledge of Seller, neither Seller's Products
included in the Acquired Assets nor the use of Seller's Intellectual Property,
(A) infringes upon or misappropriates the Intellectual Property of any Person,
(B) violates the rights of any Person (including rights to privacy or
publicity), or (C) constitutes unfair competition or trade practices under the
laws of any jurisdiction. Seller has received no notice from any Person
claiming that Seller's Products included in the Acquired Assets nor the use of
Seller's Intellectual Property infringes upon or misappropriates the
Intellectual Property of any Person or constitutes unfair competition or trade
practices under the laws of any jurisdiction (nor, to the Knowledge of Seller,
is there any basis therefor).
1. There are no contracts, licenses or agreements between
Seller and any other Person with respect to Seller's Intellectual Property under
which there is, to the Knowledge of Seller, any dispute or any threatened
dispute regarding the scope of such agreement, or performance under such
agreement including with respect to any payments to be made or received by
Seller thereunder.
1. To the Knowledge of Seller, no Person is infringing or
misappropriating any Key Mark, other than such infringements or
misappropriations that, individually or in the aggregate, would not have a
Material Adverse Effect on such Key Mark.
<PAGE>
1. Seller and, to the Knowledge of Seller, each prior owner of
the Seller's Intellectual Property have taken whatever reasonable steps that are
required to protect rights in confidential information and trade secrets of such
Person and its successors.
1. None of the Seller's Intellectual Property is subject to any
proceeding or outstanding decree, order, judgment, agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by Seller or may
affect the validity, use or enforceability of such Seller's Intellectual
Property.
1. Seller is not required to make or accrue any royalty payment
to any third party in connection with the sale, distribution, license, transfer
or other disposition or exploitation of any of the Acquired Assets.
1. Seller has not developed any new video game software since
July 30, 1996.
1. Seller owns no Intellectual Property not included in the
Acquired Assets that is directly or indirectly competitive with the Seller's
Intellectual Property.
1. (A) Alan Helbush is the Administrative Contact listed in
the domain name record on file with Network Solutions, Inc./InterNIC
Registration Services, and (B) Seller controls the domain name "ATARI.COM".
1. None of the Intellectual Property associated with the
Seller's Products, including the Intellectual Property identified on SCHEDULE 1,
or remedies past and future against infringements thereof and rights to
protection of interest therein is an asset specified in clause (g) of the
definition of "Excluded Assets" set forth in Section 1.
A. SUFFICIENCY OF ASSETS. The Acquired Assets include all assets,
properties and rights necessary for compliance by Buyer with all obligations
relating to the Assumed Liabilities.
A. LITIGATION. There is no claim, dispute, action, proceeding
(including arbitration), suit or appeal, or investigation, at law or in equity,
pending (other than those, if any, with respect to which service of process or
similar notice has not yet been made and which are not within the Knowledge of
Seller) or, to the Knowledge of Seller, threatened against Seller or involving
any of the assets or properties of Seller before any court, agency, authority,
arbitration panel or other tribunal that would have a Material Adverse Effect.
There is no outstanding order, writ, injunction or decree of any court, agency,
authority, arbitration panel or other tribunal, and Seller is not in default
with respect to any notice, order, writ, injunction, or decree, in each case
relating to, or affecting the Acquired Assets, the Assumed Liabilities or the
Seller's Products.
<PAGE>
A. UNDERLYING DOCUMENTS. Copies of all documents listed or
described in the Disclosure Schedule and the Schedules hereto have been
furnished or made available to Buyer. All such documents are true, correct and
complete copies, and there are no amendments or modifications thereto.
A. BROKERS' FEES. Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer or its affiliates
could become liable or obligated.
A. COMPLIANCE WITH BULK SALES LAWS. The sale, transfer and
assignment by Seller to Buyer hereunder and the consummation of the other
transactions contemplated hereby do not constitute a "bulk sale" by Seller, and
it is not necessary under the laws of any jurisdiction that Seller comply with
the bulk sales laws of such jurisdiction.
A. DISCLOSURE. Neither this Agreement nor any of the Schedules nor,
to the Knowledge of Seller, any other documents delivered by Seller in
connection with this Agreement contains any untrue statement of a material fact
or omits a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading,
and, to the Knowledge of Seller, there is no fact that has not been disclosed to
Buyer that materially affects adversely or could reasonably be anticipated to
materially affect adversely the Acquired Assets, or the operation of the
Acquired Assets by Buyer as currently conducted by Seller.
I. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that the statements contained in this Section 4 are correct
and complete as of the Closing.
A. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the state of Delaware.
A. AUTHORIZATION OF TRANSACTION. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms. The person who has executed this Agreement on behalf of Buyer
has been duly authorized to do so.
A. BROKERS' FEES. Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller or its affiliates
could become liable or obligated.
<PAGE>
A. NONCONTRAVENTION. Neither the execution and delivery of this
Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby, will violate (a) any provision of the Certificate of
Incorporation or bylaws, as amended, of Buyer or (b) any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge or other
restriction of any government, governmental agency or court to which Buyer is
subject.
A. ASSESSMENT OF VALUE. Buyer has been authorized by its ultimate
parent entity to make a good faith assessment of the fair market value of the
Acquired Assets, has made such assessment, and has determined that the fair
market value of the Acquired Assets as of the Closing is less than $15,000,000.
I. POST-CLOSING COVENANTS AND AGREEMENTS.
A. COOPERATION. Each party shall, at all times following the
Closing, not take any action inconsistent with the satisfaction of its
obligations hereunder and, subject to the following sentence, shall promptly
take any further action necessary or desirable to carry out the purposes of this
Agreement (including the execution and delivery of such further instruments and
documents) as the other party may reasonably request. Seller shall take all
actions reasonably requested by Buyer, at Buyer's expense (provided that Buyer
shall not be obligated for any cost to Seller in respect of the time of Seller's
employees, officers or directors), to enable Buyer to establish a recordable
chain of title to the Acquired Assets, including contacting prior owners of
items thereof to request appropriate instruments for recordation.
A. DELIVERY. Immediately following the Closing Seller shall deliver
to Buyer, and Buyer shall accept and remove from Seller's premises at Buyer's
expense within 30 days of the date of Closing, all copies of tangible
embodiments of Acquired Assets transferred to Seller (other than software and
code, and such other items as the parties may mutually agree, which shall be
transferred electronically on or immediately following the Closing and all
tangible embodiments of which shall thereafter be destroyed by Seller);
PROVIDED, HOWEVER, that (i) any information contained in such materials listed
in clause (e) of the definition of "Acquired Assets" that does not relate to the
Acquired Assets may be deleted by Seller before such materials are delivered to
Buyer and (ii) Seller may make copies of any business or financial documents
(other than documents containing Seller Intellectual Property) prior to
delivering them to Buyer. Except as provided in Section 5(c), Seller shall
cease use of the Seller's Intellectual Property, including the name Atari and
the "Fuji" logo relating thereto.
A. SELLER INVENTORY. Seller owns certain unsold inventory of games
bearing the Atari and/or Fuji trademark, and certain other Registered Marks and
containing other Seller's Intellectual Property (the "Inventory"). Buyer hereby
grants to Seller an irrevocable, worldwide, royalty-free license, for a period
of one year from the date of the Closing to use the Registered Marks and other
applicable Seller's Intellectual
<PAGE>
Property relating to such Inventory solely for the purpose of selling the
Inventory. Except as set forth in the previous sentence, after the Closing
Seller shall have no right to exploit the Seller's Intellectual Property.
Without limiting the foregoing, Seller shall not, following the expiration of
the one-year license period set forth above, sell any product referred to in
clause (e) of the definition of "Excluded Assets" set forth in Section 1.
Seller warrants that the Inventory sold pursuant to this Section 5(c) shall be
of like kind and quality to that previously sold by Atari Corporation in the
ordinary course of its business.
A. NOTICE OF DEVELOPMENTS. Seller shall give prompt written notice
to Buyer of any material development that could have a Material Adverse Effect.
Each party shall give prompt written notice to the other of any material
development affecting the ability of the parties to perform their post-Closing
obligations under this Agreement.
A. ENFORCEMENT OF RIGHTS. In connection with the enforcement of its
rights of ownership of the Acquired Assets and the enjoyment thereof, Buyer may
bring actions in the name of Seller, or cause Seller to join any such action as
a party, as reasonably necessary, provided that Buyer shall indemnify Seller
with respect thereto.
A. MAINTENANCE OF INTELLECTUAL PROPERTY; DELIVERY OF NOTICES. After
the Closing, Seller shall not be responsible for the maintenance or renewal of
any registration with respect to the Acquired Assets, such responsibility to
belong to Buyer as the owner of the Acquired Assets; PROVIDED, HOWEVER, that
Seller shall promptly forward to Seller any and all notices and correspondence
which it may receive pertaining to the Acquired Assets; and FURTHER PROVIDED
that Seller shall remain responsible for the maintenance and renewal of
registration with respect to all of the Consent-Required Assets retained by
Seller pursuant to Section 2(d) of this Agreement as a consequence of the
failure to obtain a required consent of a third party until such time as the
applicable consent is obtained.
A. LITIGATION SUPPORT. In the event and for so long as Seller
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Acquired Assets or the Assumed Liabilities, Buyer will provide access upon
prior request and during its regular business hours to the books, records and
other items specified in clause (e) of the definition of Acquired Assets set
forth in Section 1 as shall be reasonably necessary in connection with the
contest or defense, all at the sole cost and expense of Seller and subject to
Seller's execution and delivery of Buyer's standard form of confidentiality
agreement with respect to such items.
<PAGE>
I. INDEMNIFICATION.
A. INDEMNIFICATION AND REIMBURSEMENT OF BUYER'S LOSSES. Seller
shall indemnify Buyer and its affiliates, together with their respective
officers, directors and employees (each a "Seller's Indemnitee") against Losses
(as defined below) as set forth in this Section 6. If a Seller's Indemnitee
shall have suffered a Loss by reason of (i) the breach of any of the
representations or warranties made by Seller herein, (ii) any matter arising
prior to the Closing with respect to the Seller's business, an Acquired Asset or
an Assumed Liability, (iii) any liability of Seller that is not an Assumed
Liability or (iv) any breach of a covenant of Seller hereunder, Seller's
Indemnitee shall be reimbursed for such Loss by Seller as set forth in this
Section 6. For purposes hereof, "Loss" shall mean any losses, liabilities,
claims, damages and expenses incurred or reasonably expected to be incurred,
including penalties, fines, interest, amounts paid in settlement and reasonable
fees and disbursements of counsel, and expenses incurred in connection with any
investigation, action, suit or proceeding instituted against an indemnified
party. Notwithstanding the foregoing, Seller shall have no obligation to
indemnify Seller's Indemnitees for Losses which, cumulatively, total less than
$25,000; PROVIDED, HOWEVER, that if cumulative Losses equal or exceed said
$25,000, then Seller shall indemnify Seller's Indemnitees for all of such
Losses. Liquidated Claims (as defined below) actually paid by Seller under this
Section 6 shall be limited to an aggregate of $5 million.
A. INDEMNIFICATION AND REIMBURSEMENT OF SELLER'S LOSSES. Buyer
shall indemnify Seller and its affiliates, together with their respective
officers, directors and employees (each a "Buyer's Indemnitee") against Losses
as set forth in this Section 6. If a Buyer's Indemnitee shall have suffered a
Loss by reason of (i) the breach of any of the representations or warranties
made by Buyer herein, (ii) any matter arising after the Closing with respect to
the Buyer's business, an Acquired Asset or an Assumed Liability, provided such
matter is not related to or arising from any breach of a covenant,
representation or warranty of Seller or any act or omission by Seller involving
wilful misconduct, fraud or bad faith, or (iii) any breach of a covenant of
Buyer hereunder, Buyer's Indemnitee shall be reimbursed for such Loss by Buyer
as set forth in this Section 6. Notwithstanding the foregoing, Buyer shall have
no obligation to indemnify Buyer's Indemnitees for Losses which, cumulatively,
total less than $25,000, provided however that if cumulative Losses equal or
exceed said $25,000, then Buyer shall indemnify Buyer's Indemnitees for all of
such Losses. Liquidated Claims actually paid by Buyer under this Section 6
shall be limited to an aggregate of $5 million.
A. PAYMENT. At such time as the reimbursable amount of a Claim or a
Third Party Claim has been determined in accordance with this Section 6 (a
"Liquidated Claim"), the indemnifying party shall immediately pay the Person to
be indemnified hereunder (an "Indemnitee") the amount of the Liquidated Claim.
No forbearance of an Indemnitee in demanding payment from the indemnifying party
shall act as a waiver of any right of an Indemnitee to receive payment from the
indemnifying
<PAGE>
party, nor shall it relieve the indemnifying party of any obligation to an
Indemnitee under this Agreement.
A. NOTICE OF CLAIMS. In the event an Indemnitee has any claim for
indemnification under Section 6(a) or Section 6(b) (a "Claim"), it shall give
prompt written notice thereof to the indemnifying party, including in such
notice a brief description of the facts upon which such claim is based and the
amount thereof.
A. THIRD PARTY CLAIMS.
1. If any third party shall notify an Indemnitee with respect
to any matter (a "Third Party Claim") that may give rise to a claim for
indemnification against a party hereto (the "Indemnifying Party") under this
Section 6, then the Indemnitee shall promptly notify the Indemnifying Party
thereof in writing; PROVIDED, HOWEVER, that no delay on the part of the
Indemnitee in notifying the Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder, unless (and then solely to the extent) that
the Indemnifying Party is prejudiced.
1. The Indemnifying Party shall have the right to defend the
Indemnitee against the Third Party Claim with counsel of the Indemnifying
Party's choice reasonably satisfactory to the Indemnitee so long as (A) the
Indemnifying Party notifies the Indemnitee within 15 days after the Indemnitee
has given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnitee as required by (and subject to the limitations of) this
Section 6 for Losses arising out of, relating to, in the nature of, or caused by
the Third Party Claim; (B) the Indemnifying Party provides the Indemnitee with
evidence reasonably acceptable to the Indemnitee that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder; (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief; (D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnitee, likely to
establish a precedential custom or practice materially adverse to the continuing
business interest of the Indemnitee; and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
1. So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 6(e)(ii) above, (A) the
Indemnitee may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim; (B) the Indemnitee shall
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably); and (C) the Indemnifying
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnitee (not to be withheld unreasonably).
<PAGE>
1. In the event any of the conditions in Section 6(e)(ii) above
is or becomes unsatisfied, however, (A) the Indemnitee may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party claim in any manner it reasonably may deem appropriate (and
the Indemnitee need not consult with or obtain any consent from, any
Indemnifying Party in connection therewith); (B) the Indemnifying Party shall
reimburse the Indemnitee promptly and periodically for the reasonable costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (C) the Indemnifying Party shall remain responsible for any
Losses the Indemnitee may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest extent provided
in this Section 6.
A. DISPUTED CLAIMS. If Seller objects to any Claim or Third Party
Claim, it shall give written notice of such objection and brief statement of the
grounds of such objection to Indemnitee within 20 business days after notice is
received. If no such objection is given, such Claim or Third Party Claim, as
the case may be, shall be a Liquidated Claim. If such objection is made,
Indemnitee and Seller shall meet and use their best efforts to settle the
dispute in writing that when resolved shall be a Liquidated Claim.
A. SURVIVAL. The provisions of this Section 6 shall survive the
Closing. Notwithstanding anything to the contrary in this Agreement, no Claim
or Third Party Claim may be asserted by a Seller's Indemnitee under this Section
6: (i) with respect to Losses arising in connection with the obligation to pay
taxes, following the date of the expiration of the applicable statute of
limitations for such obligation; (ii) with respect to a Loss arising out of or
in connection with a License Agreement, following the termination of such
License Agreement in accordance with its terms; and (iii) with respect to all
other Losses, following August 31, 2000. No Claim or Third Party Claim may be
asserted by a Buyer's Indemnitee under this Section 6, other than Losses arising
with respect to the Assumed Liabilities, following August 31, 2000.
Notwithstanding the preceding sentence, an Indemnitee may assert a Claim or
Third Party Claim under this Section 6 with respect to Losses that are the
result of fraud or wilful misconduct by the Indemnifying Party at any time
within the applicable statute of limitations for such claim.
A. The right of each party hereto to assert Claims and receive
indemnification payments pursuant to this Section 6 shall be the sole and
exclusive right and remedy exercisable by such party with respect to any breach
by the other party hereto of any representation or warranty or failure to
perform any covenant required to be performed by such other party; PROVIDED,
HOWEVER, that the above shall not prevent a party hereto from seeking specific
performance of a covenant which another party hereto has failed to perform under
this Agreement.
I. MISCELLANEOUS.
<PAGE>
A. NO THIRD PARTY BENEFICIARIES. Except as otherwise specified
herein, this Agreement shall not confer any rights or remedies upon any person
other than the parties and their respective successors and permitted assigns.
A. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the parties and
supersedes any prior understandings, agreements, or representations by or
between the parties, written or oral, that may have related in any way to the
subject matter hereof.
A. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. Seller shall not assign any of its rights,
interests or obligations hereunder without the prior written consent of Buyer.
Buyer may assign its right, interests and obligations hereunder to any Person
provided that such permitted assignee agrees to be bound by the terms hereof and
to assume all obligations of Buyer hereunder.
A. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
A. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
A. NOTICES. All notices, requests, demands, claims, and other
communications hereunder in writing. Any notice, request, demand, claim, or
other communication hereunder shall be deemed duly given five business days
after mailing if sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below:
If to Seller:
JTS Corporation
1661 Baypointe Parkway
San Jose, California 95134
Attention: President
Copy to:
Cooley Godward LLP
5 Palo Alto Square
Palo Alto, California 94306
Attention: Andrei M. Manoliu, Esq.
<PAGE>
If to Buyer:
HIAC XI, Corp.
1027 Newport Avenue
Pawtucket, Rhode Island 02862
Attention: President
Copy to:
Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island, 02862
Attention: General Counsel
Copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Eric W. Wright, Esq.
Any party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, facsimile, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it is received by the person for whom it
is intended. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
A. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as such laws are applied
to agreements entered into and to be performed entirely within California by
California residents.
A. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller.
A. EXPENSES. Each of Buyer and Seller shall bear its own costs and
expenses (including legal fees and expenses) incurred in connection with the
negotiation and preparation of this Agreement and the transactions contemplated
hereby. Buyer shall, pursuant to Section 5(a) of this Agreement, bear all costs
and expenses of the recordation of chain of title to the Acquired Assets,
including preparation and recordation of appropriate assignments of the Acquired
Assets.
<PAGE>
A. CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. Except as otherwise specified, references in
this Agreement to Sections and Schedules are to Sections of, and Schedules
attached to, this Agreement. Except where the context clearly requires to the
contrary, "including" shall mean "including, without limitation".
A. SCHEDULES. The Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
A. TRANSFER TAXES. Any and all sales, use or other transfer taxes
arising from the transactions contemplated by this Agreement shall be paid by
Seller.
A. CONFIDENTIALITY OF INFORMATION. All information given to a party
by the other party in connection with this Agreement ("Confidential
Information") shall be used only for purposes related to the consummation of the
transactions contemplated herein, and shall be disclosed to the receiving
party's employees and representatives only on a "need to know" basis in
connection with such purposes. If the Closing does not occur for any reason,
each party shall maintain in confidence all Confidential Information of the
other party, shall return to the disclosing party all tangible embodiments (and
all copies) of such Confidential Information and shall not use such Confidential
Information for any purpose; PROVIDED, HOWEVER, that the forgoing restrictions
shall not apply to: (i) information that is or becomes a matter of public
knowledge through no act or failure to act of the receiving party, its
representatives or employees, (ii) information that becomes available to the
receiving party from a source not under an obligation of confidentiality to the
disclosing party, or (iii) information that was known to receiving party prior
to its disclosure to the receiving party by the disclosing party.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement
on the date first above written.
HIAC XI, CORP.
By:
Title:
JTS CORPORATION
By:
D. Thomas Mitchell
President & Chief Executive
Officer
By:
John Skruch
Director of Licensing
