Exhibit 2.1
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
BY AND AMONG
WESTERN DIGITAL CORPORATION,
WESTERN DIGITAL IRELAND, LTD.,
HITACHI, LTD.,
AND
VIVITI TECHNOLOGIES LTD.
March 7, 2011
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; INTERPRETATION |
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1 |
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Section 1.1 Definitions |
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1 |
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Section 1.2 Interpretation |
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16 |
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ARTICLE II PURCHASE AND SALE |
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18 |
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Section 2.1 Purchase and Sale |
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18 |
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Section 2.2 Purchase Price |
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18 |
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Section 2.3 Closing Payments |
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19 |
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Section 2.4 Treatment of Equity Awards |
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20 |
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Section 2.5 Closing |
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22 |
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Section 2.6 Delivery of Company Share Certificates
and the Buyer Parent Stock Certificates;
Other Closing Deliverables |
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23 |
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Section 2.7 Working Capital Adjustment |
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24 |
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Section 2.8 Withholding Taxes |
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27 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLER |
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28 |
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Section 3.1 Organization |
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28 |
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Section 3.2 Authorization; Enforceability |
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28 |
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Section 3.3 Ownership of the Stock |
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28 |
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Section 3.4 No Violation |
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29 |
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Section 3.5 Litigation; Compliance with Law |
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29 |
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Section 3.6 Consents and Approvals |
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29 |
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Section 3.7 No Claims |
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29 |
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Section 3.8 Investment |
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30 |
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Section 3.9 Brokers, Finders Fees, etc. |
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30 |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING
TO THE COMPANY |
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31 |
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Section 4.1 Organization |
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31 |
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Section 4.2 Authority; Enforceability |
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31 |
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Section 4.3 No Violation |
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32 |
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Section 4.4 Consents and Approvals |
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32 |
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Section 4.5 Capitalization |
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32 |
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Section 4.6 Subsidiaries and Affiliates |
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33 |
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Section 4.7 Financial Statements |
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34 |
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Section 4.8 Absence of Certain Changes |
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34 |
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Section 4.9 Undisclosed Liabilities |
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34 |
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Section 4.10 Registration Statement |
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35 |
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Section 4.11 Title to Properties; Encumbrances |
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35 |
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TABLE OF CONTENTS
(continued)
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Section 4.12 Intellectual Property |
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37 |
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Section 4.13 Title to Assets; Condition and Sufficiency of Assets |
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39 |
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Section 4.14 Material Contracts |
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40 |
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Section 4.15 Litigation; Compliance with Law |
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42 |
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Section 4.16 Taxes |
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43 |
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Section 4.17 Employee Benefit Plans |
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44 |
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Section 4.18 Employment Matters |
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47 |
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Section 4.19 Environmental Matters |
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48 |
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Section 4.20 Affiliate Transactions |
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49 |
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Section 4.21 Customers and Suppliers |
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50 |
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Section 4.22 Insurance |
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50 |
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Section 4.23 Product Warranties and Returns; Product Liability |
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50 |
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Section 4.24 Permits |
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51 |
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Section 4.25 Compliance with Anti-bribery, Economic Sanctions, Export
Control and Import Laws |
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51 |
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Section 4.26 Books and Records |
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52 |
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Section 4.27 Brokers, Finders Fees, etc. |
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52 |
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Section 4.28 No Additional Representations |
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52 |
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ARTICLE V REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER AND THE BUYER PARENT |
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52 |
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Section 5.1 Organization |
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52 |
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Section 5.2 Authorization; Enforceability |
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53 |
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Section 5.3 No Violation |
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53 |
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Section 5.4 Consents and Approvals |
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54 |
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Section 5.5 Capitalization |
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54 |
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Section 5.6 Reports; SEC Filings |
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55 |
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Section 5.7 Financial Statements |
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55 |
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Section 5.8 Litigation; Compliance with Law |
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56 |
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Section 5.9 Absence of Certain Changes |
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56 |
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Section 5.10 Accredited Investor |
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56 |
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Section 5.11 Buyer Parent Stock |
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57 |
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Section 5.12 Sufficient Funds |
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57 |
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Section 5.13 Brokers, Finders Fees, etc. |
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57 |
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Section 5.14 Tax Holidays or Incentives |
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57 |
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ARTICLE VI COVENANTS |
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57 |
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Section 6.1 Conduct of Business |
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57 |
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Section 6.2 Reasonable Access |
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62 |
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Section 6.3 Notification |
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62 |
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Section 6.4 Other Information |
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62 |
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Section 6.5 Mutual Reasonable Best Efforts; Further Assurances |
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63 |
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Section 6.6 Antitrust |
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63 |
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Section 6.7 No Solicitation of Competing Proposals; Notice of Inquiry |
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66 |
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TABLE OF CONTENTS
(continued)
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Section 6.8 Press Releases and Announcements; Contacts with Customers and
Suppliers |
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66 |
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Section 6.9 Confidentiality |
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66 |
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Section 6.10 Expenses |
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68 |
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Section 6.11 Consents |
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68 |
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Section 6.12 Employees |
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69 |
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Section 6.13 Seperation of Network and Infrastructure |
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81 |
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Section 6.14 SEC Filings and Financing Cooperation |
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81 |
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Section 6.15 Environmental Approvals |
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82 |
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Section 6.16 Negotiation of External Storage Brand Agreement |
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82 |
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Section 6.17 Termination of Accounts Receivable Guarantee |
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82 |
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ARTICLE VII CONDITIONS PRECEDENT TO THE BUYERS OBLIGATIONS |
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82 |
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Section 7.1 No Adverse Governmental Action, Proceeding or Injunction |
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82 |
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Section 7.2 Antitrust Approvals |
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82 |
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Section 7.3 Representations and Warranties of the Company |
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82 |
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Section 7.4 Representations and Warranties of the Seller |
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83 |
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Section 7.5 Performance |
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83 |
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Section 7.6 No Material Adverse Effect |
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83 |
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Section 7.7 Payoff Letters |
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83 |
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Section 7.8 Retained Land |
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83 |
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Section 7.9 Resignation Letters |
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84 |
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Section 7.10 Non-Competition Agreement |
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84 |
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Section 7.11 IP License Agreement |
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84 |
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Section 7.12 Investor Rights Agreement |
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84 |
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Section 7.13 Customer Agreement |
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84 |
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Section 7.14 R&D Services Agreement |
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84 |
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Section 7.15 Branding Agreement |
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84 |
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Section 7.16 Secondment Agreement |
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84 |
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ARTICLE VIII CONDITIONS PRECEDENT TO THE COMPANYS AND THE SELLERS OBLIGATIONS |
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85 |
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Section 8.1 No Adverse Governmental Action, Proceeding or Injunction |
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85 |
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Section 8.2 Antitrust Approvals |
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85 |
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Section 8.3 Representations and Warranties |
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85 |
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Section 8.4 Performance |
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85 |
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Section 8.5 No Material Adverse Effect |
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85 |
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Section 8.6 IP License Agreement |
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85 |
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Section 8.7 Investor Rights Agreement |
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85 |
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TABLE OF CONTENTS
(continued)
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ARTICLE IX INDEMNIFICATION |
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86 |
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Section 9.1 Survival |
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86 |
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Section 9.2 Indemnification of the Buyer |
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87 |
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Section 9.3 Indemnification of the Seller |
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88 |
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Section 9.4 Indemnification Claim Procedures |
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88 |
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Section 9.5 Additional Indemnity Provisions |
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89 |
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Section 9.6 Defense of Third-Party Claims |
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91 |
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Section 9.7 Additional Environmental Remediation Procedures |
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92 |
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ARTICLE X TERMINATION AND ABANDONMENT |
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94 |
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Section 10.1 Methods of Termination |
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94 |
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Section 10.2 Procedure Upon Termination |
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94 |
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ARTICLE XI TAX MATTERS |
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95 |
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Section 11.1 Tax Indemnification |
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95 |
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Section 11.2 Tax Returns |
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96 |
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Section 11.3 Conduct and Notice of Audits |
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97 |
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Section 11.4 Cooperation on Tax Matters |
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98 |
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Section 11.5 Tax Sharing Agreements |
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99 |
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Section 11.6 Tax Treatment |
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99 |
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Section 11.7 Transfer Taxes |
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99 |
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Section 11.8 Certain Non-U.S. Tax Filings |
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99 |
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Section 11.9 Conflicts |
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99 |
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ARTICLE XII MISCELLANEOUS PROVISIONS |
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100 |
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Section 12.1 Amendment and Modification |
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100 |
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Section 12.2 Extension; Waiver |
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100 |
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Section 12.3 Notices |
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100 |
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Section 12.4 Binding Nature; Assignment |
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101 |
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Section 12.5 Governing Law |
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101 |
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Section 12.6 Severability |
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102 |
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Section 12.7 Negotiation Procedure; Consent to Jurisdiction; Service of
Process; Venue |
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102 |
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Section 12.8 Complete Agreement |
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103 |
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Section 12.9 No Third-Party Beneficiaries |
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103 |
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Section 12.10 Guarantee |
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104 |
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Section 12.11 Notification pursuant to The Financial Instruments and Exchange
Law of Japan |
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104 |
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Section 12.12 Specific Performance |
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104 |
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Section 12.13 Counterparts and Signatures |
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104 |
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Section 12.14 Waiver of Jury Trial |
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104 |
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TABLE OF CONTENTS
(continued)
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EXHIBITS |
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Exhibit A
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Form of Non-Competition Agreement |
Exhibit B
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Form of IP License Agreement |
Exhibit C
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Form of Investor Rights Agreement |
Exhibit D
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Form of Customer Agreement |
Exhibit E
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Form of R&D Services Agreement |
Exhibit F
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Form of Branding Agreement |
Exhibit G
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Form of Secondment Agreement |
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SCHEDULES |
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Schedule 1.1(a)
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Change of Control Payments |
Schedule 1.1(b)
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Indemnified Properties Owned Real Estate |
Schedule 1.1(c)
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Indemnified Properties Rental Real Estate |
Schedule 1.1(d)
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Subsidiaries |
Schedule 2.4(b)
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Holders of Unvested Equity Awards Not Assumed |
Schedule 6.1
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Conduct of Business |
Schedule 6.6
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Antitrust Governmental Entities |
Schedule 6.12(e)(i)
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Seller Seconded R&D Employees |
Schedule 6.12(e)(ii)
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Seller Seconded Non-R&D Employees |
Schedule 6.12(f)
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HGST Japan Secondees |
Schedule 7.2
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Antitrust Jurisdictions |
Schedule 7.8
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Retained Land |
Schedule 9.2(a)(vii)
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Equity Award Claims |
-v-
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this Agreement) is made and entered into as of the
7th day of March, 2011, by and among Western Digital Corporation, a Delaware corporation
(the Buyer Parent), Western Digital Ireland, Ltd., a corporation organized under the laws
of the Cayman Islands and an indirect wholly owned subsidiary of the Buyer Parent (the
Buyer), Hitachi, Ltd., a company incorporated under the laws of Japan (the
Seller), and Viviti Technologies Ltd., a company incorporated under the laws of the
Republic of Singapore and a wholly owned subsidiary of the Seller (the Company).
RECITALS
A. The Seller is the legal and beneficial owner of the Stock (as defined below), which
represents 100% of the issued, outstanding and paid-up share capital of the Company;
B. Prior to the Closing Date (as defined below), the Buyer shall acquire the Buyer Parent
Stock (as defined below) from the Buyer Parent;
C. As of the date hereof, Stephen Milligan has entered into an employment agreement with the
Buyer and the Buyer Parent in respect of the position of President of the Buyer Parent effective
from the Closing Date;
D. As of the date hereof, the Buyer, the Buyer Parent, the Seller and the Company have entered
into a transition services agreement; and
E. On the terms and subject to the conditions contained herein, the Seller desires to sell and
the Buyer desires to purchase all of the Sellers right, title and interest in and to the Stock.
NOW THEREFORE, in consideration of the premises and of the mutual representations, warranties
and covenants that are to be made and performed by the parties hereto (each a Party and
collectively the Parties), it is agreed as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions. The following terms when used in this Agreement have the meanings
set forth below:
Accounting Arbitrator has the meaning set forth in Section 2.7(h).
Acquisition Proposal has the meaning set forth in Section 6.7(a).
Action means any action, suit, proceeding, hearing, order, charge, complaint or
arbitration at Law or in equity, or before any Governmental Entity.
Active Scheme Members has the meaning set forth in Section 6.12(i)(i).
-1-
Adjusted Purchase Price has the meaning set forth in Section 2.2.
Affiliate means any Person now or hereafter controlling, controlled by or under
common control with another Person.
Affiliate Contracts has the meaning set forth in Section 3.7.
Agreement has the meaning set forth in the Preamble.
Antitrust Laws has the meaning set forth in Section 6.6(a).
Antitrust Prohibition has the meaning set forth in Section 6.6(b).
Apportionment has the meaning set forth in Section 6.12(i)(i).
Approvals has the meaning set forth in Section 4.23.
Assumed Benefit Plans has the meaning set forth in Section 6.12(d)(i).
Assumed PBO has the meaning set forth in Section 6.12(d)(i).
Assumed RSU has the meaning set forth in Section 2.4(c)(ii).
Assumed SAR has the meaning set forth in Section 2.4(c)(iii).
Assumed Stock Option has the meaning set forth in Section 2.4(c)(i).
Balance Sheet Date has the meaning set forth in Section 4.7(a).
Benefit Arrangement means any plan, program, policy, practice or arrangement
relating to insurance, bonuses, vacation, profit-sharing, stock options, disability, pension,
retirement, allowances, welfare, healthcare, unemployment or any other benefits to employees or
former employees, their beneficiaries or dependents.
Benefit Plan has the meaning set forth in Section 4.17(a).
Benefits Straddle Period has the meaning set forth in Section 6.12(b)(ii).
Branding Agreement has the meaning set forth in Section 7.16.
Business Day means a day, other than Saturday, Sunday or public holidays in the
United States of America.
Business Intellectual Property means the Owned Intellectual Property used in the
conduct of the businesses of the Company and each of the Subsidiaries, and the Licensed
Intellectual Property.
Buyer has the meaning set forth in the Recitals.
-2-
Buyer 401(k) Plan has the meaning set forth in Section 6.12(h)(ii).
Buyer Actuary has the meaning set forth in Section 6.12(d)(iii).
Buyer Benefit Plans has the meaning set forth in Section 6.12(b)(ii).
Buyer Excluded Claim has the meaning set forth in Section 9.1(a).
Buyer Indemnitees has the meaning set forth in Section 9.2(a).
Buyer Parent has the meaning set forth in the Preamble.
Buyer Parent Average Share Price means an amount equal to the average of the last
reported sale prices for a single share of the Buyer Parents common stock for the Buyer Parent
Share Price Average Period.
Buyer Parent Confidential Information has the meaning set forth in Section
6.9(b).
Buyer Parent SEC Reports has the meaning set forth in Section 5.6.
Buyer Parent Share Price Average Period means the ten (10) consecutive full trading
days on which the shares of the Buyer Parents common stock are actually traded ending on (and
including) the third trading day prior to the Closing Date.
Buyer Parent Stock has the meaning set forth in Section 2.2.
Buyer Securities has the meaning set forth in Section 5.5(c).
Buyer Transaction Documents means this Agreement, the Non-Competition Agreement, the
Transition Services Agreement, the IP License Agreement, the Investor Rights Agreement, the
Customer Agreement, the R&D Services Agreement, the Branding Agreement, the Secondment Agreement
and any other agreements to be entered into in connection with the transactions contemplated by
this Agreement to which the Buyer is, or is specified to be, a party.
Cash Portion of the Purchase Price has the meaning set forth in Section 2.2.
Change of Control Payments means the payments listed on Schedule 1.1(a);
except that the amounts specified on such schedule by footnote shall be paid by the Seller
immediately prior to the Closing and shall not be included in the Change of Control Payments. For
the avoidance of doubt, amounts included in the Employee Payments and Equity Award Payments shall
not be included in Change of Control Payments.
Claim Certificate has the meaning set forth in Section 9.4(a).
Closing has the meaning set forth in Section 2.5.
Closing Date has the meaning set forth in Section 2.5.
-3-
Closing Payments and Assumed Obligations means the sum of (a) the Transaction
Expenses; (b) the Change of Control Payments; (c) the Employee Payments; (d) the Outstanding
Company Debt and (e) the Equity Award Payments.
Code means the Internal Revenue Code of 1986, as amended.
Company has the meaning set forth in the Preamble.
Company Disclosure Schedules has the meaning set forth in Article III.
Company Employees means the Continuing Employees and the Specified Persons,
collectively.
Company Equity Plans means, collectively, the Hitachi Global Storage Technologies
Holdings Pte. Ltd. 2010 Equity Plan and the Hitachi Global Storage Technologies Holdings Pte. Ltd.
2010 Senior Executive Officer Equity Plan.
Company Options means, collectively, options, whether vested or unvested, to
purchase the Companys ordinary shares pursuant to the Company Equity Plans.
Company Option Holders means, collectively, the holders of Company Options
immediately prior to the Closing.
Company Securities has the meaning set forth in Section 4.5(b).
Company Software means all Software, owned or purported to be owned by the Company
or any of the Subsidiaries, including without limitation any such Software used in any products of
the Company or any of the Subsidiaries.
Company Transaction Documents means this Agreement and any agreements to be entered
into in connection with the transactions contemplated by this Agreement to which the Company is, or
is specified to be a party.
Confidentiality Agreements has the meaning set forth in Section 6.9(a).
Consideration Spreadsheet means the spreadsheet described in Section 2.3(a).
Continuing Employees means all of the employees of the Company and each of the
Subsidiaries as of the Closing who are not Specified Persons.
Contract means any legally binding written or oral contract, agreement, instrument,
commitment, understanding or undertaking (including leases, franchises, bonds, guaranties,
licenses, mortgages, notes, indentures, sublicenses, subcontracts and purchase orders).
Customer Agreement has the meaning set forth in Section 7.14.
Divestiture Action has the meaning set forth in Section 6.6(b).
DOL means the United States Department of Labor.
-4-
DTSC has the meaning set forth in Section 9.2(a).
Employment Commencement Date has the meaning set forth in Section
6.12(g)(i).
Employee Payments means all amounts, including any bonus, severance or other
payments (other than amounts included in the Change of Control Payments or the Equity Award
Payments and other than Severance and amounts payable pursuant to
Sections 6.12(a)(v) and
(vi)), that shall become payable (whether currently or in the future) to employees (past
and present), consultants or contractors of the Company or any of the Subsidiaries in their
capacities as such or liabilities owed to such employees in their capacities as such that are to be
incurred by the Company, in each case, as a result of the purchase of the Stock by Buyer as
contemplated by this Agreement, including all amounts payable pursuant to the Companys or any of
the Subsidiaries employee retention program, pursuant to an agreement entered into by the Company
prior to the Closing (except to the extent paid in cash prior to the Closing or to the extent
included in Total Current Liabilities).
Encumbrance means any mortgage, deed of trust, pledge, hypothecation, security
interest, lien (statutory or otherwise), easement, charge, encumbrance, claim, license, option
(including rights of first refusal or similar rights) or any similar types of restrictions or
limitations.
Environmental Laws has the meaning set forth in Section 4.19(a).
Environmental Release has the meaning set forth in Section 4.19(c).
Equity Award Exchange Ratio means an exchange ratio equal to the Per Share Closing
Payment divided by the Buyer Parent Average Share Price.
Equity Award Payments means the payments to be made in cash to the Vested Equity
Holders at Closing pursuant to Section 2.3(a)(v), as set forth on the Consideration
Spreadsheet.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate has the meaning set forth in Section 4.17(e).
Estimated Assumed PBO Amount has the meaning set forth in Section
6.12(d)(ii).
Estimated Unfunded Assumed PBO Amount has the meaning set forth in Section
6.12(d)(ii).
Estimated Working Capital has the meaning set forth in Section 2.7(a).
Estimated Working Capital Deficit has the meaning set forth in Section
2.7(a).
Estimated Working Capital Surplus has the meaning set forth in Section
2.7(a).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
-5-
Expiration Date has the meaning set forth in Section 9.1(a).
FIEL has the meaning set forth in Section 12.11.
FIN 48 has the meaning set forth in Section 11.1(a).
Final Specified Persons List has the meaning set forth in Section
6.12(a)(iii).
Final Statement of Working Capital has the meaning set forth in Section
2.7(j).
Final Working Capital has the meaning set forth in Section 2.7(j).
Financial Statements has the meaning set forth in Section 4.7(a).
Fully Diluted Share Number means that number of shares in the capital of the Company
equal to the sum of (a) the Stock, (b) the number of shares in the capital of the Company issuable
by the Company, including those shares issuable at its election, upon the exercise of the Vested
Equity Awards (including, for the avoidance of doubt, Company Options and SARs held by Specified
Persons or the individuals identified on Schedule 2.4(b) the vesting of which is
accelerated pursuant to Section 2.4(b), except to the extent the Company has paid cash in
exchange for the exercise of such Company Options and SARs prior to the Closing) and (c) the number
of shares in the capital of the Company issuable by the Company, including those shares issuable at
its election, upon the exercise of the Unvested Equity Awards held by the Continuing Employees
(assuming such Unvested Equity Awards were fully vested).
GAAP means generally accepted accounting principles of the United States applied in
a manner consistent with past practices of the Company and each of the Subsidiaries.
Governmental Entity means any supranational, foreign, domestic, federal,
territorial, state, county, city, township or other local governmental authority, or any
regulatory, administrative or other agency, instrumentality, court, government organization,
quasi-governmental organization, mediator, arbitrator or arbitral forum (whether public or
private), commission, tribunal thereof, or any political or other subdivision, department or branch
of any of the foregoing, or any private body, in each case, which exercises any Tax, regulatory or
governmental or quasi-governmental authority.
Hazardous Material shall mean all materials, wastes or substances regulated,
classified or otherwise characterized under any applicable Environmental Laws as hazardous,
toxic, pollutant, or contaminant.
HGST Japan means Hitachi Global Storage Technologies Japan, Ltd. and its Related
Subsidiaries (if any).
HGST Japan Secondees has the meaning set forth in Section 6.12(f).
HGST Japan Secondment Period has the meaning set forth in Section 6.12(f).
HGST UK has the meaning set forth in Section 6.12(i)(i).
-6-
Hitachi Europe has the meaning set forth in Section 6.12(i)(i).
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Indebtedness means the sum of (a) the principal amount of any indebtedness of the
Company and any of the Subsidiaries for borrowed money outstanding as of the Closing (excluding any
intra-company indebtedness between the Company and any of the Subsidiaries), together with all
prepayment premiums or penalties and such other similar payments coming due as a result of the
transactions contemplated by this Agreement; and (b) any unpaid interest owing on any such
indebtedness of the Company or any of the Subsidiaries.
Indemnification Basket has the meaning set forth in Section 9.2(b).
Indemnification Cap has the meaning set forth in Section 9.2(c).
Indemnified Party has the meaning set forth in Section 9.4(a).
Indemnifying Party has the meaning set forth in Section 9.4(b).
Indemnified Properties means (I) the Owned Real Estate located in (a) San Jose,
California, U.S.A., (b) Fujisawa, Kanagawa, Japan, and (c) Odawara, Kanagawa, Japan, each as more
particularly described on Schedule 1.1(b) and (II) the Rental Real Estate located in
Odawara, Kanagawa, Japan, as more particularly described on Schedule 1.1(c).
Intellectual Property means all of the following in any jurisdiction worldwide, and
all rights therein: (a) patents; (b) trademarks, service marks, trade dress, trade names, corporate
names, together with all goodwill associated with the foregoing; (c) Internet domain names; (d)
copyrights (including rights in computer software) and moral rights, database rights, rights in
designs; (e) semi-conductor topography rights, integrated circuit layout design rights; (f)
registrations and applications for any of the foregoing with any Governmental Entity; (g) trade
secrets and know-how and rights protecting confidential information; and (h) all other intellectual
property throughout the world, together with, in each case, all benefits, privileges, rights to
sue, recover damages and obtain relief for any infringement, misappropriation or violation of any
of the foregoing rights.
Investor Rights Agreement has the meaning set forth in Section 7.13.
IP License Agreement has the meaning set forth in Section 7.12.
IRS means the United States Internal Revenue Service.
Japan Benefit Plan Participants has the meaning set forth in Section
6.12(c)(i).
Japan Benefit Plan Assets and Liabilities has the meaning set forth in Section
6.12(c)(iii).
Japan Benefit Plans has the meaning set forth in Section 6.12(c)(i).
-7-
Japan Employees means the Continuing Employees of HGST Japan.
Knowledge means (a) the actual knowledge of (i) in the case of the Company or any of
the Subsidiaries, Stephen Milligan, Michael Murray, Mark Long, Steve Campbell, Don Blake, Karen
Rohde, Christopher Dewees, Steven Craig and Mike Cordano, (ii) in the case of the Seller, Toyoki
Furuta, or (iii) in the case of the Buyer or Buyer Parent, John Coyne, Tim Leyden, Wolfgang Nickl,
Michael Ray and Don Bennett, and (b) with respect to each of the foregoing, the actual knowledge of
such person after reasonable inquiry.
Latest Balance Sheet means the audited consolidated balance sheets of the Company
and each of the Subsidiaries at December 31, 2010 (including the notes thereto, if any), and the
related unaudited consolidated statements of operations, shareholders equity and cash flows for
the period and year then ended.
Law means any foreign or domestic constitutional provision, act, statute or other
law, ordinance, circular, rule or regulation of any Governmental Entity and any binding and
enforceable decree, injunction, judgment, order, ruling, writ, doctrine, assessment or arbitration
award or similar form of decision or determination issued by a Governmental Entity.
Leases has the meaning set forth in Section 4.11(b).
Licensed Intellectual Property means all Intellectual Property for which the Company
or any of the Subsidiaries have a license or other valid right to use in the conduct of the
businesses of the Company or any of the Subsidiaries.
Loss and Losses have the meaning set forth in Section 9.5(b).
Material Adverse Effect means any event, condition, change, effect, omission or
occurrence which, individually or together with any other event, condition, change, effect,
omission or occurrence occurring or coming into being after the date of the Agreement that, (a) has
had a material adverse effect or material adverse change on the assets, liabilities, properties,
business, financial condition or results of operations of the applicable Party and its
subsidiaries, taken as a whole; except if due to (i) changes that adversely affect either
the United States or global economy generally or the industry in which the Buyer Parent or the
Company and their respective subsidiaries operate, except to the extent that such changes have a
materially disproportionate effect on the applicable Party and its subsidiaries, taken as a whole,
as compared to the impact on their principal competitors; (ii) the announcement, pendency or
consummation of the transactions contemplated by this Agreement, including, any resulting
shortfalls or declines in unit sales, revenue, margins or profitability, loss of employees,
cancellations of or delays in work for customers or other adverse customer reactions to this
Agreement; (iii) any decrease in the market price or trading volume of the Buyer Parent Stock, in
and of itself (it being understood that the underlying cause of any such decrease may be taken into
consideration); (iv) any failure to meet published analyst estimates of revenue, earnings or
results of operations or failure to meet internal budgets, projects or forecasts of revenue,
earnings or other financial performance or results of operations (it being understood that the
underlying cause of any such failure may be taken into consideration); (v) acts of war or
terrorism, which do not have a materially disproportionate impact on such Party and its
subsidiaries, taken as a
whole, as compared to the impact on its principal competitors; (vi) any changes in GAAP,
changes in the interpretation of GAAP, or changes in any Laws; (vii) the failure of the Buyer to
consent to any of the actions proscribed in Section 6.1 where such failure to consent would
be a breach by the Buyer of Section 6.1 or (ix) the performance of this Agreement
(including compliance with the covenants therein) or the failure to take any action prohibited by
this Agreement; or (b) has materially impaired the ability of the applicable Party and/or its
subsidiaries to consummate the transactions contemplated by this Agreement.
-8-
Material Contract or Material Contracts has the meaning set forth in
Section 4.14.
MHLW has the meaning set forth in Section 6.12(c)(iii).
Negotiation Procedures has the meaning set forth in Section 12.7(b).
New HGST Benefit Plans has the meaning set forth in Section 6.12(c)(i).
Non-Competition Agreement has the meaning set forth in Section 7.10.
Non-Practicing Entities has the meaning set forth in Section 4.15(a).
Non-R&D/R&D Related Secondees has the meaning set forth in Section
6.12(e)(ii).
Non-R&D/R&D Related Secondment Period has the meaning set forth in Section
6.12(e)(ii).
Notice of Working Capital Disagreement has the meaning set forth in Section
2.7(f).
OFAC has the meaning set forth in Section 4.25(b).
Offer Letters has the meaning set forth in Section 6.12(g)(i).
Open Source Software means any Software that contains, is derived in any manner (in
whole or in part) from, or is distributed as, free Software, share-ware, open source software or
is otherwise made available under terms that require such Software or derivative works thereof, as
a covenant or condition of distribution of such Software or derivative works, (a) be made available
or distributed in a form other than binary (e.g., source code form); (b) be licensed under terms
that allow for creation of derivative works; (c) be licensed under terms that allow for
decompiling, disassembling or reverse engineering; or (d) be licensed under terms that permit free
redistribution (such covenants and conditions, Open Source Terms).
Outstanding Company Debt means all short and long-term debt, accounts-receivable
related borrowings and lines of credit of the Company or any of its Subsidiaries outstanding as of
the Closing Date, other than intercompany indebtedness between the Company and any of its
Subsidiaries or between any of its Subsidiaries.
Owned Intellectual Property means all Intellectual Property owned or purported to be
owned by the Company or any of the Subsidiaries, including the Owned Registered Intellectual
Property.
-9-
Owned Real Estate has the meaning set forth in Section 4.11(a).
Owned Registered Intellectual Property has the meaning set forth in Section
4.12(a).
Party has the meaning set forth in the Recitals.
Per Share Cash Closing Payment means an amount, in cash, equal to the Per Share
Closing Payment.
Per Share Closing Payment means an amount equal to the quotient of (a) the Adjusted
Purchase Price, increased by (i) the aggregate exercise price of the Vested Options (including, for
the avoidance of doubt, Company Options held by Specified Persons or the individuals identified on
Schedule 2.4(b) the vesting of which is accelerated pursuant to Section 2.4(b)),
plus (ii) the aggregate base price of the Vested SARs (including, for the avoidance of doubt, SARs
held by Specified Persons or the individuals identified on Schedule 2.4(b) the vesting of
which is accelerated pursuant to Section 2.4(b)), plus (iii) the aggregate exercise price
of the Unvested Options held by the Continuing Employees and plus (iv) the aggregate base price of
the Unvested SARs held by the Continuing Employees, and (b) the Fully Diluted Share Number.
Permitted Encumbrance means (a) liens to the extent shown on or reflected in the
balance sheets of the Seller, the Company or any of the Subsidiaries; (b) liens for Taxes and other
Government Entity charges and assessments that are not yet due or delinquent; (c) licenses to
Business Intellectual Property granted by the Company or any of the Subsidiaries in the ordinary
course of business consistent with past practice; and (d) carriers, warehousemens, mechanics,
materialmens and other similar liens with respect to amounts that are not yet due and payable.
Permitted Real Estate Encumbrance means (a) easements, covenants, conditions,
restrictions, access agreements, use agreements, licenses or other similar agreements, restrictions
and/or encumbrances, none of which materially affect title to or the use and/or operation of Real
Estate, and (b) liens for Taxes and other Government Entity charges and assessments that are not
yet due or delinquent and for which adequate reserves have been established in accordance with
GAAP.
Person means any individual, sole proprietorship, partnership, limited liability
company, corporation, association, joint stock company, trust, joint venture, unincorporated
organization, any other business organization or entity, or Governmental Entity.
Post-Closing Tax Period means any taxable period beginning after the Closing Date,
and, in the case of any Straddle Period, the portion of such period beginning after the Closing
Date.
PRC shall mean the Peoples Republic of China and, for purposes of this Agreement,
does not include Hong Kong, Macau and Taiwan.
PRC Tax Circular 698 means the Notice of the State Administration of Taxation on
Strengthening the Management of Enterprise Income Tax Collection of Proceeds from Equity Transfers
by Non-resident Enterprises, Guoshuihan 2009 No. 698.
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Pre-Closing Environmental Liabilities has the meaning set forth in Section
9.2(a).
Pre-Closing Taxes shall mean, except for amounts included in the calculation of
Final Working Capital, (A) Taxes of or imposed on the Company or the Subsidiaries for any
Pre-Closing Tax Period, (B) Taxes of any Person (other than the Company or any of the Subsidiaries)
imposed on the Company or any of the Subsidiaries pursuant to Treasury Regulation Section 1.1502-6
or any analogous state, local or foreign Law or regulation, or by reason of the Company or any of
the Subsidiaries having been a member of any consolidated, combined, unitary or other group on or
prior to the Closing Date, (C) Taxes of any other Person (other than the Company or any of the
Subsidiaries) for which the Company or any of the Subsidiaries is liable as a transferee or
successor, if the event giving rise to such liability occurred prior to the Closing Date, or
pursuant to any indemnity agreement, tax sharing agreement, or similar agreement entered into on or
before the Closing Date; and (D) (i) income Taxes imposed as a result of the direct or indirect
transfer of the Company or any of the Subsidiaries pursuant to this Agreement, including with
respect to built-in gain attributable to the Pre-Closing Tax Period in the shares of the Company or
any of the Subsidiaries, (ii) any Taxes imposed pursuant to PRC Tax Circular 698 and/or (iii) any
Taxes imposed based on the resident enterprise status of the Company or any of the Subsidiaries
under the PRC Tax Law. For the avoidance of doubt, Pre-Closing Taxes shall not include (v) any
Taxes that the Buyer is required to pay to any Seller Tax Indemnitee pursuant to Section
11.1(b), (w) any Taxes related to any agreement for a Tax holiday or incentive that arise as a
result of the Buyer reducing employment, closing a factory, or other action or failure to take
action by the Buyer on or after the Closing that is inconsistent with Sellers past practices with
respect to such Tax holidays or incentives and that is in breach of any Tax holiday or incentive
agreement (other than with respect to any of the transactions contemplated by this Agreement), (x)
Transfer Taxes for which Buyer is responsible pursuant to Section 11.7, (y) any Taxes
attributable to any election made by or at the direction of the Buyer under Section 338 of the Code
(or similar provision of state, local or foreign Law) other than with respect to any Taxes
attributable to a breach of Section 4.16(a)(xii) or (z) any Taxes under Section 1445 of the
Code as a result of the transfer (or deemed sale) of the U.S. Subsidiary other than with respect to
any Taxes attributable to a breach of Section 4.16(a)(xii).
Pre-Closing Tax Period means any taxable period ending on or before the Closing Date
and, in the case of any Straddle Period, the portion of such period ending on and including the
Closing Date.
Proceeding means any audit or other examination, or any judicial or administrative
proceeding, relating to liability for or refunds or adjustments with respect to Taxes.
Projected Benefit Obligation has the meaning set forth in Section
6.12(d)(i).
Proposed Statement of Working Capital has the meaning set forth in Section
2.7(d).
Proposed Statement Review Period has the meaning set forth in Section
2.7(e).
Purchase Price has the meaning set forth in Section 2.2.
R&D has the meaning set forth in Section 6.12(e)(i).
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R&D Secondees has the meaning set forth in Section 6.12(e)(i).
R&D Secondment Period has the meaning set forth in Section 6.12(e)(i).
R&D Services Agreement has the meaning set forth in Section 7.15.
Real Estate has the meaning set forth in Section 4.11(c).
Registration Statement has the meaning set forth in Section 4.10.
Related Subsidiary means, with respect to any Person, any other Person controlled,
directly or indirectly, by such first Person.
Remedial Activities has the meaning set forth in Section 9.7(a).
Rental Real Estate has the meaning set forth in Section 4.11(b).
Required Consents means, collectively, the Required Governmental Consents and the
Required Third-Party Consents.
Required Governmental Consents has the meaning set forth in Section 4.4(a).
Required Third-Party Consents has the meaning set forth in Section 4.4(b).
Retained Land has the meaning set forth in Section 7.8.
RSUs means, collectively, restricted share units, whether vested or unvested, with
respect to the Companys ordinary shares pursuant to the Company Equity Plans.
SARs means, collectively share appreciation rights, whether vested or unvested, with
respect to the Companys ordinary shares pursuant to the Company Equity Plans.
Scheme Beneficiaries has the meaning set forth in Section 6.12(i)(i).
SEC means the Securities and Exchange Commission.
Secondment Agreement has the meaning set forth in Section 6.12(e)(iii).
Section 75 has the meaning set forth in Section 6.12(i)(i).
Section 75 Debt has the meaning set forth in Section 6.12(i)(iii).
Securities Act means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Seller has the meaning set forth in the Preamble.
Seller 401(k) Plan has the meaning set forth in Section 6.12(h)(ii).
-12-
Seller Actuary has the meaning set forth in Section 6.12(d)(ii).
Seller Employees has the meaning set forth in Section 4.18(c).
Seller Excluded Claims has the meaning set forth in Section 9.1(a).
Seller Group Entity has the meaning set forth in Section 6.12(a)(iii).
Seller Indemnitees has the meaning set forth in Section 9.3(a).
Seller Japanese Employees has the meaning set forth in Section 6.12(e).
Seller Tax Indemnitee has the meaning set forth in Section 11.1(b).
Seller Transaction Documents means this Agreement, the Non-Competition Agreement,
the Transition Services Agreement, the IP License Agreement, the Investor Rights Agreement, the
Customer Agreement, the R&D Services Agreement, the Branding Agreement, the Secondment Agreement
and any other agreements to be entered into in connection with the transactions contemplated by
this Agreement to which the Seller is, or is specified to be a party.
Seller Seconded/Transferred Employee has the meaning set forth in Section
6.12(g)(i).
Severance has the meaning set forth in Section 6.12(a)(iv).
Severance Plans has the meaning set forth in Section 6.12(k)(ii).
Social Insurance means any form of social insurance required under applicable Laws,
including without limitation, the PRC national and local contributions for pensions, medical
insurance, unemployment insurance, work-related injury insurance, pregnancy benefits, and housing
accumulation funds.
Software means computer programs and firmware, including any and all software
implementations of algorithms, models and methodologies, program files, program and system logic,
program modules, routines, and subroutines, whether in source code, object code or other form,
including manuals, specifications, and other documentation and materials relating thereto.
Specified Persons means all of the employees of the Company and each of the
Subsidiaries (other than HGST Japan and its Related Subsidiaries) set forth on the Final Specified
Persons List, which employees are not expected by the Buyer to be employed by the Company or any of
the Subsidiaries following the Closing.
Statement of Estimated Working Capital has the meaning set forth in Section
2.7(b).
Stock means all of the issued and paid-up shares in the capital of the Company
outstanding on the Closing Date.
Stock Portion of the Purchase Price has the meaning set forth in Section
2.2.
-13-
Straddle Period means any taxable period beginning on or prior to and ending after
the Closing Date.
Submission has the meaning set forth in Section 11.4.
Subsidiaries means the entities set forth on Schedule 1.1(d).
Target Working Capital means $160,000,000.
Tax or Taxes means any and all federal, state, local and foreign taxes,
assessments, duties, impositions, including those based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, alternative minimum, windfall
profits, estimated, customs, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions imposed with respect
to such amounts.
Tax Attribute Indemnifiable Amount has the meaning set forth in Section
11.1(a).
Tax Return means any return, declaration, report, claim for refund, information
return (including any related or supporting schedule (including Schedule K-1), attachment,
statement or information) filed or required to be filed in connection with the determination,
assessment or collection of any Tax of any Party.
Third-Party Claim has the meaning set forth in Section 9.6(a).
Total Current Assets means (without duplication) (i) cash, plus (ii) accounts
receivable (net of allowance for bad debts), plus (iii) securitized accounts receivable, plus (iv)
inventory, net, plus (v) receivables from Seller and its Affiliates (other than any Subsidiary of
the Company), plus (vi) prepaid expenses and other current assets, plus (vii) current deferred Tax
assets, each as determined in a manner consistent with the preparation of the Financial Statements
under GAAP as currently in effect. For the avoidance of doubt, any portion of the Retained Land
that is classified as a current asset, and any other receivables from the Seller and its Affiliates
that are terminated and do not survive the Closing, shall not be included in the definition of
Total Current Assets.
Total Current Liabilities means (without duplication) (i) accounts payable, plus
(ii) accrued liabilities which are classified as current liabilities, including current deferred
Tax liabilities to the extent not otherwise included as a contra account in clause (vii) of the
definition of Total Current Assets, plus (iii) payables to the Seller and its Affiliates (other
than any Subsidiary of the Company), plus (iv) accrued warranty which are classified as current
liabilities, each as determined in a manner consistent with the preparation of the Financial
Statements under GAAP as currently in effect. For the avoidance of doubt, all Transaction
Expenses, Change of Control Payments, Employee Payments, borrowings from Affiliates, Indebtedness
to be paid at Closing, any other payables to the Seller and its Affiliates that are terminated and
do not survive the Closing, and Equity Award Payments, shall not be included in the definition of
Total Current Liabilities.
-14-
Transaction Documents means, collectively, the Buyer Transaction Documents, the
Company Transaction Documents and the Seller Transaction Documents.
Transaction Expenses means all legal, accounting, brokers, investment banker and
other third party costs, fees and expenses incurred by the Company or any of the Subsidiaries in
connection with the negotiation, preparation and performance of and compliance with this Agreement
and the transactions contemplated by this Agreement (including the fees, disbursements and expenses
of experts, consultants, including pension and environmental advisors, or other representatives but
not any third party consent fees), as set forth on the Consideration Spreadsheet.
Transfer Taxes has the meaning set forth in Section 11.7.
Transition Services Agreement means that certain Transition Services Agreement dated
as of the date hereof, by and among the Seller, the Company and the Buyer Parent.
UK Scheme has the meaning set forth in Section 6.12(i)(i).
Unassumed Equity Awards has the meaning set forth in Section 2.4(b).
Unvested Equity Awards means, collectively, the Unvested Options, the Unvested RSUs
and the Unvested SARs.
Unvested Option means, collectively, those Company Options that are unvested as of
immediately prior to Closing.
Unvested RSUs means, collectively, those RSUs that are unvested as of immediately
prior to Closing.
Unvested SARs means, collectively, those SARs that are unvested as of immediately
prior to Closing.
Updated Assumed PBO Amount has the meaning set forth in Section
6.12(d)(iii).
U.S. Benefit Plans has the meaning set forth in Section 6.12(h)(i).
U.S. Subsidiary means Hitachi Global Storage Technologies, Inc., a Delaware
corporation.
Valuation Allowance Reduction has the meaning set forth in Section 11.1(a)
Vested Equity Awards means, collectively, the Vested Options, the Vested RSUs and
the Vested SARs.
Vested Equity Holders means, collectively, the Vested Option Holders, the Vested RSU
Holders and the Vested SAR Holders.
Vested Option has the meaning set forth in Section 2.4(a)(i).
-15-
Vested Option Holders means, collectively, the Company Option Holders who hold
Vested Options as of immediately prior to the Closing.
Vested Option Payment means, with respect to each share in the capital of the
Company subject to a Vested Option, an amount, in cash, equal to (a) the Per Share Cash Closing
Payment, less (b) the exercise price per share of such Vested Option, with the aggregate
amount of such payment rounded to the nearest whole cent.
Vested RSU has the meaning set forth in Section 2.4(a)(ii).
Vested RSU Holder means, collectively, the holders of Vested RSUs as of immediately
prior to the Closing.
Vested SAR has the meaning set forth in Section 2.4(a)(iii).
Vested SAR Holders means, collectively, the holders of Vested SARs as of immediately
prior to the Closing.
Vested SAR Payment means, with respect to each share in the capital of the Company
subject to a Vested SAR, an amount, in cash, equal to (a) the Per Share Cash Closing Payment,
less (b) the base price per share of such Vested SAR, with the aggregate amount of such
payment rounded to the nearest whole cent.
WARN Act has the meaning set forth in Section 4.18(f).
Working Capital has the meaning set forth in Section 2.7(a).
Section 1.2 Interpretation.
(a) All references herein to Articles, Sections, Exhibits and Schedules are to Articles,
Sections, Exhibits and Schedules, respectively, in or to this Agreement unless otherwise
specified.
(b) All references herein to any document, instrument or agreement (i) shall include all
exhibits, schedules and other attachments thereto, (ii) shall include all documents, instruments
or agreements issued or executed in replacement thereof and (iii) shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended, modified and
supplemented from time to time and in effect at any given time.
(c) All references herein to statutory provisions shall be construed as references to those
provisions as respectively amended or re-enacted from time to time and references to any document
or agreement shall be deemed to include references to such document or agreement as amended,
modified, supplemented or novated from time to time.
(d) The headings contained in this Agreement, any Exhibit or Schedule and in the table of
contents to this Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement.
-16-
(e) The words hereof, hereby, hereto, hereunder, herein and herewith and words of
similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(f) Whenever the words include, includes, including or among other things are used in
this Agreement, they shall be deemed to be followed by the words without limitation.
(g) Unless the context clearly requires otherwise, or shall be inclusive and not exclusive.
(h) All references herein to days shall mean calendar days, unless otherwise indicated.
References to a time of day shall mean such time in the State of California, unless otherwise
indicated.
(i) All references to dollars and $ are to the currency of the United States of America.
(j) All references to domestic mean within the United States of America.
(k) All references to foreign mean outside of the United States of America.
(l) A reference to a Party or any other Person includes a reference to its permitted
transferees and assigns and to its successors.
(m) The meaning assigned to each term defined herein shall be equally applicable to both the
singular and the plural forms of such term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have
a corresponding meaning.
(n) Unless otherwise provided therein, any capitalized terms used in any Schedule or Exhibit
but not otherwise defined therein, shall have the meaning as defined in this Agreement.
(o) All accounting terms shall be construed in accordance with GAAP unless otherwise
indicated. To the extent that the definition of an accounting term that is defined in this
Agreement is inconsistent with the meaning of such term under GAAP, the definition set forth in
this Agreement will control.
(p) The Parties have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.
(q) Unless otherwise expressly provided herein, the measure of a period of one month or one
year for purposes of this Agreement shall be that date of the following month or year
corresponding to the starting date; provided, however, that if no corresponding
date
exists, the measure shall be that date of the following month or year corresponding to the
next day following the starting date. For example, one month following February 18th is March
18th, and one month following March 31 is May 1.
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ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale. Subject to the terms and conditions set forth herein, at
the Closing the Seller will sell as legal and beneficial owner and the Buyer will, relying on the
representations, warranties, covenants and undertakings made by the Seller in this Agreement,
purchase all of the Sellers right, title and interest in and to the Stock, free and clear of all
Encumbrances and together with all rights, dividends, entitlements and advantages now and hereafter
attaching thereto for the payments specified in Section 2.3. The Buyer shall not be obliged
to complete the purchase of any of the Stock unless the purchase of all of the Stock is completed
simultaneously. The Purchase Price shall be subject to a post-Closing adjustment, if any, as set
forth in Section 2.7.
Section 2.2 Purchase Price. The Purchase Price (the Purchase Price) shall
consist of (a) $3,500,000,000 (the Cash Portion of the Purchase Price) in cash and (b)
Twenty-Five Million (25,000,000) shares of the Buyer Parents common stock, par value $0.01 per
share (the Buyer Parent Stock). The Purchase Price is subject to the following
adjustments (without duplication):
(a) Estimated Working Capital Adjustment (if any). The Purchase Price shall be
reduced by the amount of any Estimated Working Capital Deficit or increased by the amount of any
Estimated Working Capital Surplus;
(b) Transaction Expenses. The Purchase Price shall be reduced by the amount of any
Transaction Expenses not paid by the Company or any of the Subsidiaries prior to the Closing;
(c) Change of Control Payments. The Purchase Price shall be reduced by the amount of
any Change of Control Payments not paid by the Company or any of the Subsidiaries prior to the
Closing;
(d) Employee Payments. The Purchase Price shall be reduced by the amount of any
Employee Payments not paid by the Company or any of the Subsidiaries prior to the Closing;
(e) Estimated Unfunded Assumed PBO Amount. The Purchase Price shall be reduced by
the Estimated Unfunded Assumed PBO Amount, as determined under Section 6.12(d); and
(f) Outstanding Company Debt. The Purchase Price shall be reduced by the amount of
any Outstanding Company Debt not paid by the Company or any of the Subsidiaries prior to the
Closing, other than any such debt between the Company and any of the Subsidiaries or between any
of the Subsidiaries.
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(g) Paid or Accrued Severance. The Purchase Price shall be increased by the amount
of any Severance which is paid or accrued by the Company prior to the Closing.
The Purchase Price, after giving effect to the adjustments set forth in Section 2.2(a)
through Section 2.2(f) and Section 2.8(c), is referred to herein as the
Adjusted Purchase Price. For purposes of calculating the Adjusted Purchase Price, the
aggregate value of the Buyer Parent Stock shall be calculated as follows: the product of (x) the
Buyer Parent Stock and (y) the Buyer Parent Average Share Price (the Stock Portion of the
Purchase Price).
Section 2.3 Closing Payments.
(a) At the Closing, the Buyer shall make the following payments by wire transfer of
immediately available funds for the benefit of the Persons and to the accounts and in the amounts
specified on a spreadsheet containing the items listed below in this Section 2.3(a) (the
Consideration Spreadsheet), to be prepared by the Company not less than three (3)
Business Days prior to the Closing:
(i) Unpaid Transaction Expenses. The Buyer shall pay, from the Cash
Portion of the Purchase Price, the Transaction Expenses not paid by the Company or
any of the Subsidiaries prior to the Closing;
(ii) Unpaid Change of Control Payments. The Buyer shall pay, from the
Cash Portion of the Purchase Price, all Change of Control Payments, to the extent not
paid by the Company or any of the Subsidiaries prior to the Closing;
(iii) Unpaid Employee Payments. The Buyer shall pay, from the Cash
Portion of the Purchase Price, all Employee Payments, to the extent not paid by the
Company or any of the Subsidiaries prior to the Closing;
(iv) Unpaid Outstanding Company Debt. The Buyer shall pay, from the
Cash Portion of the Purchase Price, all Outstanding Company Debt, to the extent not
paid by the Company or any of the Subsidiaries prior to the Closing;
(v) Equity Award Payments. The Buyer shall pay to the Company, from the
Cash Portion of the Purchase Price, an amount equal to the aggregate Equity Award
Payments, and the Company shall concurrently make such Equity Award Payments, less
applicable withholding Taxes, to the respective Vested Equity Holders; and
(vi) Seller. The Buyer shall pay to the Seller from the Cash Portion of
the Purchase Price, an amount equal to the sum of (A) the product of (x) the total
number of issued and paid-up shares of the Stock owned by the Seller at the Closing
and (y) the Per Share Closing Payment less (B) the Stock Portion of the
Purchase Price.
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(b) At the Closing, the Buyer shall deliver to the Seller the Buyer Parent Stock;
provided, however, that notwithstanding any provision of this Agreement to the
contrary, in no event shall the sum of the Buyer Parent Stock and the shares of the Buyer
Parents common stock issuable upon exercise or conversion of all Unvested Equity Awards
assumed by the Buyer Parent pursuant to this Agreement exceed 17.1% of the number of shares of the
Buyer Parents common stock outstanding immediately prior to the Closing Date, and to the extent
that such 17.1% threshold is exceeded, for all purposes under this Agreement, (i) the Buyer
Parent Stock amount shall be adjusted and shall instead be an amount equal to (A) 17.1% of the
number of shares of the Buyer Parents common stock outstanding immediately prior to the Closing
Date less (B) the shares of the Buyer Parents common stock issuable upon exercise or conversion
of all Unvested Equity Awards assumed by the Buyer Parent pursuant to this Agreement; and (ii) the
Cash Portion of the Purchase Price amount shall be adjusted and shall instead be an amount equal
to the sum of (A) $3,500,000,000 and (B) the product of (1) 25,000,000 less the Buyer Parent Stock
determined pursuant to clause (i) above and (2) the Buyer Parent Average Share Price.
Section 2.4 Treatment of Equity Awards.
(a) Vested Equity Awards.
(i) Vested Options. At Closing, each then outstanding vested Company
Option including any Unassumed Equity Awards that are accelerated by operation of
Section 2.4(b) (each, a Vested Option), shall be cancelled, and
each Vested Option Holder shall be entitled to receive, subject to applicable Tax
withholding, an amount equal to the product of (A) the total number of shares in the
capital of the Company subject to the Vested Options held by such Vested Option
Holder and (B) the Vested Option Payment. For purposes of clarity, no payment shall
be made with respect to any Vested Option so cancelled with a per-share exercise
price that equals or exceeds the amount of the Per Share Cash Closing Payment.
(ii) Vested Restricted Stock Units. At Closing, each then outstanding
vested RSU including any Unassumed Equity Awards that are accelerated by operation of
Section 2.4(b) (each, a Vested RSU), shall be cancelled, and each
Vested RSU Holder shall be entitled to receive, subject to applicable Tax
withholding, an amount equal to the product of (A) the total number of shares in the
capital of the Company subject to the Vested RSUs held by such Vested RSU Holder and
(B) the Per Share Cash Closing Payment.
(iii) Vested Stock Appreciation Rights. At Closing, each then
outstanding vested SAR including any Unassumed Equity Awards that are accelerated by
operation of Section 2.4(b) (each, a Vested SAR), shall be
cancelled, and each Vested SAR Holder shall be entitled to receive, subject to
applicable Tax withholding, an amount equal to the product of (A) the total number of
shares in the capital of the Company subject to the Vested SARs held by such Vested
SAR Holder and (B) the Vested SAR Payment. For purposes of clarity, no payment shall
be made with respect to any Vested SARs cancelled with a per share base price that
equals or exceeds the amount of the Per Share Cash Closing Payment.
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(b) Unvested Equity Awards Held by Certain Persons. The Buyer Parent has determined
not to assume any Unvested Equity Awards held by those individuals identified on Schedule
2.4(b) or by Specified Persons (collectively, the Unassumed Equity Awards).
Immediately prior to the Closing (or, in the case of a Specified Person, if earlier, the
involuntary termination of such Specified Person), the vesting of each Unassumed Equity Award
shall accelerate in full and the holders thereof shall be entitled to the consideration set forth
in Section 2.4(a)(i)-(iii), as applicable as a result of the cancellation of these
Unassumed Equity Awards.
(c) Unvested Equity Awards Held by Continuing Employees.
(i) Unvested Options Held by Continuing Employees. At Closing, each
Unvested Option held by a Continuing Employee shall be assumed by the Buyer Parent
and shall be converted into an option (an Assumed Stock Option) to purchase
a number of shares of the Buyer Parents common stock (rounded down to the nearest
whole share) equal to the product of the number of the Companys ordinary shares
subject to such Unvested Option multiplied by the Equity Award Exchange Ratio. The
per share exercise price for the Buyer Parents common stock issuable upon exercise
of such Assumed Stock Option shall be equal (rounded up to the nearest whole cent) to
the exercise price per share of the Companys ordinary shares subject to such
Unvested Option divided by the Equity Award Exchange Ratio.
(ii) Unvested RSUs Held by Continuing Employees. At Closing, each
Unvested RSU held by a Continuing Employee shall be assumed by the Buyer Parent and
shall be converted into a restricted stock unit (an Assumed RSU) with
respect to a number of shares of the Buyer Parents common stock (rounded to the
nearest whole share) equal to the product of the number of the Companys ordinary
shares subject to such Unvested RSU multiplied by the Equity Award Exchange Ratio.
Each Assumed RSU shall vest as to one-third (1/3) of the Buyer Parent common stock on
each of the first, second and third anniversaries of the vesting commencement date
specified in each such Unvested RSU, subject to continued employment through such
dates.
(iii) Unvested SARs Held by Continuing Employees. At Closing, each
Unvested SAR held by a Continuing Employee shall be assumed by the Buyer Parent and
shall be converted into a stock appreciation right (an Assumed SAR) with
respect to a number of shares of the Buyer Parents common stock (rounded down to the
nearest whole share) equal to the product of the number of the Companys ordinary
shares subject to such Unvested SAR multiplied by the Equity Award Exchange Ratio.
The per share base price for the Buyer Parents common stock subject to such Assumed
SAR shall be equal (rounded up to the nearest whole cent) to the base price per share
of the Companys ordinary shares subject to such Unvested SAR divided by the Equity
Award Exchange Ratio.
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(d) Further Actions. Except as provided above, the Assumed Stock Options, Assumed
RSUs and Assumed SARs shall be subject to the same terms and conditions (including any applicable
expiration dates, vesting or exercise provisions and payment dates) as were applicable to the
corresponding Company awards immediately prior to Closing. From and after Closing, the Assumed
Stock Options, Assumed RSUs and Assumed SARs shall no longer represent the right to acquire the
Companys ordinary shares. As soon as practicable after Closing, the Buyer Parent shall deliver
to the holder of each Assumed Stock Option, Assumed RSU and Assumed SAR appropriate notices
setting forth the number of shares of the Buyer Parents common stock subject to such Assumed
Stock Option, Assumed RSU and Assumed SAR, as applicable, and the applicable adjusted exercise or
base price applicable to each Assumed Stock Option or Assumed SAR. Prior to Closing, the Seller
and the Company shall use their reasonable best efforts to take all necessary or appropriate
action to effectuate the treatment of outstanding Company equity awards (including both the Vested
Equity Awards and the Unvested Equity Awards) in accordance with the terms of this Section
2.4 (including, without limitation, timely providing any required notices and obtaining any
Required Consents). Prior to Closing, the Buyer Parent shall take all such steps as may be
required to cause any acquisitions of the Buyer Parent common stock (including any derivative
securities with respect to the Buyer Parent common stock) resulting from the treatment of
outstanding Company equity awards in accordance with the terms of this Section 2.4 by any
individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act to be
exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in accordance
with the guidance provided by the SEC.
(e) Registration Statement. As soon as practicable following the Closing, but in any
event within ten (10) Business Days thereafter, the Buyer Parent shall use its reasonable best
efforts to prepare and file with the SEC a registration statement on Form S-8 or other appropriate
form covering the shares of the Buyer Parents common stock issuable pursuant to the outstanding
Assumed Options, Assumed RSUs and Assumed SARs.
Section 2.5 Closing. Unless this Agreement shall have been terminated pursuant to
Article X, and subject to the satisfaction or waiver of all of the conditions set forth in
Article VII and Article VIII, the closing of the transactions contemplated by this
Agreement (the Closing) shall take place at the offices of OMelveny & Myers LLP, 610
Newport Center Drive, 17th Floor, Newport Beach, California, or such other place (including by
electronic transmission) as the Buyer and the Seller shall agree, on the date that is three (3)
Business Days following the satisfaction or waiver of all conditions set forth in Article
VII and Article VIII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) and/or at
such other time and place as shall be mutually agreed by the Parties (the Closing Date).
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Section 2.6 Delivery of Company Share Certificates and the Buyer Parent Stock
Certificates; Other Closing Deliverables.
(a) Delivery of Company Share Certificates. At the Closing, the Seller shall deliver
to the Buyer one or more certificates in respect of all of the Stock and valid share transfer
forms in respect of the Stock duly executed by the Seller in favor of the Buyer, together with (i)
a letter in the form prescribed by the Stamp Duty Branch of the Inland Revenue
Authority of Singapore and executed by a director or the secretary of the Company
incorporating a working sheet computing the net asset value per share of the Stock and/or (ii)
such other documents as may be prescribed from time to time by the Stamp Duty Branch of the Inland
Revenue Authority of Singapore for the purpose of assessing the stamp duty payable on the transfer
of the Stock.
(b) Delivery of the Buyer Parent Stock Certificates. At the Closing, the Buyer shall
deliver to the Seller one or more certificates representing the Buyer Parent Stock, duly endorsed
in blank for transfer or accompanied by duly executed stock powers or equivalent instruments in
proper form.
(c) Other Closing Deliverables. At or prior to the Closing, the Seller shall deliver
to the Buyer:
(i) certified true copies of the resolutions passed by the board of directors of
the Company: (A) approving the registration of the transfer of the Stock to the Buyer
subject only to their being duly stamped; (B) authorizing the issue of new share
certificates in respect of the Stock in favor of the Buyer; (C) approving the entry
into the register of members of the Company the name of the Buyer as the holder of
the Stock and the making of such other entries into other corporate records of the
Company as may be necessary; and (D) revoking all existing authorities to bankers in
respect of the operations of its bank accounts and giving authority in favor of such
persons as the Buyer may nominate to operate such accounts;
(ii) such waivers or consents as may be necessary to enable the Buyer to be
registered in the register of members of the Company as holders of any and all of the
Stock;
(iii) (A) a certified copy of the seal impression (inkan shomeisho) of the
representative director of the Seller issued during the two (2) week period preceding
the Closing Date, (B) a certified copy of the corporate register (tokibo) of the
Seller issued during two (2) week period preceding the Closing Date and (C) a
certified copy of the articles of incorporation (teikan) of the Seller effective on
the Closing Date; and
(iv) a certified copy of the Sellers board of director resolutions
(torshimariyakukai gijiroku) approving the Seller Transaction Documents and the
transactions contemplated thereby, certified by the Sellers representative director
or his or her authorized nominee.
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Section 2.7 Working Capital Adjustment.
(a) For purposes of this Agreement, (i) the term Working Capital means Total
Current Assets less Total Current Liabilities, each as of 12:01 a.m. Pacific Time on the
Closing Date as reflected on the Companys books and records as of that time in accordance with
GAAP; (ii) the term Estimated Working Capital shall mean the estimated amount of
Working Capital as determined pursuant to subsection (b) below; (iii) the term Estimated
Working Capital Deficit shall mean the amount, if any, by which Estimated Working Capital is
less than the Target Working Capital; and (iv) the term Estimated Working Capital
Surplus shall mean the amount, if any, by which the Estimated Working Capital is greater than
the Target Working Capital.
(b) Not later than the five (5) Business Days prior to the Closing Date, the Company shall
deliver to the Buyer a statement of Estimated Working Capital, as of the close of business on the
day immediately preceding the Closing Date (the Statement of Estimated Working Capital).
The Statement of Estimated Working Capital shall include all of the balance sheet line items
included in the computation of Estimated Working Capital and shall include a computation of the
Estimated Working Capital Deficit, if any, or the Estimated Working Capital Surplus, if any.
(c) The Statement of Estimated Working Capital, Proposed Statement of Working Capital and
Final Statement of Working Capital shall be based upon the books and records of the Company and
each of the Subsidiaries and prepared in accordance with GAAP, consistent with and using the same
principles, policies, practices, procedures, methods, estimates and calculations, with consistent
classifications, judgments and valuation and estimation methods, as those used in preparing the
Financial Statements.
(d) Within seventy-five (75) calendar days after the Closing Date, the Buyer and the Buyers
accountants shall prepare and deliver to the Seller a proposed statement of the Working Capital of
the Company as of the close of business on the day immediately preceding the Closing Date (the
Proposed Statement of Working Capital). The Proposed Statement of Working Capital shall
include all of the balance sheet line items included in the computation of Working Capital and
shall include a computation of Working Capital. In connection with the preparation of the
Proposed Statement of Working Capital, to the extent the Buyer does not have all relevant
information in its possession, the Buyer and its representatives will be permitted to have
reasonable access during normal business hours to review the books, records and other relevant
information relating to the Companys and each of the Subsidiaries operations and finances and
the work papers, if any, of the Seller and the Sellers independent accountants (to the extent
permitted by the independent accountants), and the Seller shall make reasonably available the
individuals in the employ of the Seller and its representatives, if any, responsible for and
knowledgeable about the information used in, and the preparation of, the Financial Statements in
order to assist the Buyer in the preparation of the Proposed Statement of Working Capital.
(e) During the sixty (60) calendar days immediately following the Sellers receipt of the
Proposed Statement of Working Capital (the Proposed Statement Review Period), the Seller
and its representatives will be permitted to review the work papers of the Buyer, the Buyer Parent
and the work papers of the independent accountants (to the extent permitted by the independent
accountants), if any, retained by the Buyer or the Buyer Parent relating to the Proposed Statement
of Working Capital, and to make reasonable inquiries of the Buyer, the Buyer Parent and their
respective employees, accountants and representatives regarding questions concerning the Proposed
Statement of Working Capital, and the Buyer and the Buyer Parent shall make reasonably available
the individuals in the employ of the Buyer or
the Buyer Parent and their respective representatives, if any, responsible for and
knowledgeable about the information used in, and the preparation of, the Financial Statements in
order to assist the Seller in its review of the Proposed Statement of Working Capital.
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(f) The Seller shall notify the Buyer in writing (the Notice of Working Capital
Disagreement) prior to the expiration of the Proposed Statement Review Period if the Seller
disagrees with any one or more of the line items of the Proposed Statement of Working Capital.
The Notice of Working Capital Disagreement shall set forth in reasonable detail the basis for such
dispute, the amounts involved and the Sellers determination of the amount of the Working Capital
of the Company as of the close of business on the day immediately preceding the Closing Date. If
no Notice of Working Capital Disagreement is given to the Buyer prior to the expiration of the
Proposed Statement Review Period, then the Proposed Statement of Working Capital shall be deemed
to have been accepted by the Seller and shall become final, binding and conclusive upon the
Parties.
(g) If a Notice of Working Capital Disagreement is given to the Buyer prior to the expiration
of the Proposed Statement Review Period, then the Negotiation Procedures shall apply and the
Seller and the Buyer shall attempt, in good faith pursuant to the Negotiation Procedures, to
resolve any differences that they may have with respect to the matters specified in the Notice of
Working Capital Disagreement.
(h) If the Seller and the Buyer have been unable to resolve all of the differences they may
have with respect to the matters specified in the Notice of Working Capital Disagreement pursuant
to the Negotiation Procedures, either the Seller or the Buyer may submit all matters that remain
in dispute with respect to the Notice of Working Capital Disagreement (along with a copy of the
Proposed Statement of Working Capital marked to indicate those line items that are not in dispute)
to the New York office of PricewaterhouseCoopers LLP (the Accounting Arbitrator) after
the conclusion of the Negotiation Procedures. Each Party agrees to execute a reasonable
engagement letter if requested by the Accounting Arbitrator. During the review by the Accounting
Arbitrator, the Buyer and the Seller will each make available to the Accounting Arbitrator such
information, books and records and work papers, as may be reasonably required by the Accounting
Arbitrator to fulfill its obligations under this Section 2.7.
(i) Within thirty (30) days after the submission of matters in dispute to the Accounting
Arbitrator, or as soon as practicable thereafter, the Accounting Arbitrator shall make a final
determination, binding on the Parties to this Agreement, of the appropriate amount of each of the
line items in the Proposed Statement of Working Capital as to which the Seller and the Buyer
disagree as set out in the Notice of Working Capital Disagreement. Such determination shall be in
accordance with the standards set forth in this section and shall be final, binding and conclusive
with respect to any issue relating to the Buyers compliance with the standards set forth in this
section in preparing the Proposed Statement of Working Capital. With respect to each disputed
line item, such determination, if not in accordance with the position of either the Seller or the
Buyer, shall not be in excess of the higher, nor less than the lower, of the amounts advocated by
the Seller in the Notice of Working Capital Disagreement or by the Buyer in the Proposed Statement
of Working Capital with respect to such disputed line item.
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(j) The Statement of Working Capital of the Company and the determination of the Working
Capital of the Company, as determined either through agreement of the Parties or through the
action of the Accounting Arbitrator pursuant to this Section 2.7(j), shall be final,
binding and conclusive on the Parties, and shall be referred to as the Final Statement of
Working Capital and the Final Working Capital, respectively.
(k) Final Working Capital Payments.
(i) If there was an Estimated Working Capital Deficit then, within five (5)
Business Days after the Final Statement of Working Capital has been determined, the
Parties shall do as follows:
(A) If the Final Working Capital is less than the Estimated Working Capital, then the
Seller shall pay to the Buyer an amount equal to the amount by which the Estimated Working
Capital exceeds the Final Working Capital; or
(B) If the Final Working Capital is greater than the Estimated Working Capital, then
the Buyer shall pay the Seller an amount equal to the amount by which the Final Working
Capital exceeds the Estimated Working Capital.
(ii) If there was neither an Estimated Working Capital Deficit nor an Estimated
Working Capital Surplus, then, within five (5) Business Days after the Final
Statement of Working Capital has been determined, the Parties shall do as follows:
(A) If the Final Working Capital is less than the Target Working Capital, then the
Seller shall pay to the Buyer an amount equal to the amount by which the Target Working
Capital exceeds the Final Working Capital;
(B) If the Final Working Capital is equal to the Target Working Capital, then no amount
shall be paid; or
(C) If the Final Working Capital is greater than the Target Working Capital, then the
Buyer shall pay the Seller an amount equal to the amount by which the Final Working Capital
exceeds the Target Working Capital.
(iii) If there was an Estimated Working Capital Surplus, then, within five (5)
Business Days after the Final Statement of Working Capital has been determined, the
Parties shall do as follows:
(A) If the Final Working Capital is less than the Target Working Capital, then the
Seller shall pay to the Buyer an amount equal to the amount by which the Estimated Working
Capital exceeds the Final Working Capital;
(B) If the Final Working Capital is greater than the Target Working Capital, but less
than the Estimated Working Capital, then the Seller shall pay to the Buyer an amount equal
to the amount by which the Estimated Working Capital exceeds the Final Working Capital; or
(C) If the Final Working Capital is greater than the Estimated Working Capital, then
the Buyer shall pay the Seller an amount equal to the amount by which the Final Working
Capital exceeds the Estimated Working Capital.
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Any amounts payable by the Seller pursuant to this Section 2.7(k) shall be paid to the
Buyer in cash by wire transfer of immediately available funds. Any amounts payable by the Buyer
pursuant to this Section 2.7(k) shall be paid to the Seller by wire transfer of
immediately available funds in cash. The Accounting Arbitrator shall issue a written arbitration
award stating the amount to be paid pursuant to this Section 2.7(k), which may be entered
as a judgment in, and enforced by, any court of competent jurisdiction.
(l) The Buyer, on the one hand, and the Seller, on the other hand, will each be obligated to
pay fifty percent (50%) of the fees and expenses, if any, of the Accounting Arbitrator.
Section 2.8 Withholding Taxes.
(a) Notwithstanding any other provision in this Agreement (other than Section
2.8(b)), the Buyer (and any other Person that has any withholding obligation with respect to
any payment made pursuant to this Agreement) shall be entitled to deduct and withhold from the
payments to be made pursuant to this Agreement any Taxes required to be deducted and withheld with
respect to the making of such payments under the Code or any other applicable provision of Law.
To the extent that amounts are so withheld pursuant to this Agreement, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to such Person in respect of
which such deduction and withholding was made.
(b) Subject to Section 2.8(c), each of the Buyer and the Seller acknowledges and
agrees that any payments made by the Buyer to the Seller hereunder are not subject to withholding
Tax. To the extent that the Buyer becomes aware of any applicable withholding Taxes, the Buyer (i)
shall provide prompt written notice to the Seller of the amount of such Tax and (ii) shall consult
with the Seller in good faith as to the nature of the Tax and the basis upon which such
withholding is required. Each of the Buyer and the Seller agrees to use its reasonable best
efforts, in accordance with applicable Law, to obtain exemptions from, or reductions of, any Taxes
required to be withheld from payments under this Agreement.
(c) The Seller acknowledges and agrees that the Buyer may have a U.S. withholding tax
obligation under Section 1445 of the Code as a result of the transfer (or deemed sale) of the U.S.
Subsidiary. The Seller agrees, to the extent reasonably practicable, to (i) provide the Buyer any
and all information necessary to perform an appraisal of the fair market value of the Companys
U.S. Subsidiary before the Closing and (ii) otherwise cooperate fully with the Buyer before the
Closing and determine the built-in gain for purposes of Section 897 of the Code, if any, with
respect to the shares in the Companys U.S. Subsidiary. The Seller further agrees, to the extent
reasonably practicable, upon request, to cooperate fully with the Buyer to obtain a withholding
certificate from the IRS with respect to the Companys U.S. Subsidiary under Rev. Proc. 2000-35
before the Closing. If the Buyer withholds and remits a portion of the Purchase Price to the IRS
pursuant to Section 1445 of the Code, the amount of the Purchase Price shall be increased by an
amount such that the Seller receives on the Closing
Date the amount of Purchase Price (in cash and shares) equal to the amount it would have
received had such withholding not applied. Any refunds relating to any withholding taxes withheld
and paid by the Buyer to the IRS pursuant to this Section 2.8(c) shall be for the benefit
of the Buyer.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLER
Except as set forth in the disclosure schedules delivered by the Company concurrent with the
execution and delivery of this Agreement (the Company Disclosure Schedules), the Seller
represents and warrants to each of the Buyer and the Buyer Parent as of the date of this Agreement
and the Closing Date (except for such representations and warranties as are made only as of a
specific date) as set forth below. Each exception set forth in the Company Disclosure Schedules is
identified by reference to the specific Section or subsection of this Agreement and relates only to
such Section or subsection, and to any other Section or subsection of this Agreement that it is
reasonably apparent on the face of such disclosure that it should also qualify or apply to.
Section 3.1 Organization. The Seller is a company duly organized, validly existing and in
good standing under the Laws of Japan, with all requisite corporate power and authority necessary
to carry on its business as it is presently conducted and to own, lease or operate its properties
and assets. The Seller is not in violation of any of the provisions of its articles of
incorporation (teikan) or bylaws (or other equivalent organizational documents).
Section 3.2 Authorization; Enforceability.
(a) The Seller has all requisite power and authority to enter into this Agreement and the
other Seller Transaction Documents, to perform its obligations hereunder and thereunder and to
carry out the transactions contemplated hereby and thereby. All necessary corporate action has
been taken by the Seller to authorize the execution, delivery and performance of this Agreement
and each other Seller Transaction Document. The Seller has duly executed and delivered this
Agreement and, at or prior to the Closing, will have duly executed and delivered each other Seller
Transaction Document.
(b) This Agreement is, and each other Seller Transaction Document, when duly executed and
delivered at or prior to the Closing by the Seller will be, the legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its respective terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar Laws now or hereafter in effect relating to or
limiting creditors rights and remedies generally and general principles of equity relating to the
availability of specific performance and injunctive and other forms of equitable relief.
Section 3.3 Ownership of the Stock. The Seller is currently, and shall on Closing be, the
sole owner, legally, beneficially and of record, of the Stock, free and clear of any Encumbrances.
All of the Stock has been duly authorized, validly issued and fully paid, and is not subject to
and was not issued in violation of any preemptive rights. The Stock was not issued in violation of
any Laws, including applicable securities laws. There is no stockholder
agreement, voting trust or other agreement or understanding to which the Seller is a party or by
which the Seller is bound relating to the voting, purchase, transfer or registration of the Stock
or preemptive rights with respect thereto. At the Closing, the Buyer will acquire good and
marketable title to the Stock, free and clear of any Encumbrances, together with all rights and
benefits attaching thereto as at the Closing Date.
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Section 3.4 No Violation. Provided the Required Consents are obtained prior to the Closing
Date, neither the execution and delivery of this Agreement and the other Seller Transaction
Documents nor the consummation of the transactions contemplated hereby or thereby (with or without
the passage of time or the giving of notice, or both) by the Seller will (a) contravene, violate,
breach or be in conflict with any provisions of its articles of incorporation (teikan) or bylaws or
other equivalent organizational documents or (b) with or without the giving of notice or passage of
time, or both, violate, or be in conflict with under or constitute a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under any of the terms, conditions
or provisions of any Material Contract to which the Seller is a party or by which the Seller or any
of the Sellers assets may be bound or (c) violate or conflict with any Laws to which the Seller is
subject, except in the case of clauses (b) and (c) above, for any such conflicts, violations,
breaches and defaults or other occurrences which could not reasonably be expected to have a
Material Adverse Effect on the Sellers ability to consummate the transactions.
Section 3.5 Litigation; Compliance with Law. There is no material Action pending or, to
the Knowledge of the Seller, threatened, against the Seller or affecting any of its properties or
assets that would reasonably be expected to have an adverse effect on or materially delay or
prevent the Sellers performance under this Agreement and the other Seller Transaction Documents or
the consummation of the transactions contemplated hereby or thereby.
Section 3.6 Consents and Approvals. Except for the Required Governmental Consents and
except for compliance with the HSR Act and other applicable Antitrust Laws, no consent, Approval or
authorization of, or declaration or filing with, any Governmental Entity is required to be made or
obtained by the Seller in connection with the execution, delivery and performance by the Seller of
this Agreement and the Seller Transaction Documents or the consummation by the Seller of the
transactions contemplated hereby or thereby.
Section 3.7 No Claims. (a) There are no defaults by the Company or any of the Subsidiaries
under any Contract between the Seller or any of its Affiliates (other than the Company and each of
the Subsidiaries), on the one hand, and the Company or any of the Subsidiaries, on the other hand
(collectively, the Affiliate Contracts), (b) no event has occurred which, through the
passage of time or the giving of notice, or both, would constitute a default by the Company or any
of the Subsidiaries under any of the Affiliate Contracts or would cause the acceleration of any
obligation of the Company or any of the Subsidiaries under any of the Affiliate Contracts, the loss
of any rights of the Company or any of the Subsidiaries under any of the Affiliate Contracts, or
the creation of any Encumbrance (other than a Permitted Encumbrance) upon any asset of the Company
or any of the Subsidiaries pursuant to any of the Affiliate Contracts and (c) neither the Seller
nor any of its Affiliates (other than the Company and each of the Subsidiaries) has any material
claim, cause of action or the like against the Company or any of the Subsidiaries under any of the
Affiliate Contracts.
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Section 3.8 Investment.
(a) The Seller is an accredited investor as defined in Rule 501 of Regulation D of the
Securities Act, as presently in effect. The Seller agrees to furnish any additional information
requested to assure compliance with applicable federal and state securities Laws in connection
with the issuance of the Buyer Parent Stock.
(b) The Buyer Parent Stock is being acquired by the Seller for the Sellers own account, for
investment only, not as a nominee or agent and not with a view to the sale or distribution of all
or any part thereof in violation of federal or state securities Laws or the terms of this
Agreement. The Seller shall not offer or otherwise dispose of the Buyer Parent Stock in violation
of any Laws applicable to any such offer, sale or other disposition.
(c) The Seller is aware that the Buyer Parent Stock is subject to significant restrictions on
transfer, including pursuant to the Investor Rights Agreement. The Seller represents that it (i)
has liquid assets sufficient to assure that the purchase contemplated by this Agreement will cause
no undue financial difficulties, (ii) can afford the complete loss of its investment, and (iii)
can provide for current needs and possible contingencies without the need to sell or dispose of
the Buyer Parent Stock.
(d) Seller is aware that each certificate evidencing the Buyer Parent Stock shall bear the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT
TO AN AGREEMENT BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF
WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE CORPORATION. SUCH RESTRICTIONS ON
TRANSFER ARE BINDING ON ANY TRANSFEREES OF THESE SHARES.
Section 3.9 Brokers, Finders Fees, etc. Except for Goldman, Sachs & Co., no Person is
entitled to rights to brokerage commissions, finders fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or agreement made or
alleged to have been made by or on behalf of the Seller or any of its Affiliates, officers,
employees or directors for which the Company is liable.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
Except as set forth in the Company Disclosure Schedules, the Company represents and warrants
to each of the Buyer and the Buyer Parent as of the date of this Agreement and the Closing Date
(except for such representations and warranties as are made only as of a specific date) as set
forth below. Each exception set forth in the Company Disclosure Schedules is identified by
reference to the specific Section or subsection of this Agreement and relates only to such Section
or subsection, and to any other Section or subsection of this Agreement that it is reasonably
apparent on the face of such disclosure that it should also qualify or apply to.
Section 4.1 Organization. The Company is a company duly incorporated and validly existing
under the Laws of the Republic of Singapore, with all requisite corporate power and authority to
carry on its business as it is presently conducted and to own, lease or operate its properties and
assets. The Company is duly qualified to do business and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect.
The Company has delivered to the Buyer and the Buyer Parent complete and correct copies of its
memorandum and articles of association, as amended to date, and each such instrument is in full
force and effect. The Company is not in violation of any of the provisions of its memorandum and
articles of association.
Section 4.2 Authority; Enforceability.
(a) The Company has all requisite power and authority to enter into this Agreement and the
other Company Transaction Documents, and to perform its obligations hereunder and thereunder and
to carry out the transactions contemplated hereby and thereby. All necessary corporate action has
been taken by the Company to authorize the execution, delivery and performance of this Agreement
and each other Company Transaction Document. The Company has duly executed and delivered this
Agreement and, at or prior to the Closing, will have duly executed and delivered each other
Company Transaction Document.
(b) This Agreement is, and each other Company Transaction Document, when duly executed and
delivered at or prior to the Closing by the Company, will be the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its respective
terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar Laws now or hereafter in effect relating to or
limiting creditors rights and remedies generally and general principles of equity relating to the
availability of specific performance and injunctive and other forms of equitable relief.
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Section 4.3 No Violation. Provided the Required Consents are obtained prior to the Closing
Date, neither the execution and delivery of this Agreement and the other Company Transaction
Documents nor the consummation of the transactions contemplated hereby or thereby (with or without
the passage of time or the giving of notice, or both) by the Company will (a) contravene, violate,
breach or be in conflict with any provisions of the memorandum and
articles of association or other equivalent organizational documents of the Company or any of the
Subsidiaries or (b) with or without the giving of notice or passage of time, or both, violate, or
be in conflict with, or create an Encumbrance (other than a Permitted Encumbrance or Permitted Real
Estate Encumbrance) under, constitute a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under or result in any loss of rights under any of the
terms, conditions or provisions of any Material Contract to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or any of their
respective assets may be bound or (c) violate or conflict with any Laws to which the Company or any
of the Subsidiaries is subject or (d) give rise to a declaration or imposition of any Encumbrance
(other than a Permitted Encumbrance or Permitted Real Estate Encumbrance) on any of the assets of
the Company or any of the Subsidiaries, except in the cases of (b), (c) and (d) above, for any such
conflicts, violations, breaches, defaults or other occurrences which would not reasonably be
expected to have a Material Adverse Effect on the Company and the Subsidiaries, taken as a whole.
Section 4.4 Consents and Approvals.
(a) Except for the consents set forth on Section 4.4(a) of the Company Disclosure
Schedules (other than with respect to antitrust matters, the Required Governmental
Consents), and except for compliance with the HSR Act and other applicable Antitrust Laws, no
material consent, Approval or authorization of, or declaration or filing with, any Governmental
Entity is required to be made or obtained by the Company or any of the Subsidiaries in connection
with the execution, delivery and performance by the Company of this Agreement and the other
Company Transaction Documents or the consummation by the Company of the transactions contemplated
hereby or thereby.
(b) Except for the consents set forth on Section 4.4(b) of the Company Disclosure
Schedules (the Required Third-Party Consents), no consent, Approval or authorization of,
or notice to any counterparty to any Material Contract must be made or obtained by the Company or
any of the Subsidiaries in connection with the execution, delivery and performance by the Company
of this Agreement and the other Company Transaction Documents or the consummation by the Company
of the transactions contemplated hereby or thereby, other than any consents, Approvals,
authorizations or notices the failure of which to obtain would not reasonably be expected to have
a Material Adverse Effect on the Company and the Subsidiaries, taken as a whole.
Section 4.5 Capitalization.
(a) The issued and paid-up share capital of the Company is $861,807,200.01, which, as of the
date of this Agreement, is comprised of 88,418,001 issued and paid-up ordinary shares. As of the
date of this Agreement, there are outstanding Company Options to purchase an aggregate of
7,288,511 ordinary shares, outstanding RSUs with respect to an aggregate of 814,074 ordinary
shares and outstanding SARs with respect to an aggregate of 2,003,268 ordinary shares. The Company
has reserved an aggregate of 9,824,222 ordinary shares for issuance pursuant to the Company Equity
Plans (including shares issued in respect of awards and shares subject to outstanding awards).
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(b) All issued shares of the Stock have been duly authorized validly issued, fully paid and
are not subject to and were not issued in violation of any preemptive rights. Except as set forth
in Section 4.5(a), as of the date of this Agreement, there is no outstanding, and there
has not been reserved for issuance any: (i) share or other voting securities of the Company or
any of the Subsidiaries; (ii) security of the Company or any of the Subsidiaries convertible into
or exchangeable for shares in the capital or voting securities of the Company; (iii) option or
other right to acquire from the Company or any of the Subsidiaries, or obligation of the Company
or any of the Subsidiaries to issue, any shares, voting securities or security convertible into or
exchangeable for shares or voting securities of the Company or any of the Subsidiaries, as the
case may be; or (iv) equity equivalent interest in the ownership or earnings of the Company or
other similar right (the items in clauses (i) through (iv) collectively, Company
Securities). There is no outstanding obligation of the Company or any of the Subsidiaries to
repurchase, redeem or otherwise acquire any Company Security. There is no stockholder agreement,
voting trust or other agreement or understanding to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries are bound relating to the voting,
purchase, transfer or registration of any shares of the Company or any of the Subsidiaries or
preemptive rights with respect thereto.
Section 4.6 Subsidiaries and Affiliates.
(a) The Company or one of the Subsidiaries owns the capital stock or other equity securities
of the Persons and otherwise has an interest (whether ownership or other) in the Persons set forth
on Section 4.6 of the Company Disclosure Schedules. The interests of the Company and each
of the Subsidiaries in the Persons set forth on Section 4.6 of the Company Disclosure
Schedules are owned by the Company or one of the Subsidiaries, as applicable, free and clear of
any Encumbrance (other than Permitted Encumbrances). Neither the Company nor any of the
Subsidiaries is subject to any obligation or requirement to provide funds for, or to make any
investment (in the form of a loan, capital contribution or otherwise) to or in, any of such
Persons. Each of the Subsidiaries is duly organized, validly existing and in good standing (where
applicable) under the Laws of the jurisdiction of its incorporation or organization, with all
requisite corporate power and authority to carry on its business as it is presently conducted and
to own, lease or operate its properties and assets. All outstanding equity securities of each of
the Subsidiaries are duly and validly issued in compliance with all applicable Laws, free of any
preemptive rights, rights of first refusal (except to the extent provided by applicable Laws),
with respect to such equity securities. None of the Subsidiaries is a party or subject to any
Contract that relates to the voting or giving of written consents with respect to, or the right to
cause the redemption, or repurchase of, any equity securities of such Subsidiary. Each of the
Subsidiaries is duly qualified to do business and in good standing (where applicable) in every
jurisdiction where the character of its properties owned or leased or the nature of its activities
make such qualification necessary, except where the failure to be so qualified or in good standing
would not, individually or in the aggregate, have or reasonably be expected to have a Material
Adverse Effect on the Company and the Subsidiaries, taken as a whole.
(b) Section 4.6 of the Company Disclosure Schedules sets forth the name, jurisdiction
of organization, jurisdictions of qualification as a foreign entity and the authorized and
outstanding capital stock and issued share capital, as applicable, of each of the Subsidiaries.
The Company has delivered to the Buyer and the Buyer Parent complete and correct copies of
each of the Subsidiaries certificate of incorporation and bylaws (or other equivalent
organizational documents), as amended to date, and each such instrument is in full force and
effect.
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Section 4.7 Financial Statements.
(a) The Company has previously delivered to the Buyer accurate and complete copies of the
audited consolidated balance sheets of the Company and each of the Subsidiaries at December 31,
2010 (the Balance Sheet Date) and December 31, 2009 (including the notes thereto, if
any), and the related audited consolidated statements of operations, shareholders equity and cash
flows for the three (3) years in the period ended December 31, 2010 (collectively, the financial
statements described in this Section 4.7 are referred to herein as the Financial
Statements). Such Financial Statements present fairly, in all material respects, the
consolidated financial position of the Company and the Subsidiaries at the date thereof, and the
results of operations and cash flows of the Company and each of the Subsidiaries for the period
indicated, in conformity with GAAP consistently applied throughout such periods.
(b) The Company and the Subsidiaries maintain systems of internal accounting controls
sufficient to provide reasonable assurances that: (i) the Companys and the Subsidiaries
transactions are executed in accordance with managements general or specific authorization; (ii)
the Companys and the Subsidiaries transactions are recorded as necessary to permit the
preparation of financial statements in conformity with GAAP and to maintain accountability for its
assets; (iii) access to the Companys and the Subsidiaries assets is generally permitted only in
accordance with managements general or specific authorization; and (iv) the recorded
accountability for the Companys and the Subsidiaries assets is compared with the actual levels
annually and appropriate action is taken with respect to any differences. The Company has
provided the Buyer copies of the management letters delivered to the Company or any Subsidiary, as
applicable, by their outside accountants in connection with the Financial Statements or relating
to any review by the Companys or the Subsidiaries outside accountants of the internal controls
of the Company or the Subsidiaries, as applicable.
Section 4.8 Absence of Certain Changes. Since the Balance Sheet Date until the date of
this Agreement, except as may be affected by actions expressly contemplated by this Agreement, (a)
the businesses of the Company and each of the Subsidiaries has been conducted in the ordinary
course consistent with past practice, (b) none of the actions or events prohibited or circumscribed
by Section 6.1(b) have been taken or have occurred, and (c) there has not been any
circumstance, development, event, condition, effect or change that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse Effect on the Company
and the Subsidiaries, taken as a whole.
Section 4.9 Undisclosed Liabilities. Neither the Company nor any of the Subsidiaries has
any liabilities required by GAAP to be included in the Financial Statements other than (a)
liabilities reflected or otherwise reserved against in the Financial Statements or disclosed in the
notes thereto, (b) liabilities in connection with this Agreement, the other agreements contemplated
hereby and the transactions contemplated hereby and thereby, (c) liabilities arising subsequent to
the Balance Sheet Date in the ordinary course of business consistent with past
practice or (d) liabilities that have not had and would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company and the Subsidiaries,
taken as a whole.
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Section 4.10 Registration Statement. The Registration Statement on Form F-1 (including all
exhibits and schedules thereto, the Registration Statement), confidentially submitted to
the SEC on February 16, 2011 in connection with the Companys proposed initial public offering,
complied in all material respects, as of its submission date, with the applicable requirements of
the Securities Act, as in effect on the date the Registration Statement was submitted. As of its
submission date, the Registration Statement, including any financial statements or schedules
included therein, did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. True and correct copies of the Registration Statement,
as well as copies of any correspondence between the Company and the SEC related to the Registration
Statement, have been furnished to the Buyer and the Buyer Parent.
Section 4.11 Title to Properties; Encumbrances.
(a) Section 4.11(a) of the Company Disclosure Schedules lists the address and
description of each parcel of real property owned by the Company or any of the Subsidiaries
(including without limitation, any land use rights) (the Owned Real Estate). With
respect to each parcel of Owned Real Estate:
(i) The Company and each of the Subsidiaries, as applicable, has sole legal and
beneficial ownership of good and marketable title (or equivalent concepts for any
non-United States jurisdictions) in the estate in fee simple (or equivalent concepts
for any non-United States jurisdictions), free and clear of any Encumbrance (except
for Permitted Real Estate Encumbrance).
(ii) Neither the Company nor any of the Subsidiaries has leased or otherwise
granted to any Person the right to use or occupy the Owned Real Estate or any portion
thereof.
(iii) There are no outstanding options, rights of first offer, rights of first
refusal or any other rights to purchase, lease or acquire any other interest in the
Owned Real Estate or any portion thereof or interest therein.
(iv) To the extent such Owned Real Estate is a land use right, all land grant
premiums required under applicable Laws in connection with securing such land use
rights, and under the applicable land use rights grant contracts have been fully paid
except to the extent where such failure would not be reasonably expected to have a
Material Adverse Effect on the Company and the Subsidiaries, taken as a whole.
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(b) Section 4.11(b) of the Company Disclosure Schedules lists all real property that
is leased, used or occupied by the Company or any of the Subsidiaries, as
applicable, in connection with their respective businesses (the Rental Real Estate)
and true and complete copies of the leases, subleases and agreements (including all amendments
thereto) by which such Rental Real Estate is leased, used or occupied (collectively, the
Leases) have been delivered or made available to the Buyer (or in the case of oral
agreements, a description of such arrangement is contained in Section 4.11(b) of the
Company Disclosure Schedules). With respect to each of the Leases and the Rental Real Estate:
(i) The Company or any of the Subsidiaries, as applicable, has sole legal and
beneficial ownership of good and marketable title (or equivalent concepts for any
non-United States jurisdictions) in the leasehold estate to the Rental Real Estate,
free and clear of any Encumbrance (except for Permitted Real Estate Encumbrances).
(ii) Each Lease is a valid and binding obligation of the Company or any of the
Subsidiaries (as applicable), enforceable against it in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws now or hereafter in effect relating to
creditors rights and remedies generally. As of the date of this Agreement, there
are no defaults by the Company or any of the Subsidiaries under any Lease or, to the
Knowledge of the Company and each of the Subsidiaries, by any other party thereto,
nor is the Company or any of the Subsidiaries in receipt of any written claims of
default, or to the Knowledge of the Company and each of the Subsidiaries, any oral
claims of default, under any Lease, in each case except as would not reasonably be
expected to have a Material Adverse Effect on the Company and the Subsidiaries, taken
as a whole. No event has occurred as of the date of this Agreement which, through
the passage of time or the giving of notice, or both, would constitute a default by
the Company or any of the Subsidiaries under any Lease or, to the Knowledge of the
Company and each of the Subsidiaries, by the other party thereto or would cause the
acceleration of any obligation under any Lease, the loss of any rights under any
Lease, or the creation of any Encumbrance (other than a Permitted Real Estate
Encumbrance) upon any asset of the Company or any of the Subsidiaries, in each case,
except as would not reasonably be expected to have a Material Adverse Effect on the
Company and the Subsidiaries, taken as a whole.
(iii) Neither the Company nor any of the Subsidiaries have entered into leases,
subleases, concessions or other agreements granting to any Person the right to lease,
use or occupy, or to acquire any interest in, the Leases or any portion of the Rental
Real Estate and no Person (other than the Company or any of the Subsidiaries, as
applicable) is in possession of any part of the Rental Real Estate.
(iv) All material registrations and filings of such Leases as required under
applicable Laws have been duly made.
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(c) The Owned Real Estate and Rental Real Estate (collectively, the Real Estate)
comprise all of the real property used or intended to be used in the businesses of the
Company and each of the Subsidiaries; and neither the Company nor any of the Subsidiaries is
a party to any agreement or option to purchase any other real property or interest therein.
(d) All material buildings, structures, fixtures, building systems and equipment, utility
services or systems, and all components thereof, owned by the Company or any of the Subsidiaries
and included in the Real Estate are, except for ordinary wear and tear, in condition and repair
sufficient for the operation of the businesses, as presently conducted, of the Company and each of
the Subsidiaries.
(e) Neither the Company nor any of the Subsidiaries has Knowledge of any condemnation,
expropriation, other proceeding in eminent domain, or acquisition affecting any Real Estate or any
portion thereof or interest therein.
(f) To the Knowledge of the Company and each of the Subsidiaries, the use of the Real Estate
is in material compliance with all applicable building, zoning, subdivision, health and safety and
other applicable land use Laws, and all material requirements of any Permitted Real Estate
Encumbrances.
(g) The Company and each of the Subsidiaries, as applicable, has paid all material stamp duty
relating to the Leases that was due prior to the date of this Agreement.
(h) There are no material encroachments by adjoining properties onto the Real Estate and
there are no material encroachments by the Real Estate onto adjoining properties.
Section 4.12 Intellectual Property.
(a) Section 4.12(a) of the Company Disclosure Schedules includes a complete and
accurate list of all patent, trademark, service mark, trade name, domain name and copyright
registrations and applications for registration of any of the foregoing owned by the Company or
any of the Subsidiaries (Owned Registered Intellectual Property), in each case listing
(i) the jurisdiction where the application or registration has been filed; (ii) the application or
registration number; (iii) the filing or registration date; (iv) the registered owner; and (v) the
current status. Each item of material Owned Registered Intellectual Property is and, to the
Knowledge of the Company and each of the Subsidiaries, at all times has been in material
compliance with all applicable Laws, and all filings, payments, and other actions required to be
taken to maintain such material Owned Registered Intellectual Property in full force and effect
have been taken. To the Knowledge of the Company and each of the Subsidiaries, the material Owned
Registered Intellectual Property is valid, enforceable and uncontested, and nothing has been done
or omitted to be done by which they may cease to be valid and enforceable. All assignments to the
Company and each of the Subsidiaries with respect to material Owned Registered Intellectual
Property have been properly executed and recorded with the relevant Governmental Entities.
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(b) The Company or one of the Subsidiaries is the exclusive legal and beneficial owner of all
right, title and interest in and to all material Owned Intellectual Property, free and clear of
all Encumbrances (except for Permitted Encumbrances). To the Knowledge of
the Company and each of the Subsidiaries, the conduct of the businesses of the Company and
each of the Subsidiaries does not conflict with, misappropriate, or infringe (other than
assertions of infringement by Non-Practicing Entities that arise as of or after the date of the
Agreement), and has not, within the three (3) years prior to the date hereof, conflicted with,
infringed or misappropriated, the rights of any third Person. There have been no proceedings or
written threats within the three (3) years prior to the date of this Agreement, and there are no
proceedings currently pending before any Governmental Entity or threatened in writing, (i)
alleging that the Company or any of the Subsidiaries is infringing, misappropriating or violating
any rights of a third Person with regard to any Intellectual Property, or (ii) contesting the
title, scope, validity, registrability or enforceability of any material Owned Intellectual
Property. As of the date of this Agreement, no Owned Intellectual Property is subject to any
Action, settlement agreement or stipulation that restricts in any material manner the use,
transfer or licensing thereof by the Company or any of the Subsidiaries or that may materially
affect the validity or enforceability of any Owned Intellectual Property whether before or
immediately after the Closing.
(c) The Business Intellectual Property (including all Intellectual Property that is the
subject of the IP License Agreement) constitutes all of the Intellectual Property sufficient
(other than Business Intellectual Property that is the subject of an assertion of infringement by
Non-Practicing Entities that arise as of or after the date of the Agreement) for the operation of
the businesses as presently conducted by the Company and each of the Subsidiaries as of the date
of this Agreement. The Company or any of the Subsidiaries owns or possesses a valid, enforceable
and written license to use the Licensed Intellectual Property sufficient for the present operation
of the business, and, to the Knowledge of the Company and each of the Subsidiaries, neither the
Company nor any of the Subsidiaries is in default under any such license it has to use Licensed
Intellectual Property; except as enforceability of such licenses may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws now or
hereafter in effect relating to or limiting creditors rights and remedies generally and general
principles of equity relating to the availability of specific performance and injunctive and other
forms of equitable relief.
(d) To the Knowledge of the Company and each of the Subsidiaries, within the three (3) years
prior to the date of this Agreement, (i) no third Person has materially infringed any Owned
Intellectual Property; or (ii) no claim has been made in writing contesting the validity,
registrability or enforceability of any Owned Intellectual Property.
(e) The Company and each of the Subsidiaries have taken all commercially reasonable measures
to maintain the confidentiality of all confidential information developed, used or held for use in
the operation of their respective businesses. The Company and each of the Subsidiaries have and
use commercially reasonable efforts to enforce policies (i) requiring all Persons, including
employees, agents, consultants or contractors contributing to or participating in the creation,
development or authorship of any material Owned Intellectual Property to assign to the Company or
any of the Subsidiaries full ownership of, and all right, title and interest in and to such
Intellectual Property, and (ii) any such assignment of material Owned Intellectual Property to the
Company or any of the Subsidiaries as of the date of this Agreement has been made in accordance
with applicable Laws.
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(f) To the Knowledge of the Company and each of the Subsidiaries, all use and distribution by
the Company or any of the Subsidiaries of products of the Company or any of the Subsidiaries and
any Open Source Software by the Company or any of the Subsidiaries is in material compliance with
all Open Source Software licenses applicable thereto.
(g) Neither the Company nor any of the Subsidiaries is or has been a member or promoter of,
or contributor to, any industry standards bodies, patent pooling organizations or similar
organizations that could reasonably be expected to require or obligate the Company or any of the
Subsidiaries to grant or offer to any Person any license or right to any material Owned
Intellectual Property that would materially impair or materially limit its control of such Owned
Intellectual Property. No funding, facilities, or personnel of any Governmental Entity or
university, college, other educational institution or research center or funding from any other
Person was used directly or indirectly in the development of any material Owned Intellectual
Property where, as a result of such funding or the use of such facilities, any Governmental Entity
or any university, college, other educational institution or research center has any rights in or
to such Owned Intellectual Property.
(h) None of the execution, delivery or performance of this Agreement or the consummation of
any of the transactions contemplated by this Agreement will, under the terms of any Material
Contract to which the Company or any Subsidiary is a party, result in (i) the Buyer granting,
assigning or transferring to any Person any material rights or licenses to any Intellectual
Property, (ii) the Company or any of the Subsidiaries being obligated to cause the Buyer to grant,
assign or transfer to any Person any material rights or licenses to any Intellectual Property;
(iii) the release, disclosure or required delivery to any Person of any material Owned
Intellectual Property or tangible embodiments thereof; (iv) any requirement to pay any material
royalties or other material amounts in excess of those that would have, in any event, been payable
by the Company or any of the Subsidiaries, or the Company or any of the Subsidiaries being subject
to more materially adverse terms in respect of any rights or licenses to any material Business
Intellectual Property had the transactions contemplated by this Agreement not occurred; or (v) the
loss of any material rights of the Company or any of the Subsidiaries to any Intellectual Property
licensed to the Seller or its Affiliates by any third Persons, except in the cases of (i), (ii),
(iii), (iv) and (v) above, for any such conflicts, violations, breaches, defaults or other
occurrences which would not reasonably be expected to have a Material Adverse Effect on the
Company and the Subsidiaries, taken as a whole.
Section 4.13 Title to Assets; Condition and Sufficiency of Assets.
(a) The Company and each of the Subsidiaries have good and valid title to, or a valid
leasehold interest in, the material tangible personal property used in the conduct of the
Companys and each of the Subsidiaries respective businesses, reflected on the Financial
Statements or acquired since the date thereof, free and clear of all Encumbrances (except
Permitted Encumbrances), except as would not reasonably be expected to materially interfere with
the ability of the Company and the Subsidiaries to use such personal property in the business of
the Company and the Subsidiaries as currently conducted and except for assets disposed of in the
ordinary course of business consistent with past practice since the Balance Sheet Date and
otherwise in compliance with this Agreement.
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(b) The material tangible personal property owned or used by the Company and each of the
Subsidiaries is, respectively, in operating condition and repair, ordinary wear and tear excepted,
and is usable in the ordinary course of business. The personal property and assets shown on the
Latest Balance Sheet or acquired after the Balance Sheet Date and the lease rights under the
leases of the Company and each of the Subsidiaries personal property collectively include all
material assets reasonably necessary to the conduct of the Company and each of the Subsidiaries
respective businesses as presently conducted, and all such properties are located at the Real
Estate.
Section 4.14 Material Contracts. Section 4.14 of the Company Disclosure Schedules
lists all of the following Contracts to which the Seller (only with respect to Section
4.14(g), (h) and (i)), the Company or any of the Subsidiaries is a party or is
bound as of the date of this Agreement (each, a Material Contract and collectively, the
Material Contracts) (with such list including the applicable subsection(s) of this
Section 4.14 to which such Contract is responsive):
(a) Contracts (other than Leases and other than Contracts otherwise required to be listed
pursuant to clause (m) below) that cannot be terminated upon ninety (90) days or less notice
without penalty, that have an unexpired term of one year or more and involve future expenditure
commitments in excess of $1,000,000;
(b) Contracts (other than non-disclosure agreements entered into in the ordinary course of
business consistent with past practice) with (i) the Seller or any of its Affiliates or (ii) any
director or officer of the Company or any of the Subsidiaries in excess of $100,000, other than
employment agreements entered into in the ordinary course of business and other than Contracts
required to be listed pursuant to clauses (h) or (i) below;
(c) Contracts that constitute an obligation in respect of a borrowing of money in excess of
$2,000,000 by the Company or any of the Subsidiaries;
(d) Contracts that constitute a guaranty or indemnity by the Company or any of the
Subsidiaries with a maximum potential liability of $5,000,000 or greater;
(e) Contracts providing for the extension of credit in excess of $5,000,000 by the Company or
any of the Subsidiaries, other than in the ordinary course of business from vendors or to
customers;
(f) Contracts materially limiting the ability of the Company or any of the Subsidiaries to
conduct their business as currently being conducted as to manner or place;
(g) Contracts that are collective bargaining agreements, works council agreements, work
forces agreements or other agreements with any labor union, employees association or other
employee representative of a group of employees of the Company or any of the Subsidiaries or any
Seller Employees;
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(h) Contracts that are for the employment (other than at will offer letters), severance or
retention of any Seller Employee or any manager, director, officer, employee, agent, consultant or
advisor of the Company or any of the Subsidiaries providing for
compensation or payments in excess of $100,000 or any other Contract with any Seller Employee
or member, manager, director, officer or employee, in each case in the United States, which does
not provide for termination at will without further cost or liability to the Seller, the Company
or any of the Subsidiaries (except for costs required by applicable Law) as of or at any time
after the date of this Agreement;
(i) Contracts with any Seller Employee or any current or former employee, director or
consultant of the Company or any of the Subsidiaries that (a) accelerates the vesting schedule for
any grant of equity, upon or following a termination of such Persons employment or engagement
with the Seller, the Company or any of the Subsidiaries or (b) provides for any bonus payments or
benefits, or accelerates the vesting schedule for any grant of equity, upon the consummation of
the transactions contemplated by this Agreement;
(j) Contracts with a third party that leases temporary employees or provides for contingent
workers to work for the Company or any of the Subsidiaries;
(k) Contracts that are for capital expenditures in an amount exceeding $1,500,000 in any
individual case or $10,000,000 in the aggregate;
(l) Contracts granting any Person an Encumbrance, other than Permitted Encumbrances or
Permitted Real Estate Encumbrances, on all or any material part of the assets of the Company or
any of the Subsidiaries, other than Encumbrances that will be released at the Closing;
(m) Contracts that are material to the business of the Company or any of the Subsidiaries
pursuant to which (i) the Company or any of the Subsidiaries licenses or otherwise has the right
to use Licensed Intellectual Property, other than Contracts for which the license or maintenance
fees is less than $400,000 on an annual basis, and (ii) the Company or any of the Subsidiaries has
entered into any patent cross-license with any third Person or granted any third Person any
license or other right to use Owned Intellectual Property, other than non-exclusive licenses
granted to customers in connection with the use of the Companys or any of the Subsidiaries
products or services in the ordinary course of business;
(n) Contracts with the ten (10) largest customers and the ten (10) largest suppliers of the
Company and the Subsidiaries, on a consolidated basis, for the fiscal year ended December 31,
2010, as set forth on Section 4.21(a) of the Company Disclosure Schedules; and
(o) Contracts (other than technical services agreements and developed works agreements
entered into in the ordinary course and substantially in the form of the Companys standard form
for such agreements) that are joint venture, joint development, strategic partnership, partnership
or other similar agreements (however named) involving a sharing of profits, losses, costs or
liabilities, or the joint development or joint ownership or joint licensing of material Business
Intellectual Property.
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True, correct and complete copies of all Material Contracts, together with all amendments, waivers,
or other changes thereto, have been delivered or made available to the Buyer. Each
Material Contract is a valid and binding obligation of the Company or any of the Subsidiaries (as
applicable), enforceable against it in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws now or
hereafter in effect relating to creditors rights and remedies generally. As of the date of this
Agreement, there are no defaults by the Company or any of the Subsidiaries under any Material
Contract or, to the Knowledge of the Company and each of the Subsidiaries, by any other party
thereto, nor is the Company or any of the Subsidiaries in receipt of any written claims of default,
or to the Knowledge of the Company and each of the Subsidiaries, any oral claims of default, under
any Material Contract, in each case except as would not reasonably be expected to have a Material
Adverse Effect on the Company or the Subsidiaries, taken as a whole. No event has occurred as of
the date of this Agreement which, through the passage of time or the giving of notice, or both,
would constitute a default by the Company or any of the Subsidiaries under any Material Contract
or, to the Knowledge of the Company and each of the Subsidiaries, by the other party thereto or
would cause the acceleration of any obligation under any Material Contract, the loss of any rights
under any Material Contract, or the creation of any Encumbrance (other than a Permitted Encumbrance
or a Permitted Real Estate Encumbrance) upon any asset of the Company or any of the Subsidiaries,
in each case except as would not reasonably be expected to have a Material Adverse Effect on the
Company and the Subsidiaries, taken as a whole.
Section 4.15 Litigation; Compliance with Law.
(a) There is no material Action pending or, to the Knowledge of the Company and each of the
Subsidiaries, threatened in writing, against or affecting the Company or any of the Subsidiaries
or any of their respective properties or assets that would reasonably be expected to have a
Material Adverse Effect on the Company and the Subsidiaries, taken as a whole, other than any
Action as of or after the date of this Agreement that arises out of or is related to (i)
assertions of infringement by entities that aggregate Patents with the intent of asserting such
Patents against multiple defendants in particular industries and that do not commercialize
products or services relating to such Patents (Non-Practicing Entities) or (ii) any
Antitrust Laws. Neither the Company nor any of the Subsidiaries is a party to nor is bound by any
currently effective order, judgment, injunction, assessment, unsatisfied arbitration award or
decree.
(b) The Company and each of the Subsidiaries are, and have been for the three (3) years
preceding the date of this Agreement, in compliance with all Laws to which any of them, or any of
their respective businesses, properties or operations is subject, except where such failure to
comply would not reasonably be expected to have a Material Adverse Effect on the Company and the
Subsidiaries, taken as a whole, it being understood that nothing in this representation is
intended to address any compliance issue that is specifically addressed by any other
representation or warranty set forth in this Agreement. No written or, to the Knowledge of the
Company and each of the Subsidiaries, oral notice has been received by the Company or any of the
Subsidiaries alleging a material violation of any such Law. To the Knowledge of the Company and
each of the Subsidiaries, no investigation, inspection, audit, or other proceeding involving
allegations of any material violation of any Law has been threatened by any Governmental Entity.
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Section 4.16 Taxes.
(a) Tax Matters.
(i) All material Tax Returns required to be filed on or before the Closing Date by or
on behalf of the Company and each of the Subsidiaries have been or will be filed. All Tax
Returns filed by any of the aforementioned are true, correct and complete in all material
respects. All material Taxes (whether or not shown on a Tax Return) required to be paid
prior to the Closing Date by the Company and each of the Subsidiaries have been or will be
paid by the due date thereof, other than Taxes (i) for which adequate reserves have been
established or (ii) being contested in good faith by appropriate procedures.
(ii) No written claim for the assessment or collection of material Taxes is presently
being asserted against either of the Company or any of the Subsidiaries for any open taxable
period and there are no material audits or investigations by any taxing authority, or
judicial or administrative proceedings with respect to Taxes of or relating to the Company
or any of the Subsidiaries currently in progress or threatened in writing. Within the past
three years, no material claim has been received (in writing) from a jurisdiction in which
Tax Returns have not been filed by the Company or any of the Subsidiaries to the effect that
such entity is or may be subject to taxation by such jurisdiction, that has not been
previously resolved. To the knowledge of the Company and each of the Subsidiaries in
respect of the period preceding the past three years, no material claim has been received
(in writing) from a jurisdiction in which Tax Returns have not been filed by the Company or
any of the Subsidiaries to the effect that such entity is or may be subject to taxation by
such jurisdiction, that has not been previously resolved.
(iii) Neither the Company nor any of the Subsidiaries has engaged in a transaction that
constitutes a listed transaction as such term is defined in Treasury Regulation Section
1.6011-4(b)(2).
(iv) Neither the Company nor any of the Subsidiaries is or has been a member of any
affiliated group within the meaning of Section 1504(a) of the Code or any combined,
consolidated, unitary or other group for any Federal or state (within the United States) Tax
purpose, other than a group the parent of which is the Company or such Subsidiary.
(v) Neither the Company nor any of the Subsidiaries is subject to any extension of, or
has filed any waiver with respect to, any statute of limitations applicable to the
assessment or collection of any material Tax, which statute (taking into account any waiver
or extension) has not yet expired.
(vi) The Company and each of the Subsidiaries has withheld and paid all material Taxes
required to have been withheld and paid.
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(vii) There are no Tax liens on any assets of any of the Company or any of the
Subsidiaries other than statutory liens for Taxes not yet due and payable.
(viii) Neither the Company nor any of the Subsidiaries will have any material liability
following the Closing under any Tax sharing, Tax allocation or Tax indemnification agreement
entered into prior to the Closing (other than any agreement by and among the Company or the
Subsidiaries and their respective affiliates). Neither the Company nor any of the
Subsidiaries has any material liability for the Taxes of any other person (other than the
Company or any of the Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign Law), as a transferee or successor.
(ix) Neither the Company nor any of the Subsidiaries will be required to include any
item of income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (A) change in
method of accounting under the Code for a taxable period ending on or prior to the Closing
Date, or (B) closing agreement as described in Section 7121 of the Code (or any
corresponding or similar provision of state Tax Law) executed on or prior to the Closing
Date.
(x) The Company has provided to the Buyer all agreements for Tax holidays or incentives
of the non-U.S. Subsidiaries as in effect as of the date hereof. The Company and each of
the Subsidiaries are, and up until immediately before the Closing will be, in compliance
with all requirements for any applicable Tax holidays or incentives.
(xi) There is no limitation on the utilization by the Company or any of the
Subsidiaries of its net operating losses, capital loss carry forwards, Tax credits, or
similar items under Sections 382, 383, or 384 of the Code (or any corresponding or similar
provision of state, local or foreign income Tax Law), other than any such limitation arising
as a result of the consummation of the transactions contemplated by this Agreement.
(xii) As of the Closing Date, the U.S. tax basis in the shares of the U.S. Subsidiary
will be at least $615,000,000.
Section 4.17 Employee Benefit Plans.
(a) Section 4.17(a) of the Company Disclosure Schedules sets forth a true and
complete list of each material employee benefit plan, as defined in Section 3(3) of ERISA, and
each and every material written, unwritten, formal or informal plan, agreement, program, policy or
other arrangement involving direct or indirect compensation (other than workers compensation,
unemployment compensation and other government programs), employment, severance, consulting,
disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights, other
forms of incentive compensation, post-retirement insurance benefits, Benefit Arrangement, or other
benefits, entered into, maintained or
contributed to by the Company or any of the Subsidiaries or with respect to which the Company
or any of the Subsidiaries has, prior to the assumption of liabilities by the Seller as
contemplated Section 6.12 had, or may in the future have any liability (contingent or
otherwise). Each plan, agreement, program, policy or arrangement required to be set forth on
Section 4.17(a) of the Company Disclosure Schedules pursuant to the foregoing is referred
to herein as a Benefit Plan.
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(b) Section 4.17(b) of the Company Disclosure Schedules sets forth for each Company
Option, RSU and SAR, (i) the exercise or base price per share of each Company Option and SAR, (ii)
the number of shares covered by such award, (iii) the vesting schedule for such award, (iv)
whether each Company Option is an incentive stock option or non-statutory stock option under the
Code, and (v) if such award is held by a Person who is not an employee of the Company or any of
the Subsidiaries, the relationship of such Person to the Company. True and correct copies of the
Company Equity Plans, the standard award agreements under the Company Equity Plans, and each
agreement for each award that does not conform to the standard agreements under the Company Equity
Plans have been delivered to the Buyer. All awards have been issued and granted in compliance
with the Company Equity Plans.
(c) The Company has delivered or made available the following documents to the Buyer with
respect to each Benefit Plan: (i) correct and complete copies of all documents embodying such
Benefit Plan, including all amendments thereto, and all related trust documents, or a written
description of any Benefit Plan that is not set forth in a written document, (ii) the most recent
summary plan description together with the summary or summaries of material modifications thereto,
if any, (iii) the two most recent annual actuarial valuations, if any and, (iv) the two most
recent annual reports (Form Series 5500 and all schedules and financial statements attached
thereto) or their foreign equivalent, if any.
(d) The Company and each of the Subsidiaries maintains, and has funded to the extent required
by applicable Law, each Benefit Plan and any other labor-related plans that it is required by Law
or by Contract to maintain. Each Benefit Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations (foreign and domestic), including ERISA and the Code,
which are applicable to such Benefit Plans. All contributions, reserves or premium payments
required to be made or accrued as of the date of this Agreement to the Benefit Plans have been
timely made or accrued in all material respects. The Company and each of the Subsidiaries is in
compliance in all material respects with all Laws and Contracts relating to its provision of any
form of Social Insurance, and has paid, or made provision for the payment of, all Social Insurance
contributions required under applicable Laws and Contracts. Each Benefit Plan intended to be
qualified under Section 401(a) of the Code and each trust intended to qualify under Section 501(a)
of the Code either: (i) has obtained a currently effective favorable determination, advisory
and/or opinion letter, as applicable, as to its qualified status (or the qualified status of the
master or prototype form on which it is established) from the IRS covering the amendments to the
Code effected by the Tax Reform Act of 1986 and all subsequent legislation for which the IRS will
currently issue such a letter, and no amendment to such Benefit Plan has been adopted since the
date of such letter covering such Benefit Plan that would adversely affect such favorable
determination; or (ii) still has a
remaining period of time in which to apply for or receive such letter and to make any
amendments necessary to obtain a favorable determination.
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(e) No plan currently or ever in the past maintained, sponsored, contributed to or required
to be contributed to by the Company, any of the Subsidiaries, or any of their respective current
or former ERISA Affiliates is or ever in the past was (i) a multiemployer plan as defined in
Section 3(37) of ERISA, (ii) a plan described in Section 413 of the Code, (iii) a plan subject to
Title IV of ERISA, (iv) a plan subject to the minimum funding standards of Section 412 of the Code
or Section 302 of ERISA, or (v) a plan maintained in connection with any trust described in
Section 501(c)(9) of the Code. The term ERISA Affiliate means any Person that, together
with the Company or any of the Subsidiaries, would be deemed a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
(f) Except as would not have a Material Adverse effect, (i) neither the Company nor any of
the Subsidiaries is subject to any liability or penalty under Sections 4975 through 4980G of the
Code or Title I of ERISA; (ii) the Company and each of the Subsidiaries have complied with all
applicable health care continuation requirements in Section 4980B of the Code and in ERISA; and
(iii) no Prohibited Transaction, within the meaning of Section 4975 of the Code or Sections 406
or 407 of ERISA and not otherwise exempt under Section 408 of ERISA, has occurred with respect to
any Benefit Plan.
(g) No Benefit Plan provides, or reflects or represents any obligation to provide, benefits
(including death or medical benefits), whether or not insured, with respect to any former or
current employee, or any spouse or dependent of any such employee, beyond the employees
retirement or other termination of employment with the Company and each of the Subsidiaries other
than benefits in the nature of severance pay with respect to one or more of the employment
Contracts set forth on Section 4.17(g) of the Company Disclosure Schedules.
(h) There is no Contract, plan or arrangement covering any employee or former employee of the
Company or any of the Subsidiaries that, individually or collectively, could give rise to the
payment as a result of the transactions contemplated by this Agreement of any amount that would
not be deductible by the Company or any of the Subsidiaries by reason of Section 280G of the Code
or other applicable foreign Law. For purposes of the foregoing sentence, the term payment shall
include any payment, acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits. The execution of this Agreement and the consummation of
the transactions contemplated by this Agreement (alone or together with any other event which,
standing alone, would not by itself trigger such entitlement or acceleration) will not (i) entitle
any Person to any payment, forgiveness of indebtedness, vesting, distribution or increase in
benefits under or with respect to any Benefit Plan, (ii) otherwise trigger any acceleration (of
vesting or payment of benefits or otherwise) under or with respect to any Benefit Plan, or (iii)
trigger any obligation to fund any Benefit Plan.
(i) Except as would not have a Material Adverse Effect, no Action (excluding claims for
benefits incurred in the ordinary course) has been brought or is pending or threatened against or
with respect to any Benefit Plan or the assets or any fiduciary thereof (in that Persons capacity
as a fiduciary of such Benefit Plan). To the Knowledge of the
Company, there are no audits, inquiries or proceedings pending or threatened by the IRS, DOL,
or other Governmental Entity with respect to any Benefit Plan.
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(j) With respect to each Benefit Plan that is a nonqualified deferred compensation plan (as
defined for purposes of Section 409A(d)(1) of the Code), (i) such plan has been operated since
January 1, 2005 in material compliance with Section 409A of the Code and all applicable IRS
guidance promulgated thereunder to the extent such plan is subject to Section 409A of the Code and
so as to avoid any tax, interest or penalty thereunder; (ii) the document or documents that
evidence each such plan have conformed to the provisions of Section 409A of the Code and the final
regulations under Section 409A of the Code since December 31, 2008; and (iii) as to any such plan
in existence prior to January 1, 2005 and not subject to Section 409A of the Code, has not been
materially modified (within the meaning of IRS Notice 2005-1) at any time after October 3, 2004.
No Company Option, RSU or SAR is, has been or would be, as applicable, subject to any Tax under
Section 409A of the Code.
Section 4.18 Employment Matters.
(a) Neither the Seller (with respect to the Seller Employees), the Company nor any of the
Subsidiaries is a party to any collective bargaining agreements, works council agreements or other
labor contracts with any employee organization, and there are no labor unions or other
organizations representing any employee of the Company or any of the Subsidiaries, or any Seller
Employees. There are no labor unions or other labor organizations that have filed a petition with
the National Labor Relations Board or other Governmental Entity seeking certification as the
collective bargaining representative of any employee of the Company, any employee of any of the
Subsidiaries, or any Seller Employees and to the Knowledge of the Company and each of the
Subsidiaries, no labor union, work council or other labor organization is engaged in any
organizing activity with respect to any employee or independent contractor of the Company or any
of the Subsidiaries, or any Seller Employees. In the three (3) years prior to the Closing Date
there has not been, there is not presently pending or existing, and, to the Knowledge of the
Company, there is not threatened, (i) any strike, lockout, slowdown, picketing, or work stoppage
with respect to the employees of the Company or any of the Subsidiaries or (ii) any material
unfair labor practice charge or material grievance or arbitration proceeding against the Company
or any of the Subsidiaries.
(b) Section 4.18(b) of the Company Disclosure Schedules lists all current employees
as of the date of this Agreement, without identifying the names of such employees, of the Company
and each of the Subsidiaries as of the date of this Agreement whose base compensation in 2010
exceeded $100,000, and for each such employee: (i) job position; (ii) job location; (iii)
classification as exempt or non-exempt under applicable state, federal or foreign overtime
regulations; (iv) hourly rate of compensation or base salary (as applicable); (v) target incentive
compensation for 2011 (including commission and/or bonus, as applicable); (vi) the commencement
date of employment; and (vii) the entity by which such employee is employed.
(c) Section 4.18(c) of the Company Disclosure Schedules lists all current employees
as of the date of this Agreement, without identifying the names of such employees, of the Seller
that primarily provide services to the Company and/or any of the Subsidiaries as of the date of
this Agreement, and for each such employee (Seller Employees): (i) job position;
(ii) job location; (iii) classification as exempt or non-exempt under applicable state or
federal overtime regulations; (iv) hourly rate of compensation or base salary (as applicable); (v)
target incentive compensation for 2011 (including commission and/or bonus, as applicable); (vi)
the commencement date of employment with Seller; and (vii) the entity to which such employee is
providing services.
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(d) As of the date of this Agreement, to the Knowledge of the Company, no executive of the
Company has indicated any plans to terminate employment with the Company before or after the
Closing. As of the date of this Agreement, to the Knowledge of the Seller, no executive that is a
Seller Employee has indicated any plans to terminate employment with Seller before or after the
Closing.
(e) The Seller (with respect to the Seller Employees), the Company and each of the
Subsidiaries is presently in compliance, in all material respects with all applicable Laws
relating to employment, equal opportunity, nondiscrimination, immigration, wages, employee
exemption status, hours, collective bargaining, occupational safety and health, and/or privacy
rights of employees.
(f) Since January 1, 2010, neither the Company nor any of the Subsidiaries has effectuated
(i) a plant closing as defined in the Worker Adjustment and Retraining Notification Act, 29
U.S.C. §§ 2101 et seq. (the WARN Act) (or any similar state, local or foreign Law)
affecting any site of employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of the Subsidiaries, (ii) a mass layoff as defined
in the WARN Act (or any similar state, local or foreign Law) affecting any site of employment or
facility of the Company or any of the Subsidiaries, or (iii) a Relocation or Termination
within the meaning of California Labor Code § 1400 et seq.
Section 4.19 Environmental Matters.
(a) Except as would not have, or be reasonably expected to have, a Material Adverse Effect,
the Company and each of the Subsidiaries are and have been since the date that is three (3) years
before the Closing Date in compliance with all applicable Laws, and all applicable and legally
binding judicial or administrative interpretations thereof, in effect at as of the date of this
Agreement relating to the protection of the environment or natural resources or human health and
safety as it relates to environmental protection, and relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control or cleanup of any Hazardous
Material in the environment and including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42
U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), and the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), to the extent each
is applicable and as each has been amended, including the regulations promulgated pursuant thereto
(the Environmental Laws).
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(b) Except as would not have, or be reasonably expected to have, a Material Adverse Effect,
the Company and each of the Subsidiaries possess and are in compliance with all permits, licenses,
certificates, Approvals, franchises and other authorizations required by any Environmental Laws
for the operation of their respective businesses and use and occupation of the Real Estate, and at
all times prior to the date that is three (3) years before Closing Date the Company and each of
the Subsidiaries possessed and were in compliance with all permits, licenses, certificates,
Approvals, franchises and other authorizations required by any Environmental Laws for the
operation of their respective businesses and use and occupation of the Real Estate.
(c) Except as would not have, or be reasonably expected to have, a Material Adverse Effect,
the operations of the Company and each of the Subsidiaries have not caused any release of
Hazardous Material (Environmental Release) on, in or under (i) any Real Estate of the
Company or any of the Subsidiaries, (ii) any other property at which the Company or any of the
Subsidiaries has disposed of or arranged for the disposal of Hazardous Material or (iii) any
property adjoining the Real Estate.
(d) To the Knowledge of the Company and each Company Subsidiary, there is no Environmental
Release that remains unresolved at any real property presently owned, leased or operated by the
Company or any of the Subsidiaries or at any Real Estate formerly owned, leased, occupied or
operated by the Company or any of the Subsidiaries that represents a material liability to the
Company or any of the Subsidiaries.
(e) There are no suits, notices, investigations or claims related to any Environmental Law
that are pending, or to the Knowledge of the Company and each of the Subsidiaries, threatened
against the Company or any of the Subsidiaries, that if determined adversely would be material to
the Company and the Subsidiaries, taken as a whole.
(f) The representations and warranties in this Section 4.19 constitute the sole and
exclusive representations and warranties of the Company and the Subsidiaries regarding
environmental matters.
(g) Section 4.19 of the Company Disclosure Schedules contains a list of all
underground storage tanks that are located on property now owned, leased or operated by the
Company or any of the Subsidiaries.
Section 4.20 Affiliate Transactions. No officer or director of the Seller, the Company or
any of the Subsidiaries: (a) is a party to any current Material Contract with the Company or any of
the Subsidiaries or has any ownership interest in any material property or material asset of the
Company or any of the Subsidiaries; (b) owns, directly or indirectly, any interest in or is an
officer, director, employee or consultant of any Person that is a significant competitor the
Company and the Subsidiaries; or (c) has any loan outstanding to or Action against the Seller, the
Company or any of the Subsidiaries, except for claims in the ordinary course of business, for
accrued salary, bonus, vacation pay, and benefits under Employee Benefit Plans. Section
4.20 of the Company Disclosure Schedules sets forth a description of all services provided by
the Seller or any of its Affiliates to the Company or any of the Subsidiaries.
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Section 4.21 Customers and Suppliers.
(a) Section 4.21(a) of the Company Disclosure Schedules sets forth the ten (10)
largest customers and the ten (10) largest suppliers of the Company and the Subsidiaries, on a
consolidated basis, for the fiscal year ended December 31, 2010, and includes the actual amount of
net revenue (after rebates, discounts, or other allowances) or net purchases, as applicable, by
the Company and the Subsidiaries, taken as a whole, attributable to each such customer or supplier
for such period.
(b) Since the Balance Sheet Date until the date of this Agreement, no customer or supplier
listed on Section 4.21(a) of the Company Disclosure Schedules has (i) cancelled or
otherwise terminated any Contract with the Company or any of the Subsidiaries with a value in
excess of $1,000,000 or (ii) returned, or communicated to the Company or any of the Subsidiaries
an intent or threatened to return products, equipment, goods or services, with a value in excess
of $1,000,000, purchased from the Company or any of the Subsidiaries. As of the date of this
Agreement, neither the Company nor any of the Subsidiaries has received notice from any customer
or supplier listed on Section 4.21(a) of the Company Disclosure Schedules that such
customer or supplier intends to discontinue purchases or the supply of products in an amount in
excess of $1,000,000 per annum.
Section 4.22
Insurance. Section 4.22 of the Company Disclosure Schedules sets
forth a list of each material insurance policy to which the Company or any of the Subsidiaries is a
party or a named insured and such policies are sufficient for compliance in all material respect
with the requirements of applicable Law. To the Knowledge of the Company and each of the
Subsidiaries, all of such material insurance policies are legal, valid, binding and enforceable,
and in full force and effect and will remain so immediately after the Closing; except as
enforceability of such insurance policies may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar Laws now or hereafter in effect relating to
or limiting creditors rights and remedies generally and general principles of equity relating to
the availability of specific performance and injunctive and other forms of equitable relief. To
the Knowledge of the Company and each of the Subsidiaries, neither the Company nor any of the
Subsidiaries is in material breach or default with respect to its material obligations under such
insurance policies (including with respect to payment of premiums).
Section 4.23 Product Warranties and Returns; Product Liability. Except to the extent
reserved for on the face of the Latest Balance Sheet, as of the date of this Agreement there exists
no (i) to the Knowledge of the Company, latent defect in the design or manufacture of any of the
Companys or any of the Subsidiaries products that could reasonably be expected to lead to a
general recall or rework of, or post-sale warning for, such product or would affect the safety of
such product (ii) pending, or to the Knowledge of the Company and each of the Subsidiaries
threatened, Action by or before any Governmental Entity relating to any product alleged to have
been manufactured, distributed or sold by the Company to others, and alleged to have been defective
or improperly designed or manufactured or in breach of any express or implied product warranty or
(iii) pending, or to the Knowledge of the Company and each of the Subsidiaries threatened, material
products liability claims.
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Section 4.24 Permits. The Company and each of the Subsidiaries has obtained and currently
owns or possesses all right, title and interest in and to all of and is in compliance with all
terms and conditions of all material permits, registrations, licenses, franchises, certifications,
approvals, exemptions and other approvals (collectively, the Approvals) from any
Governmental Entity necessary for the ownership of its properties and assets and conduct of its
business as presently conducted, including those Approvals necessary for the employment of the
Companys or any of the Subsidiaries employees, except where the failure to have any such
Approvals would not reasonably be expected to have a Material Adverse Effect on the Company and the
Subsidiaries, taken as a whole. The Company and each of the Subsidiaries are in compliance in all
material respects with the terms and conditions of such Approvals and has not received any written
or, to the Knowledge of the Company, oral notice that it is in material violation of any of the
terms or conditions of such Approvals. All such Approvals are, and will remain valid and in full
force and effect following the consummation of the transactions contemplated by this Agreement.
Section 4.25 Compliance with Anti-bribery, Economic Sanctions, Export Control and Import
Laws.
(a) None of the Company, any of the Subsidiaries, or, any of their respective controlled
Affiliates, directors, officers, agents or employees has, directly or indirectly, paid, or
offered, promised or authorized the payment of money or anything of value to: (i) any official or
employee of any Government Entity or political party; (ii) any employee of an enterprise owned or
controlled by a Government Entity; (iii) a political party, a candidate for political office or
person holding political office; (iv) an officer or employee of a public international
organization, such as the World Bank; or (v) to any other Person, in each instance, while being
aware of or having a belief that such money or item of value will be passed on to one of the
above, to influence any act or decision by such Person or by any Governmental Entity for the
purpose of obtaining, retaining or directing business, in violation of any applicable anti-bribery
laws.
(b) Neither the Company nor any of the Subsidiaries maintains or conducts, and has not
maintained or conducted, any business, investment, operation or other activity in the conduct of
the respective businesses of the Company or any of the Subsidiaries and the ownership, operation
or use of the Companys or of each of the Subsidiaries assets in or with: (i) any country or
Person targeted by any of the United States economic sanctions laws administered by the United
States Treasury Departments Office of Foreign Assets Control (OFAC); (ii) any Person
appearing on the list of Specially Designated Nationals and Blocked Persons issued by OFAC; or
(iii) any country or Person designated by the United States Secretary of the Treasury pursuant to
the USA PATRIOT Act as being of primary money laundering concern.
(c) In the past three years, neither the Company nor any of the Subsidiaries has conducted
business in material violation of applicable export control and import Laws and has at all times
obtained appropriate material authorizations, licenses, classifications or other necessary
approvals in connection with the export and importation of its products.
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Section 4.26 Books and Records. The books and records (including any statutory records,
registers and books) of the Company and each of the Subsidiaries are true, accurate and complete in
all material respects and have been kept in all material respects in compliance with the customary
practice of the Company and the Subsidiaries and applicable Law. At the Closing, all such books
and records will be in the possession of the Company and the Subsidiaries.
Section 4.27 Brokers, Finders Fees, etc. Except for Goldman, Sachs & Co., no Person is
entitled to rights to brokerage commissions, finders fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or agreement made by
or on behalf of the Company, any of the Subsidiaries or any of their respective Affiliates,
officers, employees or directors, for which the Company is liable.
Section 4.28 No Additional Representations. Except for representations and warranties made
by the Seller and the Company in Article III, Article IV and in any other
Transaction Document and as set forth in the certificates delivered by the Company and the Seller
to the Buyer pursuant to Section 7.3 and Section 7.4, none of the Company, the
Seller or any other Person makes any express or implied representation or warranty with respect to
the Seller, the Company or the Subsidiaries or their respective businesses, operations, assets,
liabilities, conditions (financial or otherwise) or prospects in connection with this Agreement or
the transactions contemplated hereby, and the Seller and the Company hereby disclaim any such other
representations or warranties. In particular, without limiting the foregoing disclaimer, neither
the Seller, the Company nor any other Person makes or has made any representation or warranty to
the Buyer or any of its affiliates or representatives with respect to (a) any financial projection,
forecast, estimate, budget or prospect information relating to the Company, any of the Subsidiaries
or their respective businesses, or (b) any oral or, except for the representations and warranties
made by the Seller and the Company in Article III and this Article IV and as set
forth in the certificates delivered by the Company and the Seller to the Buyer pursuant to
Section 7.3 and Section 7.4, written information presented to the Buyer or any of
its affiliates or representatives in the course of their due diligence investigation of the Seller,
the Company and the Subsidiaries, the negotiation of the Agreement or in the course of the
transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER AND THE BUYER PARENT
Each of the Buyer and the Buyer Parent represents and warrants to each of the Company and the
Seller as of the date of this Agreement and as of the Closing Date, as though made as of the
Closing Date, as set forth below.
Section 5.1 Organization. The Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the Cayman Islands and is an indirect wholly owned subsidiary of
the Buyer Parent. The Buyer Parent is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Each of the Buyer and the Buyer Parent has all
requisite corporate power and authority to carry on its business as presently conducted and to own
or lease and operate its property and assets. Each of the Buyer and the Buyer Parent is duly
qualified to do business and is in good standing in each jurisdiction
where the character of their respective properties owned or leased or the nature of their
respective activities make such qualification necessary, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on Buyer Parent or any of its subsidiaries, taken as a
whole. The Buyer and the Buyer Parent have each delivered to the Company complete and correct
copies of their respective articles of incorporation and bylaws (or other equivalent organizational
documents), as amended to date, and each such instrument is in full force and effect.
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Section 5.2 Authorization; Enforceability.
(a) Each of the Buyer and the Buyer Parent has all requisite power and authority to enter
into this Agreement and the other Buyer Transaction Documents, to perform its obligations
hereunder and thereunder and to carry out the transactions contemplated by this Agreement and
thereby. All necessary corporate action has been taken to authorize the execution, delivery and
performance of this Agreement and each other Buyer Transaction Document. Each of the Buyer and
the Buyer Parent has duly executed and delivered this Agreement and, at or prior to the Closing,
will have duly executed and delivered each other Buyer Transaction Document.
(b) This Agreement is, and each other Buyer Transaction Document, when duly executed and
delivered at or prior to the Closing by the Buyer and the Buyer Parent (as applicable) will be, the
legal, valid and binding obligation of the Buyer and the Buyer Parent (as applicable), enforceable
against the Buyer and the Buyer Parent (as applicable) in accordance with their respective terms,
except as enforceability of such objections may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar Laws now or hereafter in effect relating to
or limiting creditors rights or remedies generally and general principles of equity relating to
the availability of specific performance and injunctive and other forms of equitable relief.
Section 5.3 No Violation. Neither the execution and delivery of this Agreement and the
other Buyer Transaction Documents nor the consummation of the transactions contemplated hereby or
thereby (with or without the passage of time or the giving of notice, or both) will (a) contravene,
violate, breach or be in conflict with any provisions of the Buyers or the Buyer Parents
respective articles of incorporation or bylaws or other equivalent organizational documents or any
of their respective subsidiaries or (b) with or without the giving of notice or passage of time, or
both, violate, or be in conflict with, or create an Encumbrance (other than a Permitted Encumbrance
or Permitted Real Estate Encumbrance) under or constitute a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of the terms, conditions or
provisions of any material contract to which the Buyer or the Buyer Parent or any of their
respective subsidiaries is a party or by which the Buyer or the Buyer Parent or any of their
respective subsidiaries or any of their respective assets may be bound or (c) violate or conflict
with any Laws to which the Buyer or the Buyer Parent is subject or (d) give rise to a declaration
or imposition of any Encumbrance (other than a Permitted Encumbrance or Permitted Real Estate
Encumbrance) on any of the assets of the Buyer or the Buyer Parent or any of their respective
subsidiaries, except in the cases of (b), (c) and (d) above, for any such conflicts,
violations, breaches, defaults or other occurrences which could not reasonably be expected to have
a Material Adverse Effect on the Buyer or the Buyer Parent.
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Section 5.4 Consents and Approvals.
(a) Except for compliance with the HSR Act and other applicable Antitrust Laws, no consent,
approval or authorization of, or declaration, filing or registration with, any Governmental Entity
is required to be made or obtained by the Buyer or the Buyer Parent, respectively, in connection
with the execution, delivery and performance of this Agreement and the other agreements
contemplated hereby or the consummation of the transactions contemplated hereby or thereby.
(b) No consent, approval or authorization of, or notice to any counterparty to any material
contract of the Buyer or the Buyer Parent must be made or obtained by the Buyer or the Buyer
Parent, respectively, in connection with the execution, delivery and performance of this Agreement
and the other agreements contemplated hereby or the consummation of the transactions contemplated
hereby or thereby.
Section 5.5 Capitalization.
(a) The authorized capital stock of the Buyer Parent consists of (a) 5,000,000 shares of
preferred stock, par value $0.01 per share, and (b) 450,000,000 shares of the Buyer Parents
common stock, of which, as of the date of this Agreement, zero shares of the Buyer Parents
preferred stock are issued and outstanding or held in treasury, and 232,101,734 shares of the
Buyer Parents common stock are issued and outstanding and zero shares of the Buyer Parents
common stock are held in treasury. As of the date of this Agreement, there are outstanding
options to purchase an aggregate of 10,671,605 shares of the Buyer Parents common stock. The
Buyer Parent has reserved an aggregate of 28,935,206 shares of the Buyer Parents common stock for
issuance pursuant to the Buyer Parents employee benefit plans (including shares issued in respect
of awards and shares subject to outstanding awards). All issued shares of the Buyer Parents
common stock have been duly authorized validly issued, fully paid and are nonassessable and are
not subject to and were not issued in violation of any preemptive rights.
(b) The authorized capital stock of the Buyer consists of 1,000,000 ordinary shares, par
value $1.00 per share, of which, as of the date of this Agreement, 900,001 shares of the Buyers
ordinary shares are issued and outstanding, and zero shares of the Buyers ordinary shares are
held in treasury. As of the date of this Agreement, there are no outstanding options to purchase
shares of the Buyer. The Buyer has reserved zero ordinary shares for issuance pursuant to employee
benefit plans (including shares issued in respect of awards and shares subject to outstanding
awards). All of the 900,001 issued shares of the Buyer have been duly authorized validly issued,
fully paid and are nonassessable and are not subject to and were not issued in violation of any
preemptive rights.
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(c) Except as set forth above, there is no outstanding, and there has not been reserved for
issuance any: (i) share or other voting securities of the Buyer Parent or the Buyer; (ii)
security of the Buyer Parent or the Buyer convertible into or exchangeable for shares in the
capital or voting securities of the Buyer Parent or the Buyer; (iii) option or other right to
acquire from the Buyer Parent or the Buyer, or obligation of the Buyer Parent or the Buyer to
issue, any shares, voting securities or security convertible into or exchangeable for shares or
voting securities of the Buyer Parent or the Buyer, as the case may be; or (iv) equity equivalent
interest in the ownership or earnings of the Buyer Parent or the Buyer or other similar right (the
items in clauses (i) through (iv) collectively, Buyer Securities). There is no
outstanding obligation of the Buyer Parent or the Buyer to repurchase, redeem or otherwise acquire
any Buyer Security. There is no stockholder agreement, voting trust or other agreement or
understanding to which the Buyer Parent or the Buyer is a party or by which the Buyer Parent or
the Buyer are bound relating to the voting, purchase, transfer or registration of any shares of
the Buyer Parent or the Buyer or preemptive rights with respect thereto.
Section 5.6 Reports; SEC Filings. The Buyer Parent has timely filed with, or furnished to,
as applicable, the SEC all forms, reports and documents required to be filed or furnished since
June 27, 2008 (all such forms, reports and documents, together with any documents filed during such
period by the Buyer Parent with the SEC on a voluntary basis on Current Reports on Form 8-K and, in
all cases, all exhibits and schedules thereto, the Buyer Parent SEC Reports), each of
which complied in all material respects, as of its filing date (or, if amended or superseded by a
filing prior to the date of this Agreement, on the date of such amended or superseded filing), with
the applicable requirements of the Securities Act or the Exchange Act, as the case may be, each as
in effect on the date such Buyer Parent SEC Report was filed, except as otherwise disclosed in any
such Buyer Parent SEC Report. As of its filing date (or, if amended or superseded by a filing
prior to the date of this Agreement, on the date of such amended or superseded filing), each Buyer
Parent SEC Report, including any financial statements or schedules included or incorporated by
reference therein, did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. True and correct copies of all Buyer Parent SEC
Reports filed prior to the date of this Agreement have been furnished to the Company or are
publicly available in the EDGAR database of the SEC. None of the Buyer Parents subsidiaries is
required to file any forms, reports or other documents with the SEC. No executive officer of the
Buyer Parent has failed in any respect to make the certifications required of him or her under
Section 302 or 906 of the Sarbanes-Oxley Act of 2002 with respect to any Buyer Parent SEC Report,
and neither the Buyer Parent nor any of its executive officers has received notice from any
Governmental Entity challenging or questioning the accuracy, completeness, form or manner of filing
of such certifications. There are no outstanding comments from the staff of the SEC with respect
to any of the Buyer Parent SEC Reports.
Section 5.7 Financial Statements.
(a) The audited and unaudited consolidated financial statements of the Buyer Parent and its
subsidiaries, including any related notes thereto, included (or incorporated by reference) in the
Buyer Parent SEC Reports (except as amended or superseded by a filing prior to the date of this
Agreement) present fairly, in all material respects, the consolidated financial position of the
Buyer Parent and its subsidiaries as of the dates thereof, and the consolidated results of
operations and cash flows of the Buyer Parent and its subsidiaries for the periods then ended, in
conformity with GAAP consistently applied throughout such periods.
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(b) The Buyer Parent has implemented and maintains a system of internal accounting controls
sufficient in all material respects to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements in accordance with GAAP. The
Buyer Parent (i) has implemented and maintains disclosure controls and procedures sufficient in
all material respects to ensure that material information relating to the Buyer Parent is made
known to the chief executive officer and the chief financial officer of the Buyer Parent by others
within those entities and (ii) has disclosed, based on its most recent evaluation prior to the
date of this Agreement, to the Buyer Parents outside auditors and the audit committee of the
board of directors of the Buyer Parent (A) any significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting that are reasonably likely to
adversely affect the Buyer Parents ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Buyer Parents internal control over financial
reporting.
Section 5.8 Litigation; Compliance with Law.
(a) Except as set forth in the reports, schedules and other documents filed by the Buyer
Parent with the SEC, or furnished by the Buyer Parent to the SEC, in either case publicly
available prior to the date of this Agreement, there is no material Action pending or, to the
Knowledge of the Buyer or the Buyer Parent, threatened in writing, against or affecting the Buyer
Parent or any of its subsidiaries or affecting any of their respective properties or assets that
would reasonably be expected to have a Material Adverse Effect on the Buyer Parent and its
subsidiaries, taken as a whole, other than any Action as of or after the date of this Agreement
that arises out of or is related to (i) assertions of infringement by Non-Practicing Entities or
(ii) any Antitrust Laws.
(b) The Buyer and the Buyer Parent are in compliance with all Laws applicable to the Buyer
and the Buyer Parent or to the conduct of the business or operations of the Buyer and the Buyer
Parent, except for such failures to be in compliance that have not had or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. No written or, to
the Knowledge of the Buyer Parent and the Buyer, oral notice has been received by the Buyer Parent
or the Buyer alleging a material violation of any such Law. To the Knowledge of the Buyer Parent
and the Buyer, no investigation, inspection, audit, or other proceeding involving allegations of
any material violation of any Law is threatened.
Section 5.9 Absence of Certain Changes. Since December 31, 2010 to the date of this
Agreement, there has not been any circumstance, development, event, condition, effect or change
that, individually or in the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Buyer Parent or the Buyer.
Section 5.10 Accredited Investor. The Buyer is an accredited investor as defined in Rule
501 of Regulation D of the Securities Act, as presently in effect. The Buyer acknowledges that the
Stock has not been registered under the Securities Act or any state securities Laws and that the
Stock may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is pursuant
to the terms of an effective registration statement under the Securities Act and is
registered under any applicable state or foreign securities Laws or pursuant to an exemption from
registration under the Securities Act and any applicable state or foreign securities Laws.
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Section 5.11 Buyer Parent Stock. At the Closing, the Buyer Parent Stock will have been
duly authorized, validly issued, fully paid, non-assessable and free and clear of all Encumbrances,
other than as set forth in the Investor Rights Agreement.
Section 5.12 Sufficient Funds. The Buyer and the Buyer Parent will have at the Closing
sufficient funds to pay all of the consideration payable to the Seller as required by this
Agreement, and to make all other necessary payments in connection with the purchase of the Stock on
the terms set forth herein and to pay all related fees and expenses of the Buyer and the Buyer
Parent.
Section 5.13 Brokers, Finders Fees, etc. Except for Merrill Lynch, Pierce, Fenner &
Smith Incorporated, no Person is entitled to rights to brokerage commissions, finders fees or
similar compensation in connection with the transactions contemplated by this Agreement based on
any arrangement or agreement made or alleged to have been made by or on behalf of the Buyer, the
Buyer Parent or any of their respective Affiliates, officers, employees or directors, and neither
the Buyer nor the Buyer Parent has received a claim for such compensation nor has Knowledge of any
such claim.
Section 5.14 Tax Holidays or Incentives. The Buyer has no knowledge of any Taxes
relating to any agreements for Tax holidays or incentives that would arise as a result of the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business.
(a) From and after the date of this Agreement until the Closing Date or the date, if any, on
which this Agreement is earlier terminated pursuant to Section 10.1 (except (w) as may be
required by Law, (x) with the prior written consent of the Buyer, which consent shall not be
unreasonably withheld, delayed or conditioned, (y) as contemplated or permitted by this Agreement
or (z) as set forth in Schedule 6.1), the Company and the Seller agree to use commercially
reasonable efforts to conduct the activities and operations of the Company and each of the
Subsidiaries only in the ordinary course of business, consistent with past practices and in
material compliance with all applicable Laws.
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(b) Notwithstanding Section 6.1(a), except (w) as may be required by Law, (x) with
the prior written consent of the Buyer, which consent shall not be unreasonably withheld, delayed
or conditioned, (y) as contemplated or permitted by this Agreement or (z) as set forth in
Schedule 6.1, neither the Company nor any of the Subsidiaries will take any of the
following actions; provided, however, that the Buyer may for any reason withhold
its consent with respect to (x) with respect to the Company for any action, which is not in the
ordinary course of business for the Company consistent with past practice, (A) establishing or
adopting any Benefit Plan, (B) taking any of the actions specified in Section 6.1(b)(xvii)
and (xxi), (C)
granting or providing any severance or termination payments or benefits to any Seller
Employee or any director, officer, Company Employee, former employee, or their dependents or
beneficiaries, (D) increasing the pension, welfare, severance or other benefits of any Seller
Employee or Company Employee, or (E) entering into, adopting or amending any employment,
severance, change in control, termination, equity award, deferred compensation or similar
agreement with any Seller Employee or Company Employee, but only to the extent, in the case of
each of (A), (C), (D) and (E), that any such related obligation would survive the Closing:
(i) Except for (A) the repayment by the Company or any of the Subsidiaries of
debt (including the payment of debt owed to the Seller) or (B) ordinary shares of the
Company to be issued or delivered pursuant to the Company Equity Plans, and except
for the issuance, grant or delivery of equity-based awards granted pursuant to the
Company Equity Plans in the ordinary course of business consistent with past
practice, transfer, issue, sell, redeem or dispose of, or agree to do so, any shares
in or other equity securities of the Company or any of the Subsidiaries, grant
options, warrants, calls or other rights to purchase or otherwise acquire shares in
or other equity securities of the Company or any of the Subsidiaries or issue any
security convertible into shares in or other equity securities of the Company or any
of the Subsidiaries;
(ii) Except for ordinary shares of the Company to be issued or delivered
pursuant to the Company Equity Plans, and except for the issuance, grant or delivery
of equity-based awards granted pursuant to the Company Equity Plans in the ordinary
course of business consistent with past practice, effect any change in the Companys
or any of the Subsidiaries authorized or issued share capital (where applicable) or
other equity securities, effect any recapitalization, reclassification, stock split
or like change, directly or indirectly, in the share capital or other equity
securities of the Company or any of the Subsidiaries or amend any material term of
any outstanding security of the Company or any of the Subsidiaries;
(iii) Amend or propose to amend the memorandum and articles of association and
other charter and organizational documents of the Company or any of the Subsidiaries;
(iv) Acquire, by merging or consolidating with, or by purchasing an equity
interest in, or by any other manner, any Person or division thereof or any securities
of any Person;
(v) Other than in the ordinary course of business consistent with past practices
(including under the Companys revolving trade accounts receivable financing program
or any new such programs and existing lines of credit), incur Indebtedness for
borrowed money for any reason, or become the guarantor, surety, endorser or otherwise
liable for any Indebtedness of any other Person (except as the endorser of checks in
the ordinary course of business);
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(vi) Other than in the ordinary course of business consistent with past practice
(including but not limited to (A) purchases and sales of products, materials and
inventory in the ordinary course of business consistent with past practice, (B)
inventory write-offs in the ordinary course of business consistent with past practice
or (C) purchases and dispositions of equipment and other capital items in the
ordinary course or consistent with the Companys 2011 capital plan made available to
the Buyer), acquire, sell, lease, license, dispose of, pledge or encumber any assets;
(vii) Except as may be required by Law, enter into, modify or terminate any
labor or collective bargaining agreement, work council agreement, work force
agreement or any other labor union Contract applicable to any Seller Employee or
Company Employee or, through negotiation or otherwise, make any commitment or incur
any liability to any labor organization relating to any Seller Employees or Company
Employee;
(viii) Except in accordance with their terms and except in the ordinary course
of business consistent with past practice, terminate, renew or renegotiate any
Material Contract, default in any obligation under any Material Contract;
(ix) Enter into any transaction (or series of related transactions) or make or
enter into any Contract, commitment or understanding (or series of related
Contracts), other than ordinary course of business sales and supply transactions,
commitments and understandings, which calls for payments by the Company or any of the
Subsidiaries in excess of $5,000,000 individually;
(x) Terminate or fail to renew any existing material insurance coverage;
(xi) Terminate or fail to renew any Approvals;
(xii) Other than in the ordinary course of business consistent with past
practices, make any loan, or enter into any commitment to make any loan, or other
extension of credit to or for the benefit of any Affiliate of the Seller, the Company
or any of the Subsidiaries;
(xiii) Except in the ordinary course of business consistent with past practices
or as otherwise required under the terms of any existing Benefit Plan, (A) grant or
provide any severance or termination payments or benefits to any Seller Employee or
any director, officer, Company Employee, former employee, or their dependents or
beneficiaries, (B) increase the compensation, bonus or pension, welfare, severance or
other benefits of, pay any bonus to, make any new equity awards to, or make or amend
any loans to, any Seller Employee, any director, officer, Company Employee, former
employee, or any persons who will be a director or executive officer of the Buyer
Parent effective as of the Closing Date, or their dependents or beneficiaries, (C)
enter into, adopt or amend any employment,
severance, change in control, termination, equity award, deferred compensation
or similar agreement with any Seller Employee or any director, officer, Company
Employee, former employee, or their dependents or beneficiaries, or (D) establish,
adopt, amend or terminate any Benefit Plan, in each case;
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(xiv) Except in the ordinary course of business consistent with past practice,
abandon, dispose of or permit to lapse any rights to use any material Business
Intellectual Property;
(xv) Except in the ordinary course of business consistent with past practice (A)
make, amend or change any material Tax election; (B) make a request for a material
Tax ruling or enter into a material closing agreement; (C) settle or compromise any
material Tax Liability or Proceeding; (D) file any material amendments to any
previously filed Tax Returns; (E) surrender any right to claim a refund of any
material Taxes; or (F) make any change to any of its material methods of reporting
income or deductions for Tax accounting purposes;
(xvi) Declare, set aside, issue, make or pay any dividend (whether in stock,
personal or real property or other things of value) or the distribution or payment in
respect of the capital stock or other equity securities of the Company or any of the
Subsidiaries or any direct or indirect redemption, purchase or other acquisition of
any capital stock or other equity securities of the Company or any of the
Subsidiaries, except for (A) any transaction between the Company and any of the
Subsidiaries or among the Subsidiaries or (B) any dividend or distribution of cash;
(xvii) Except as required under the terms of any existing Benefit Plan,
accelerate the vesting schedule for any equity awards of the Company or any of the
Subsidiaries, except with respect to Specified Persons or the Change of Control
Payments;
(xviii) Take any action that would cause the Buyer to be unable to purchase the
Stock free from all Encumbrances and together with all rights and advantages attached
to them as at the Closing (including pledging any of the Stock as security for
obligations of the Seller or the Company);
(xix) Change in any material respect any of the accounting methods used by the
Company unless required by GAAP or applicable Law;
(xx) Take any action that would prohibit the satisfaction of any of the Buyers
conditions to the Closing set forth in Article VII or would materially delay
their satisfaction;
(xxi) Permit the exercise of any equity award of the Company;
(xxii) Settle or compromise any pending or threatened Action, other than a
settlement or compromise of any such pending or threatened Action for cash in an
amount not exceeding $5,000,000; or
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(xxiii) Agree to, or make any commitment to, whether orally or in writing, take
any action prohibited by the Company or the Seller in this Article VI.
(c) Neither the Buyer Parent, the Buyer nor any of their respective subsidiaries shall
(except (x) as may be required by Law, (y) with the prior written consent of the Company and the
Seller, which consent shall not be unreasonably withheld, or (z) as otherwise specifically
contemplated by the terms of this Agreement), between the date of this Agreement and the earlier
of the termination of this Agreement in accordance with its terms and the Closing, directly or
indirectly do, any of the following:
(i) Amend the Buyer Parents or the Buyers certificate of incorporation or
by-laws in any manner that would reasonably be likely to prevent or materially delay
or impair the Buyer Parent or the Buyers performance under this Agreement and the
Buyer Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, or have an adverse impact on the value of the Buyer Parent Stock;
(ii) Split, combine, subdivide or reclassify any of the capital stock of the
Buyer Parent or declare, set aside for payment or pay any dividend or other
distribution in respect of any shares of the Buyer Parents capital stock or
otherwise make any payments to stockholders in their capacity as such;
(iii) During the Buyer Parent Share Price Average Period, issue, deliver, sell,
authorize, pledge, or otherwise encumber or propose any of the foregoing with respect
to any shares of capital stock of the Buyer Parent or any securities convertible into
shares of capital stock of the Buyer Parent, or subscriptions, rights, warrants or
options to acquire any shares of capital stock of the Buyer Parent or any securities
convertible into shares of capital stock of the Buyer Parent, or enter into other
agreements or commitments of any kind or character obligating it to issue any such
shares or convertible securities or publicly announce an intention to do any of the
above, other than (i) the issuance, delivery and/or sale of shares of the Buyer
Parent Stock pursuant to the exercise of stock options outstanding on the date
hereof; (ii) the granting of options to purchase shares of the Buyer Parent Stock, to
be granted at fair market value in the ordinary course of business consistent with
past practice (as to recipients, amounts and vesting); (iii) shares of the Buyer
Parent Stock issuable upon the exercise of the stock options referred to in clause
(ii); and (iv) shares of the Buyer Parent Stock issuable to participants in any Buyer
Parents employee stock purchase plan consistent with the terms thereof;
(iv) Knowingly take, or knowingly omit to take, any action that is reasonably
likely to result in any of the conditions to the Closing set forth in Article
VIII not being satisfied in a timely manner, including any acquisition, joint
venture, strategic partnership or alliance which could reasonably be expected to
delay or otherwise negatively impact obtaining regulatory clearance of this
transaction; or authorize or enter into any agreement, contract, arrangement or
commitment to do any of the foregoing; or
(v) Agree, make any public announcement, or make any commitment, whether orally
or in writing, to take any action prohibited by this Section 6.1(c).
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Section 6.2 Reasonable Access. The Company shall (and shall cause each of the Subsidiaries
to) afford to representatives of the Buyer reasonable access, in a manner not disruptive to the
operations of the business of the Company and the Subsidiaries, during normal business hours and
upon reasonable notice throughout the period prior to the Closing Date, to the properties, books
and records of the Company and the Subsidiaries and, during such period, shall (and shall cause
each of the Subsidiaries to) furnish promptly to such representatives all information concerning
the business, properties and personnel of the Company and the Subsidiaries in each case as may
reasonably be requested and necessary to consummate the transactions contemplated by this Agreement
(and not to conduct further due diligence or other investigation of the Company and the
Subsidiaries); provided, however, that nothing herein shall require the Company or
any of the Subsidiaries to disclose any information to the Buyer or its representatives if such
disclosure would, in the reasonable judgment of the Company, (i) cause significant competitive harm
to the Company or the Subsidiaries if the transactions contemplated by this Agreement are not
consummated, (ii) violate applicable Law or the provisions of any agreement to which the Company or
any of the Subsidiaries is a party or (iii) jeopardize any attorney-client or other legal
privilege; provided further, however, that nothing herein shall authorize
Buyer or its representatives to undertake any further environmental investigations or sampling at
any of the properties owned, operated or leased by the Company or the Subsidiaries. The Buyer
agrees that it will not, and will cause its representatives not to, use any information obtained
pursuant to this Section 6.2 for any competitive or other purpose unrelated to the
consummation of the transactions contemplated by this Agreement pursuant to this Agreement. The
Confidentiality Agreements shall apply with respect to information furnished hereunder by the
Company, the Subsidiaries and the Companys representatives.
Section 6.3 Notification. From the date of this Agreement until the Closing Date, the
Company and the Seller shall as promptly as may be reasonably practicable disclose to the Buyer in
writing if, after the date of this Agreement, either of the Company or the Seller (a) becomes aware
of any fact, event or condition that has caused or could be reasonably be expected to cause any of
the representations and warranties contained in Article III or IV to fail to be
true or correct in any material respect, (b) becomes aware of the occurrence of any fact, event or
condition that has had or could reasonably be expected to have a Material Adverse Effect, (c)
becomes aware of any fact, event or condition that has resulted in or could reasonably be expected
to result in a material breach by the Company, any of the Subsidiaries or the Seller of any of
their respective covenants and obligations under this Agreement, or (d) becomes aware of the
occurrence of any fact, event or condition that has made or could reasonably be expected to make
the satisfaction of the conditions in Article VII impossible.
Section 6.4 Other Information. From the date of this Agreement to the Closing Date, the
Company shall furnish to the Buyer (a) as soon as reasonably practicable after they become
available, copies of all (i) reports, renewals, filings, certificates, statements and other
documents filed with any Governmental Entity; (ii) notices or communications from any Governmental
Entity; and (iii) notice of any planned or threatened labor dispute, organization efforts, strike
or collective work stoppage affecting the employees of the Company or any of the
Subsidiaries, and (b) within two (2) Business Days after they are completed but in no event more
than forty-five (45) days following the relevant quarter end, copies of all quarterly unaudited
balance sheets, statements of operations, shareholders equity and cash flows for the Company and
each of the Subsidiaries on a consolidated basis and monthly unaudited balance sheets and
statements of operations. Each of the financial statements delivered pursuant to this Section
6.4 shall be prepared substantially in the same manner as presently prepared, in accordance
with GAAP, subject to year-end adjustments and any other adjustments described therein and the
absence of footnotes thereto and, in the case of monthly financial statements, customary exceptions
for the fact that not all balances will be closed, and shall be accompanied by a certificate of the
chief financial officer of the Company to the effect that such financial statements present fairly
the financial position and results of operations and cash flows of the Company and each of the
Subsidiaries for the periods covered, subject to year-end adjustments and any other adjustments
described therein and the absence of footnotes thereto and, in the case of monthly financial
statements, customary exceptions for the fact that not all balances will be closed.
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Section 6.5 Mutual Reasonable Best Efforts; Further Assurances. Upon the terms and subject
to the conditions herein provided, each Party shall use its reasonable best efforts, to take or
cause to be taken all action, to do or cause to be done (including the execution and delivery of
such other instruments as may be necessary), and to assist and cooperate with each other Party in
doing, all things necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the transactions and
undertakings contemplated by this Agreement.
Section 6.6 Antitrust.
(a) Notwithstanding anything to the contrary set forth herein, each applicable Party shall
(i) make its initial filing required under the HSR Act and any other initial filings required
under or with respect to the Antitrust Laws reasonably promptly and in consultation with the other
Parties, (ii) use reasonable best efforts to obtain all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from, and the giving of any necessary notices to,
Governmental Entities and other persons and the making of all necessary registrations,
declarations and filings (including filings under the HSR Act and any other Antitrust Laws and
other registrations, declarations and filings with, or notices to, Governmental Entities, if any),
and in connection therewith and for the avoidance of doubt, the Buyer Parent, the Company and the
Seller shall interface with such Governmental Entities and in making regulatory strategy
decisions, (iii) use reasonable best efforts to coordinate and cooperate with, and give due
consideration to all reasonable additions, deletions or changes suggested by another Party in
connection with, making (A) any filing under or with respect to any Antitrust Laws and (B) any
filings, conferences or other submissions related to resolving any investigation or other inquiry
by any Governmental Entity, (iv) use reasonable best efforts to provide any supplemental
information requested by a Governmental Entity, including participating in meetings with officials
of such entity in the course of its review of this Agreement and the transactions contemplated by
this Agreement, (v) use reasonable best efforts to avoid any Action by any Governmental Entity or
other person, and (vi) use reasonable best efforts in litigating or participating in the
litigation of any Action whether judicial or
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administrative, brought by any Governmental Entity,
for the purpose of enabling the Parties to consummate the transactions contemplated by this Agreement on the terms and conditions set
forth herein. No Party shall initiate any meeting or discussion with, or make any submission to,
any Governmental Entity with respect to any filings, applications, investigation, litigation, or
other inquiry regarding the transactions contemplated by this Agreement without giving the other
Party (or Parties) reasonable prior notice of the meeting or discussion and, to the extent
permitted by the relevant Governmental Entity, the opportunity to attend and participate;
provided, however, that no Party shall engage in any substantive communication
with any Governmental Entity without the consent of the other Parties. For purposes of this
Agreement, Antitrust Laws means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other federal, state
and foreign, if any, statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other Laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
(b) In connection with and without limiting the generality of the foregoing, each of the
Seller, the Company and their respective boards of directors shall, if any federal, state or
foreign takeover statute or similar statute or regulation is or becomes applicable to this
Agreement and the transactions contemplated by this Agreement, use its reasonable best efforts to
ensure that the transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby or thereby and otherwise to minimize the effect of
such statute or regulation on this Agreement and the transactions contemplated by this Agreement.
Notwithstanding anything herein to the contrary other than the last sentence of this Section
6.6(b), the Buyer and the Buyer Parent shall take any and all action necessary to obtain the
required antitrust approvals or clearances from the Governmental Entities listed on Schedule
6.6, including but not limited to (i) selling or otherwise disposing of, or holding separate
and agreeing to sell or otherwise dispose of, assets, categories of assets or businesses of the
Company, the Buyer or the Buyer Parent or their respective subsidiaries; (ii) terminating existing
relationships, contractual rights or obligations of the Company, the Buyer or the Buyer Parent or
their respective subsidiaries; (iii) terminating any venture or other arrangement; (iv) creating
any relationship, contractual rights or obligations of the Company, the Buyer or the Buyer Parent
or their respective subsidiaries or (v) effectuating any other change or restructuring of the
Company, the Buyer or the Buyer Parent or their respective subsidiaries (and, in each case, to
enter into agreements or stipulate to the entry of an order or decree or file appropriate
applications with any Governmental Entity in connection with any of the foregoing and
provided, however, that the Buyer and the Buyer Parent shall not be required
pursuant to this Section 6.6(b) to commit to or effect any action that is not conditioned
upon the consummation of the Agreement or transactions contemplated by this Agreement) (each a
Divestiture Action) to ensure that no Governmental Entity enters any order, decision,
judgment, decree, ruling, injunction (preliminary or permanent), or establishes any law, rule,
regulation or other action preliminarily or permanently restraining, enjoining or prohibiting the
consummation of the transactions contemplated by this Agreement (each an Antitrust
Prohibition), or to ensure that no Governmental Entity with the authority to clear, authorize
or otherwise approve the consummation of the transactions contemplated by this Agreement, fails to
do so by the Closing Date. In the event that any action is threatened or instituted challenging
the transactions contemplated in this Agreement as violative of any premerger notification rule or
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other Antitrust Law, the Buyer and the Buyer Parent shall take all action necessary, including but not limited to any Divestiture Action, to avoid or resolve such action. In the event
that any permanent or preliminary injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement unlawful or that would
restrain, enjoin or otherwise prevent or materially delay the consummation of the transactions
contemplated by this Agreement, the Buyer and the Buyer Parent shall take promptly any and all
steps necessary to vacate, modify or suspend such injunction or order so as to permit such
consummation prior to the Closing Date. The Company shall cooperate with the Buyer and the Buyer
Parent and shall use its reasonable best efforts to assist Buyer and the Buyer Parent in resisting
and reducing any Divestiture Action, provided, however, that neither the Buyer
Parent nor the Seller or the Company shall initiate any offer or enter into discussions with any
Governmental Entity with respect to any Divestiture Action or any other action in connection with
any matter within the scope of this Section 6.6(b) outside the presence of the other Party
(or Parties) unless required to do so by the applicable Governmental Entity. Notwithstanding the
foregoing or any other provision of this Agreement, including the second sentence of this
Section 6.6(b), neither the Buyer, the Buyer Parent, nor the Company shall be required to
undertake (i) any Divestiture Action that, individually or in the aggregate, would reasonably be
expected to materially impair the business operations of the combined company absent such imposed
conditions; or (ii) any Divestiture Action sought by a Governmental Entity of the United States or
the European Union or any other Governmental Entity in any other jurisdiction other than the
jurisdictions specified in Schedule 6.6.
(c) Each applicable Party and any of their respective Affiliates shall not take any action
with the intention to or that could reasonably be expected to hinder or delay the obtaining of
clearance or any necessary approval of any Governmental Entity under any premerger notification
rule or Antitrust Law or the expiration of the required waiting period under any premerger
notification rule or any other Antitrust Law; provided, however, that the Buyer
and the Buyer Parent may take any reasonable action to resist or reduce the scope of a Divestiture
Action, even if it delays such expiration to a date not beyond the Closing Date.
(d) If any Divestiture Action agreed to by the Buyer or the Buyer Parent requires action by
or with respect to the Company or the Subsidiaries or its or their businesses or assets, and such
action would constitute a breach of this Agreement, the Buyer and the Buyer Parent hereby agree to
consent to the taking of such action by the Company or the Subsidiaries and any such action may,
at the discretion of the Company, be conditioned upon the consummation of the transactions
contemplated by this Agreement.
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Section 6.7 No Solicitation of Competing Proposals; Notice of Inquiry.
(a) The Company and the Seller agree that they shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties conducted heretofore with
respect to any proposed Acquisition Proposal and shall direct any of their respective Affiliates,
stockholders, officers, directors or employees of, or any investment bankers, attorneys or other
advisors or representatives to cease and terminate such activities, discussions or negotiations.
Each of the Company and the Seller further agrees that it shall not, nor shall it authorize or
permit any of its respective Affiliates, stockholders, officers, directors or employees, or any
investment banker, attorney or other of its advisors or representatives to
solicit or initiate, or knowingly encourage the submission of, any Acquisition Proposal, or
participate in any negotiations regarding, or furnish to any Person any non-public information
with respect to, or take any other action to knowingly facilitate any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal.
For purposes of this Agreement, Acquisition Proposal means any proposal (whether or not
in writing and whether or not delivered to the Companys stockholders) for a merger,
consolidation, purchase of assets other than in the ordinary course of business, tender offer or
other business combination involving the Company or any of the Subsidiaries, or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in, any voting
securities of, or a portion of the assets (other than in the ordinary course of business) of the
Company or any of the Subsidiaries taken as a whole, other than in furtherance of the transactions
contemplated by this Agreement.
(b) The Company and the Seller shall promptly (but in any event within two (2) Business Days
of such contact) advise the Buyer orally and in writing of its receipt of any Acquisition
Proposal, as well as the material terms and conditions of such Acquisition Proposal and indicate
in reasonable detail the identity of the person making any Acquisition Proposal.
(c) The Company and the Seller shall not, and the Company shall cause each of the
Subsidiaries not to, without the prior written consent of the Buyer, directly or indirectly,
release any Person from, or waive any provision of, any confidentiality or standstill agreement to
which the Company or any of the Subsidiaries or the Seller is a party.
(d) Concurrent with the execution of this Agreement, the Company and the Seller shall cease
all activities related to the Companys proposed initial public offering.
Section 6.8 Press Releases and Announcements; Contacts with Customers and Suppliers. No
press release related to this Agreement or the transactions contemplated by this Agreement, or
other announcement to the customers or suppliers of the Company and each of the Subsidiaries, will
be issued without the joint approval of the Buyer and the Seller, except as otherwise required by
applicable Law, including the rules of the New York Stock Exchange, the Tokyo Stock Exchange, the
SEC or the Japanese Financial Services Agency. The Parties shall consult with each other
concerning the means by which the Companys and each of the Subsidiaries customers and suppliers
will be informed of the transactions contemplated by this Agreement.
Section 6.9 Confidentiality.
(a) The Parties acknowledge that the Company and the Buyer Parent have previously executed a
Confidentiality Agreement, dated November 30, 2010, and a Confidentiality Agreement, dated
December 2, 2010, as amended on March 1, 2011 and that the Seller and Buyer Parent have previously
executed a Confidentiality Agreement, dated February 23, 2011, as amended on March 1, 2011
(together, the Confidentiality Agreements). The Parties agree that, (i) the
Confidentiality Agreements are in full force and effect through the Closing Date, and (ii)
following the Closing Date, the Confidentiality Agreements shall terminate and be of no further
force or effect in accordance with their terms.
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(b) Following the Closing Date until the third anniversary of the Closing Date, the Seller
shall treat and hold as confidential all information concerning the businesses, affairs,
properties, employees, finances, products, technologies and operations of the Buyer and the Buyer
Parent and any notes, analyses, compilations, studies, forecasts, interpretations or other
documents that are derived from, contain, reflect or are based upon any such information (the
Buyer Parent Confidential Information) and refrain from using any of the Buyer Parent
Confidential Information except as otherwise contemplated by this Agreement; provided,
however, that nothing in this Section 6.9(b) shall prohibit the disclosure of any
Buyer Parent Confidential Information (i) that is required to be disclosed in connection with any
Law or any proceeding before any Governmental Entity (provided, that the Seller exercises its
commercially reasonable efforts to preserve the confidentiality of the Buyer Parent Confidential
Information disclosed, including by cooperating with the Buyer and the Buyer Parent to obtain an
appropriate protective order or other reliable assurance that confidential treatment shall be
accorded the Buyer Parent Confidential Information required to be disclosed), (ii) in connection
with the enforcement of the Sellers rights hereunder or (iii) in connection with the defense by
the Seller of any claim asserted against the Seller hereunder. The Buyer Parent Confidential
Information with respect to the Buyer and the Buyer Parent (x) shall not include general industry
knowledge about the businesses, markets and industries in which the Buyer and/or the Buyer Parent
conducts businesses, and (y) shall not include any information that (A) is or becomes publicly
available without a breach of this Agreement, (B) was known to the Seller prior to the Sellers
receipt of such information from the Buyer or the Buyer Parent (or their agents) or (C) was
independently developed by the Seller without reference to or use of the Buyer Parent Confidential
Information.
(c) Following the Closing Date until the third anniversary of the Closing Date, the Seller
shall treat and hold as confidential all information concerning the businesses, affairs,
properties, employees, finances, products, technologies and operations of the Company and each of
the Subsidiaries and any notes, analyses, compilations, studies, forecasts, interpretations or
other documents that are derived from, contain, reflect or are based upon any such information
(the Company Confidential Information) and refrain from using any of the Company
Confidential Information except as otherwise contemplated by this Agreement; provided,
however, that nothing in this Section 6.9(c) shall prohibit the disclosure of any
Company Confidential Information (i) that is required to be disclosed in connection with any Law
or any proceeding before any Governmental Entity (provided, that the Seller exercises its
commercially reasonable efforts to preserve the confidentiality of the Company Confidential
Information disclosed, including by cooperating with the Buyer and the Buyer Parent to obtain an
appropriate protective order or other reliable assurance that confidential treatment shall be
accorded the Company Confidential Information required to be disclosed), (ii) in connection with
the enforcement of the Sellers rights hereunder, (iii) in connection with the defense by the
Seller of any claim asserted against the Seller hereunder or (iv) that is required to be disclosed
in connection with the corporate, financial and tax reporting obligations of the Seller. The
Company Confidential Information with respect to the Company and each of the Subsidiaries (x)
shall not include general industry knowledge about the businesses, markets and industries in which
the Company and/or any of the Subsidiaries conducts businesses, and (y) shall not include any
information that (A) is or becomes publicly available without a breach of this Agreement, (B) was
known to the Seller prior to the Sellers receipt of such information from the Company or any of
the Subsidiaries (or their agents), (C) was independently developed by
the Seller without reference to or use of the Company Confidential Information or (D) relates
to the Seller and its Affiliates (other than the Company and each of the Subsidiaries) or any of
their respective clients and customers.
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(d) Following the Closing Date until the third anniversary of the Closing Date, the Buyer and
the Buyer Parent shall treat and hold as confidential all information concerning the businesses,
affairs, properties, employees, finances, products, technologies and operations of the Seller and
any notes, analyses, compilations, studies, forecasts, interpretations or other documents that are
derived from, contain, reflect or are based upon any such information (the Seller
Confidential Information) and refrain from using any of the Seller Confidential Information
except as otherwise contemplated by this Agreement; provided, however, that
nothing in this Section 6.9(d) shall prohibit the disclosure of any Seller Confidential
Information (i) that is required to be disclosed in connection with any Law or any proceeding
before any Governmental Entity (provided, that the Buyer and the Buyer Parent exercise their
commercially reasonable efforts to preserve the confidentiality of the Seller Confidential
Information disclosed, including by cooperating with the Seller to obtain an appropriate
protective order or other reliable assurance that confidential treatment shall be accorded the
Seller Confidential Information required to be disclosed), (ii) in connection with the enforcement
of the Buyers or the Buyer Parents rights hereunder or (iii) in connection with the defense by
the Buyer or the Buyer Parent of any claim asserted against the Buyer or the Buyer Parent
hereunder. The Seller Confidential Information with respect to the Seller (x) shall not include
general industry knowledge about the businesses, markets and industries in which the Seller
conducts its businesses, and (y) shall not include any information that (A) is or becomes publicly
available without a breach of this Agreement, (B) was known to the Buyer or the Buyer Parent prior
to the Buyers or the Buyer Parents receipt of such information from the Seller (or its agents)
or (C) was independently developed by the Buyer or the Buyer Parent without reference to or use of
the Seller Confidential Information.
Section 6.10 Expenses. Except as otherwise expressly provided herein, each Party to this
Agreement shall pay its own legal, financial advisory and other fees and expenses (including fees
and expenses related to antitrust filings) in connection with the negotiation of this Agreement,
the performance of its obligations hereunder, and the consummation of the transactions contemplated
by this Agreement.
Section 6.11 Consents. The Seller and the Company shall, upon Buyers reasonable request,
use, and the Company shall cause each of the Subsidiaries to use, commercially reasonable efforts
to obtain the consents set forth on Section 4.4(b) of the Company Disclosure Schedules. If
any such consent is not obtained, the Parties shall reasonably cooperate to establish arrangements
reasonably satisfactory to the Parties under which the Buyer would obtain rights of, benefits to
and liabilities under such Contracts. Any third party consent payments with respect to the
Contracts listed on Section 4.4(b) of the Company Disclosure Schedules shall be paid by the
Buyer.
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Section 6.12 Employees.
(a) Employees Generally.
(i) The Parties acknowledge and intend that, except as otherwise provided in
this Section 6.12, after the Closing the Continuing Employees (other than the
Japan Employees) and Specified Persons will be treated in a manner substantially
equivalent to all other similarly situated employees of the Buyer and its Affiliates.
(ii) From the date hereof until the Closing, the Company shall provide to the
Buyer all reasonably requested information relating to the roles of then-current
employees of the Company and the Subsidiaries and, subject to applicable Law, all
relevant data with respect to each such employee. Subject to applicable Law, the
Company shall, upon the reasonable request of the Buyer, take all reasonable measures
to provide the Buyer with access to such employees for assessment, interview and
screening by the Buyer. From and after the Closing, the Seller and the Buyer shall
furnish such information including payroll information, employee data or other
information or records, and do all things and take all actions necessary, proper and
advisable as may be reasonably required to carry out the arrangements described in
this Section 6.12 to the extent permitted by applicable Law and Section
6.9 (Confidentiality).
(iii) From the date hereof until the Closing, no later than the end of each full
calendar quarter the Buyer shall prepare and deliver to the Seller and the Company a
proposed list of the Specified Persons; provided that the Buyer shall deliver
to the Seller and the Company an update to such list which shall be final (the
Final Specified Persons List) no later than ten (10) Business Days prior to
the Closing.
(iv) Except as required by this Section 6.12, neither the Company nor
the Seller shall be under any obligation to terminate the employment of any Specified
Person; provided, however, that the Company or any applicable
Subsidiary may terminate the employment of any Specified Person prior to Closing, in
which case the Company shall pay Severance to each such terminated Specified Person;
provided, further, however, the Seller may, or may cause an
Affiliate other than the Company and the Subsidiaries (each, a Seller Group
Entity) to, offer employment to any Specified Person and the Buyer and its
Affiliates shall not interfere in any way with any attempts by the Seller or any
Seller Group Entity from soliciting, hiring and retaining such Specified Person;
provided, further, however, that the Company and any of the
Subsidiaries, if applicable, shall use commercially reasonable efforts (upon
provision of assurance of the Buyer Parent that they will be held harmless for any
liability arising as a result of giving such notice) to avoid requiring the payment
of base salary and benefits in lieu of any notice required by the WARN Act and/or any
other applicable similar state, local or foreign Law. Severance means
severance, long-service, terminal payment, notice pay or payment in lieu of notice,
or similar
payment determined in accordance with the requirements of applicable Law and the
Companys policy or customary practice as of the date of this Agreement (subject to
applicable Law) and any amounts payable to a Specified Person in connection with the
termination of their employment on account of, or in connection with any failure to
comply with, the WARN Act (or any similar state, local or foreign law) or any other
liabilities which would be borne by the Company arising from the termination of any
Specified Person prior to the Closing excluding final wages, any accrued but unused
vacation or paid time off as may be applicable.
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(v) Subject to applicable Law, from and after the Closing until the date that is
six (6) months following the Closing Date, the Buyer, the Buyer Parent or any of
their respective Affiliates (including the Company and the Subsidiaries) may
terminate any Specified Person; provided that the Buyer, the Buyer Parent or any of
their respective Affiliates shall provide severance benefits to such Specified Person
taking into account such Specified Persons past service and employment with the
Company and the Subsidiaries, which benefits may be pursuant to existing severance
policies, practices, procedures or arrangements of the Buyer, the Buyer Parent or any
of their respective Affiliates, provided further that the severance benefits payable
by the Buyer, the Buyer Parent or any of their respective Affiliates shall be at
least substantially equivalent to the severance benefits such Specified Person would
have been entitled had such Specified Persons employment been terminated by the
Company or any Subsidiary prior to the Closing.
(vi) Subject to applicable Law, from and after the Closing until the date that
is six (6) months following the Closing Date, the Buyer, the Buyer Parent or any of
their respective Affiliates (including the Company and the Subsidiaries) may
terminate any Continuing Employee; provided that the Buyer, the Buyer Parent or any
of their respective Affiliates shall provide severance benefits to such Continuing
Employee taking into account such Continuing Employees past service and employment
with the Company and the Subsidiaries, which benefits may be pursuant to existing
severance policies, practices, procedures or arrangements of the Buyer, the Buyer
Parent or any of their respective Affiliates, provided further that
the severance benefits payable by the Buyer, the Buyer Parent or any of their
respective Affiliates shall be at least substantially equivalent to the severance
benefits such Continuing Employee would have been entitled had such Continuing
Employees employment been terminated by the Company or any Subsidiary prior to the
Closing. Notwithstanding anything to the contrary, nothing in this Section
6.12 is intended to amend, modify or supercede any individual incentive, bonus,
individual benefit, employment, employment termination, severance and other such
individual compensation agreements or arrangements, in each case existing immediately
prior to the execution of this Agreement by all the Parties, that are between the
Company or any of the Subsidiaries and any current or former officer, director or
employee thereof or for the benefit of any such current or former officer, director
or employee.
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(vii) Neither the Buyer nor any of its Affiliates shall have any obligation to
continue the employment of the Continuing Employees after the Closing.
(b) Japan Employees.
(i) For a period of 18 months following the Closing, the Buyer shall cause HGST
Japan to (A) continue to employ each Japan Employee on terms and conditions no less
favorable than such Japan Employees terms and conditions in effect as of immediately
prior to the Closing, and (B) not offer any Japan Employee a voluntary resignation
plan, early retirement program or similar option; provided, however,
that, with respect to any Japan Employee, following the Closing the Buyer may discuss
with any labor union or other organization representing such Japan Employee, or take
any action reasonably necessary to prepare for the implementation of, a voluntary
resignation plan, early retirement program or similar option to be effective from and
after the expiration of such 18-month period; provided further that,
with respect to any Japan Employee who is an employee with a fixed term contract, the
Buyers obligations under this Section 6.12(b)(i) shall continue until the
expiration of employment contract between such Japan Employee and HGST Japan in
accordance with such contracts terms and conditions.
(ii) To the extent any Benefit Arrangements established or sponsored and
administered by the Buyer or its Affiliates (Buyer Benefit Plans) are made
available to the Japan Employees after the end of the 180-day period following the
Closing (the Benefits Straddle Period), (A) all prior service with the
Company and the Subsidiaries before the end of the Benefits Straddle Period shall be
credited for eligibility and vesting (but not benefit accrual) purposes to the same
extent such service is recognized by the Company or any of the Subsidiaries as of the
end of the Benefits Straddle Period, and (B) with respect to any Buyer Benefit Plan
so made available, the Buyer shall use commercially reasonable efforts, to cause such
Buyer Benefit Plan to provide credit for any co-payments or deductibles by such Japan
Employees and waive all pre-existing condition exclusions and waiting periods, other
than exclusions or waiting periods that have not been satisfied under the applicable
Japan Benefit Plan (as defined below) as of the Closing Date or those under insured
plans that shall not be credited or waived by the respective insurer.
(iii) During the 18 month period following the Closing and without providing any
assurances as to result, the Seller will reasonably cooperate with the Buyer or the
Buyer Parent in its assessment of potential employment alternatives, including the
transfer of employment to the Seller or any Seller Group Entity after the expiration
of such 18 month period, for certain Japan Employees identified by the Buyer from
time to time as individuals for whom the Buyer may want to find alternative
employment. If (A) an alternative position at the Seller or any Seller Group Entity
is identified by the Seller and (B) the relevant Japan Employee accepts an offer of
employment for such position, the Buyer shall pay
the Seller the reasonable costs of transferring and repurposing such Japan
Employee. Except as provided in Section 6.12(f), neither the Seller nor any
Seller Group Entity shall have any obligation whatsoever to offer employment to,
employ, retain, accept the secondment of or otherwise replace any Japan Employee
during or after the 18-month period following the Closing.
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(c) Seller Benefit Plans.
(i) Japan Benefit Plans. As soon as practicable after the Closing and
in no event later than end of the Benefits Straddle Period, the Buyer shall cause
HGST Japan to use reasonable best efforts to newly establish, sponsor and administer
(either directly or indirectly) Benefit Arrangements having terms and conditions not
less favorable with respect to the Japan Employees, including (A) the Hitachi Ltd.
Corporate Pension Fund, and (B) the Hitachi Ltd. DC Plan, (such Benefit Arrangements,
collectively, the Japan Benefit Plans). Such newly established, sponsored
and administered plans are referred to herein as the New HGST Benefit
Plans. If the New HGST Benefit Plans cannot be established, sponsored and
administered by HGST Japan prior to the end of the Benefits Straddle Period through
no fault of the Buyer or its Affiliates, then the Parties shall discuss and negotiate
a mutually acceptable extension to the Benefits Straddle Period, which extension
shall be no longer than the additional period that is reasonably determined by the
Parties to be necessary to establish, sponsor and administer the New HGST Benefit
Plans; provided further that if the Parties cannot mutually agree on any such
extension the Benefits Straddle Period shall automatically be extended for a single
six (6)-month period (that shall not be subject to any automatic renewal). The
individuals entitled to participate under the New HGST Benefit Plans shall include
all Japan Employees participating in the Japan Benefit Plans (such employees,
collectively, the Japan Benefit Plan Participants). Each Japan Benefit
Plan Participant shall be eligible to participate in each New HGST Benefit Plan at
the same benefit level and under the same terms and conditions as such Japan Benefit
Plan Participant would have been entitled to participate under the corresponding
Japan Benefit Plan immediately prior to the Closing.
(ii) HGST Japan Benefit Plans. From and after the Closing, HGST Japan
and its Related Subsidiaries (as determined from and after the Closing) shall
continue to sponsor and administer their respective Benefit Arrangements. The
establishment of the New HGST Benefit Plans contemplated by this Section
6.12(c) may include a merger, amalgamation or other combination of the New HGST
Benefit Plans into, with or between the Benefit Arrangements of HGST Japan and its
Related Subsidiaries consisting of the Hitachi GST Corporate Pension Plan and the
Hitachi GST DC Plan.
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(iii) Establishment of the New HGST Benefit Plans. In connection with
and prior to the establishment of the New HGST Benefit Plans, the Buyer shall use
reasonable best efforts to, and the Buyer shall cause HGST Japan to use reasonable
best efforts to, (A) obtain all consents, Approvals and
authorizations from the Japan Benefit Plan Participants, the labor union (roudou
kumiai) or other organization representing the Japan Benefit Plan Participants (as
applicable), and any applicable Governmental Entity, including the Ministry of
Health, Labor and Welfare of Japan (the MHLW), necessary to establish, and
to cause the assignment and assumption of all assets, rights, benefit liabilities and
obligations under the Japan Benefit Plans to the extent related to the Japan Benefit
Plan Participants (the Japan Benefit Plan Assets and Liabilities) to, the
New HGST Benefit Plans as required by Law, Contract or this Section 6.12, and
(B) do all things and take all actions necessary, proper and advisable to establish,
sponsor and administer the New HGST Benefit Plans. The Seller shall provide
reasonable assistance to the Buyer, HGST Japan and its Related Subsidiaries in
establishing, and causing the transfer of the Japan Benefit Plan Participants and the
Japan Benefit Plan Assets and Liabilities to, the New HGST Benefit Plans within the
Benefits Straddle Period. From time to time and upon the Sellers reasonable
request, the Buyer shall provide the Seller a written update, together with
reasonable supporting details, regarding the status and anticipated date of the
establishment of the New HGST Benefit Plans.
(iv) Benefit Plans Transition Period. Until such time as the New HGST
Benefit Plans are established and the Japan Benefit Plan Assets and Liabilities are
transferred (whether assigned, assumed or otherwise) to the New HGST Benefit Plans,
the Seller shall continue to sponsor and administer the Japan Benefit Plans
consistent with past practices on behalf of the Japan Employees; provided
that, for the avoidance of doubt, immediately after the Closing, the Seller shall not
be liable for making any contributions from its own assets to the Japan Benefit Plans
on behalf of the Japan Benefit Plan Participants. For so long as the Seller
continues to sponsor and administer the Japan Benefit Plans after the Closing, prior
to the end of, and with respect to, each calendar month (beginning with the month in
which the Closing occurs), the Buyer shall cause HGST Japan to (A) pay to the Japan
Benefit Plans an amount equal to the aggregate benefits accrued with respect to the
Japan Benefit Plan Participants for such month (which amount shall be calculated
reasonably and consistent with past practices and which shall not include payment for
any portion of the Assumed PBO), and (B) pay the Seller for all reasonable costs and
expenses incurred by the Seller with respect to the Japan Benefit Plan Participants
in connection with such sponsorship and administration, in each case with respect to
such full calendar month (and the remainder of the month in which the Closing
occurs).
(v) Transition to New HGST Benefit Plans. Promptly after establishment
of the New HGST Benefit Plans, the Seller shall transfer, or shall cause the transfer
of, as applicable, the Japan Benefit Plans Assets and Liabilities to the New HGST
Benefit Plans (the date of such transfer, the Transfer Date);
provided, however, that the Japan Benefits Plans Assets and
Liabilities so transferred shall not include any assets and liabilities of any Japan
Benefit Participant who becomes a retiree between the Closing and the Transfer Date.
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(d) Seller Benefit Plans Adjustment.
(i) For purposes of this Section 6.12(d):
(A) Projected Benefit Obligation means the projected benefit
obligation within the meaning of the Statement of Financial Accounting Standards
No. 87.
(B) Assumed PBO means the Projected Benefit Obligation with respect
to the Assumed Benefit Plans as determined according to the actuarial methods and
assumptions used in determining the Projected Benefit Obligation set forth in the
Financial Statements as of the Balance Sheet Date.
(C) Assumed Benefit Plans means the Hitachi Ltd. Corporate Pension
Fund to the extent related to the Japan Benefit Plan Participants, HGST Retirement
Allowance Plan, Hitachi GST Corporate Pension Plan, Severance Indemnity and
Retirement Indemnity of the Philippines, Retirement Indemnity and Cash Balance of
Taiwan, and Severance Pay Plan of Thailand.
(ii) No later than five (5) Business Days prior to the Closing Date, the Seller
shall, and may cause an internationally recognized actuary selected by the Seller
(Seller Actuary) to, estimate the Assumed PBO, in the aggregate and on an
individual Benefit Plan basis, at the Closing Date for participants (whether active
or terminated) in the Assumed Benefit Plans (the Estimated Assumed PBO
Amount). The Cash Portion of the Purchase Price shall be reduced by an amount
(the Estimated Unfunded Assumed PBO Amount), which shall be equal to the
difference between (A) the Estimated Assumed PBO Amount, and (B) the aggregate assets
of the Assumed Benefit Plans, with each such plans assets determined as of the last
business day of the first month prior to the month in which the Closing Date occurs
(or if the Closing Date occurs in the first five (5) business days of a month, as of
the last business day of the second month prior to the month in which the Closing
Date occurs).
(iii) Within 90 days after the Closing Date, the Seller Actuary, who shall be
retained by the Seller if not previously retained under Section 6.12(d)(ii),
will provide the Buyer with an updated calculation of the Assumed PBO, in the
aggregate and on an individual Benefit Plan basis, at the Closing Date for
participants (whether active or terminated) in the Assumed Benefit Plans (the
Updated Assumed PBO Amount). The Buyer may submit the Seller Actuarys
determination of the Updated Assumed PBO Amount to an internationally recognized
actuary selected by the Buyer Parent (Buyer Actuary) for verification,
which shall relate only to the calculation of the Updated Assumed PBO Amount. The
Buyer shall pay the cost of the Buyer Actuary. The Seller Actuary and the Buyer
Actuary shall make a good faith attempt to reconcile any difference in their
calculations. If the Buyer Actuarys calculation is within five
percent (5%) of the Seller Actuarys calculation of the Updated Assumed PBO
Amount, the average of the Seller Actuarys calculation and the Buyer Actuarys
calculation shall be used. If the difference cannot be reconciled and exceeds five
percent (5%), the Seller Actuary and the Buyer Actuary shall jointly designate a
third independent actuary whose verification shall be final and binding, but not
greater than the calculation of the Buyer Actuary or less than the calculation of the
Seller Actuary. The Buyer and the Seller shall each pay one-half the costs of such
third actuary.
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(iv) If the amount of the Updated Assumed PBO Amount is greater than the
Estimated Assumed PBO Amount, then within sixty (60) days after completion of the
final verification of the Updated Assumed PBO Amount, the Seller shall pay the Buyer
Parent an amount in cash equal to such difference (subject to the adjustment with
respect to plan assets provided below). If the amount of the Updated Assumed PBO
Amount is less than the Estimated Assumed PBO Amount, then within sixty (60) days
after completion of the final verification of the Updated Assumed PBO Amount, the
Buyer shall pay the Seller an amount in cash equal to such difference (subject to the
adjustment with respect to plan assets provided below). The adjustment with respect
to plan assets shall be determined as follows. The actual assets of the Assumed
Benefit Plans as of the Closing Date shall be compared to the assets of such plans
used to determine the Estimated Unfunded Assumed PBO Amount. If the actual assets of
such plans as of the Closing Date are greater than the assets of such plans used to
determine the Estimated Unfunded Assumed PBO Amount, then, as applicable, the payment
to the Buyer Parent from the Seller under this Section 6.12(d)(iv) shall be
reduced by the difference in such asset amounts, or the payment to the Seller from
the Buyer shall be increased by the difference in such asset amounts. If the actual
assets of such plans as of the Closing Date are less than the assets of such plans
used to determine the Estimated Unfunded Assumed PBO Amount, then, as applicable, the
payment to the Buyer Parent from the Seller under this Section 6.12(d)(iv)
shall be increased by the difference in such asset amounts, or the payment to the
Seller from the Buyer shall be reduced by the difference in such asset amounts.
(v) Upon completion of the transfer of the Japan Benefit Plans Assets and
Liabilities to the New HGST Benefit Plans pursuant to Section 6.12(c)(v), the
Seller and the Buyer shall give effect to Sections 6.12(d)(i) through
(iv) mutatis mutandis, whereby any reference to (A) Assumed Benefit Plans
shall consist of the Hitachi Ltd. Corporate Pension Fund only, (B) the Closing Date
shall be deemed to mean the Transfer Date, and (C) the assets of the Hitachi Ltd.
Corporate Pension Fund shall be deemed to mean the actual assets (but not the
liabilities) of such plan included in the Japan Benefit Plan Assets and Liabilities;
provided, however¸ that (x) any amount that would have been a
reduction to the Cash Portion of the Purchase Price under Section 6.12(d)(ii)
shall be paid in cash from the Seller to the Buyer and (y) any Japan Benefit Plan
Participant who becomes a retiree between the Closing and the Transfer Date shall not
be deemed as a Japan Benefit Plan Participant and any amount that was deducted from
the Cash Portion of the Purchase Price under Section 6.12(d)(ii) with respect
to such
retiree Japan Benefit Plan Participant shall be deemed an over funding of the
New HGST Benefit Plans.
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(vi) The Parties shall make all calculations made pursuant to this Section
6.12(d) without double counting, whether by inclusion or exclusion of any amounts
as applicable.
(e) Seller Seconded Employees.
(i) As of the Closing, subject to normal attrition prior to the Closing, up to
113 employees of the Seller providing research and development (R&D)
services to HGST Japan as of the date hereof and as identified on Schedule
6.12(e)(i) (the R&D Secondees) shall be seconded to HGST Japan until
the two (2)-year anniversary of the Closing (the R&D Secondment Period).
Subject to the applicable R&D Secondees consent, the R&D Secondment Period for each
R&D Secondee shall renew automatically for successive two-year periods.
(ii) As of the Closing, subject to normal attrition prior to the Closing, up to
26 employees of the Seller providing non-R&D and other R&D related services to HGST
Japan as of the date hereof and as identified on Schedule 6.12(e)(ii) (the
Non-R&D/R&D Related Secondees) shall be seconded to HGST Japan until the
two (2)-year anniversary of the Closing (the Non-R&D/R&D Related Secondment
Period). Subject to the applicable Non-R&D/R&D Related Secondees consent, the
Non-R&D/R&D Related Secondment Period for each Non-R&D/R&D Related Secondee shall
renew automatically for successive two-year periods, provided that either the
Seller or HGST Japan may elect not to renew the Non-R&D/R&D Related Secondment Period
by giving written notice of such election not to renew no later than three (3) months
prior to the end of the then-current Non-R&D/R&D Related Secondment Period.
(iii) The secondments contemplated with respect to the foregoing (i) and (ii)
shall be implemented in accordance with a secondment agreement substantially in the
form attached hereto as Exhibit G (the Secondment Agreement). The
Parties acknowledge that the R&D Secondees and the Non-R&D/R&D Related Secondees are
currently seconded from the Seller to HGST Japan and that the applicable Secondment
Agreement shall provide, among other things, that HGST Japan shall pay to the Seller
fees for the performance of services by the R&D Secondees and the Non-R&D/R&D Related
Secondees, as applicable, on the same terms and conditions of such secondments as are
in effect as of the date hereof. During the R&D Secondment Period or the
Non-R&D/Other R&D Secondment Period, the Seller and the Buyer may discuss and
negotiate the permanent transfer of employment, modification, extension or
termination of any secondment term (individually or in the aggregate), or change to
terms and conditions of secondment, of any R&D Secondees and the Non-R&D/R&D Related
Secondees (subject to obtaining such applicable secondees consent) to HGST Japan or
any of its Related Subsidiaries during any R&D Secondment Period or the Non-R&D/Other
R&D Secondment Period.
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(f) HGST Japan Seconded Employees. As of the Closing, subject to normal attrition
prior to the Closing, 82 employees of HGST Japan seconded to the Seller as of the date hereof and
as identified on Schedule 6.12(f) (the HGST Japan Secondees) shall be seconded
to the Seller until the two (2)-year anniversary of the Closing (the HGST Japan Secondment
Period). Subject to the applicable HGST Japan Secondees consent, the HGST Japan Secondment
Period for each HGST Japan Secondee shall renew automatically for successive two-year periods.
The secondments contemplated with respect to this Section 6.12(f) shall be implemented in
accordance with the Secondment Agreement. The Parties acknowledge that the HGST Japan Secondees
are currently seconded from HGST Japan to the Seller and that the applicable Secondment Agreement
shall provide, among other things, that the Seller shall pay to HGST Japan fees for the
performance of services by the HGST Japan Secondees on the same terms and conditions of such
secondments as are in effect as of the date hereof. During the HGST Japan Secondment Period, the
Seller and the Buyer may discuss and negotiate the permanent transfer of employment of any HGST
Japan Secondees to the Seller or any of its Related Subsidiaries during any HGST Japan Secondment
Period.
(g) Seller Employees.
(i) The Seller shall reasonably cooperate with the Buyer and its Affiliates in
permitting representatives of the Buyer and its Affiliates to interview, on a
voluntary basis, each Seller Employee identified by the Seller as a candidate for
secondment to, or employment with, the Buyer or its Affiliates in a written notice
provided to the Buyer no later than two (2) months prior to the Closing Date, so as
to make selection decisions and communicate to such Seller Employee any information
concerning secondment or employment offers and secondment or employment with the
Buyer or its Affiliates. By no later than fifteen (15) calendar days before Closing,
the Buyer shall cause to be delivered written offers of secondment or employment,
contingent upon the occurrence of Closing, to those Seller Employees the Buyer or its
Affiliate wishes to accept secondment or to employ at Buyers or its Affiliates sole
discretion (the Offer Letters), which, if accepted, shall provide that such
Seller Employee shall be seconded to or hired by the Buyer or its Affiliate
(including the Company or any of the Subsidiaries) as of immediately after the
Closing Date on terms and conditions no less favorable, in the aggregate, than such
Seller Employees terms and conditions in effect, in the aggregate, as of immediately
prior to the Closing. Each Seller Employee who accepts the Offer Letter by signing
it and returning it as provided therein shall be seconded to or employed by the Buyer
or its Affiliate on the terms set forth in the Offer Letter, commencing on his or her
first hour of service with such entity following the Closing Date (the
Employment Commencement Date) and is referred to herein as a Seller
Seconded/Transferred Employee. Effective on the Closing Date, the Seller shall
(A) enter into a secondment agreement with the Buyer or its applicable Affiliate with
respect to the Seller Seconded/Transferred Employees who are to be seconded to the
Buyer or its Affiliates, or (B) accept the resignation of the Seller
Seconded/Transferred Employees who are to be transferred to the Buyer and its
Affiliates, and the Buyer or its Affiliate shall accept the secondment of or hire
such Seller Seconded/Transferred Employee.
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(ii) Nothing in this Agreement shall require the Buyer or its Affiliates to make
an offer to, accept a secondment or hire any particular Seller Employee or continue
to employ any Seller Transferred Employee following the Closing Date. Nothing in
this Agreement shall restrict the Buyer or its Affiliates from terminating any Japan
Employee or the Seller Seconded/Transferred Employee for cause or due to a voluntary
resignation pursuant to applicable Law.
(iii) The Seller shall be responsible for workers compensation claims with
respect to any Seller Employee if the incident or alleged incident giving rise to the
claim occurred prior to the Employment Commencement Date. The Buyer or the Buyer
Parent shall be responsible for any workers compensation claims with respect to any
Seller Seconded/Transferred Employee if the incident or alleged incident giving rise
to the claim occurs on or after the Employment Commencement Date.
(iv) The Buyer or the Buyer Parent shall provide to the Seller
Seconded/Transferred Employees employee benefits under Buyer Benefit Plans. Subject
to applicable Law, the Buyer or the Buyer Parent can amend or terminate at any time
any or all of the Buyer Benefit Plans. To the extent any Buyer Benefit Plan (but
excluding pension benefit plans) is made available to the Seller Transferred
Employees, (a) service with the Seller before the Closing Date shall be credited for
eligibility and vesting (but not benefit accrual) purposes to the same extent such
service is recognized by the Seller immediately prior to the Closing, and (b) with
respect to any Buyer Benefit Plan so made available, the Buyer or its Affiliate shall
use commercially reasonable efforts, subject to approval of the relevant insurer, to
cause such Buyer Benefit Plan to provide credit for any co-payments or deductibles by
such employees and waive all pre-existing condition exclusions and waiting periods,
other than exclusions or waiting periods that have not been satisfied under the
Sellers welfare plans as of the Closing Date or those under insured plans that shall
not be credited or waived by the respective insurer.
(h) Company U.S. Benefit Plans.
(i) Prior to the Closing, the Seller shall, and shall cause the Company and any
of Sellers applicable Affiliates to, (i) use its best efforts to obtain all consents
(if any), Approvals (if any) and authorizations (if any) from any applicable
Governmental Entity necessary to permit the Seller or any of its Affiliates other
than the Company and the Subsidiaries to become the sponsor and administrator of the
Hitachi Global Storage Technologies, Inc. Pension Plan, the Hitachi Global Storage
Technologies, Inc. Supplemental Executive Retirement Plan and the Hitachi Global
Storage Technologies, Inc. Retiree Health Subsidy Plan, each of which was frozen on
February 28, 2011 and will continue to be frozen as of the Closing (such Benefit
Arrangements, collectively, the U.S. Benefit Plans), and (ii) do all things
and take all actions necessary, proper and advisable for the Seller or such Affiliate
to become the sponsor of the U.S. Benefit Plans no later than the Closing.
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(ii) Effective not later than the Closing, Buyer shall, or shall cause one of
its Affiliates to, maintain a benefit plan that is intended to satisfy the
requirements of Sections 401(a) and 401(k) of the Code (the Buyer 401(k)
Plan). As soon as practicable following the Closing, the Seller shall cause any
and all accounts of Continuing Employees under any benefit plan sponsored by Seller
or its Affiliates that is intended to satisfy the requirements of Sections 401(a) and
401(k) of the Code (the Seller 401(k) Plan) to be fully vested. Buyer
shall cause the Buyer 401(k) Plan to accept rollover contributions of amounts
distributed to Continuing Employees from the Seller 401(k) Plan. Such rollover
contributions shall be in cash, except that to the extent the rollover contribution
is made not later than the end of the calendar quarter following the calendar quarter
in which the Closing occurs, the Buyer 401(k) Plan will accept in-kind rollovers of
participant loan balances and provide for continued repayments of any such loans
through payroll deductions commencing not later than with the first payroll period
ending not more than fourteen (14) days following the date of such rollover. The
Buyer shall use commercially reasonable efforts to provide for remittance of
continued payroll deductions to service any participant loan balance maintained by a
Continuing Employee under the Seller 401(k) Plan through the end of the calendar
quarter following the calendar quarter in which the Closing occurs (or through the
date of distribution of such Continuing Employees account under the Seller 401(k)
Plan, if earlier).
(iii) Upon the Closing, the Seller shall cause each participant in any US
Benefit Plan to be fully vested in his or her benefit under such plan. Upon the
Closing, the Seller shall cause each participant in the U.S. Benefit Plans other than
the Hitachi Global Storage Technologies, Inc. Retiree Health Subsidy Plan who is an
active employee of the Company or the Subsidiaries immediately prior to the Closing
Date to be treated as having satisfied any service requirement for any early
retirement subsidy that such participant would have become entitled to had he or she
continued active participation in such plan or plans; provided,
however, that at its option, the Seller may instead cause such plans to
credit post-closing service with the Buyer Parent or its Affiliates for purposes of
determining the eligibility for any such early retirement subsidy.
(i) UK Employees; UK Benefit Plans.
(i) Subject to the approval of the trustees of the Hitachi UK Pension Scheme
(the UK Scheme), the Seller, Hitachi Europe Ltd. or other Affiliate of the
Seller (Hitachi Europe), and Hitachi Global Storage Technologies Europe,
Ltd. (HGST UK) shall use commercially reasonable efforts to effect by the
Closing a scheme apportionment arrangement in accordance with the Occupational
Pension Schemes (Employer Debt Regulations) 2005 or other applicable Law whereby (A)
HGST UK will cease being the participant in the UK Scheme with respect to HGST UKs
active members or employees in pensionable service (the Active Scheme
Members) and former employee members or employees in pensionable service
(together with the Active Scheme Members, the Scheme Beneficiaries) and (B)
the liability attributable to HGST UK pursuant to
Sections 75 and 75A of the Pensions Act 1995 (Section 75) will be
reallocated to Hitachi Europe or other participating employer(s) of the UK Scheme
with respect to the Scheme Beneficiaries, save for a scheme apportionment share
payable by HGST UK of £1.00 (ONE POUND STERLING) (the Apportionment).
Upon effectiveness of the Apportionment, HGST UK shall have no obligations with
respect to any payment under or in connection with the UK Scheme including any
obligation to make any debt payment under Sections 75 or any distributions to the
Scheme Beneficiaries.
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(ii) Notwithstanding whether the Apportionment has been effected prior to the
Closing, prior to the Closing the Seller shall cause HGST UK to close or freeze the
UK Scheme with respect to any new accrual of benefits and the acceptance of new
active employee members in the UK Scheme from HGST UK and all then-current Active
Scheme Members from HGST UK will become deferred vested participants in the UK
Scheme.
(iii) If the Seller and Hitachi Europe are unable to effect the Apportionment by
the Closing, for two (2) years following the Closing, the Buyer and the Company shall
cause HGST UK to (A) do all things and take all actions necessary, proper and
advisable to maintain HGST UKs status as a participant in the UK Scheme, including
continuing the employment of the minimum number of Active Members required under, and
thereby preventing any obligation to make any payment under or in connection with the
UK Scheme pursuant to Section 75, and (B) otherwise use commercially reasonable
efforts to effect the Apportionment together with the Seller and Hitachi Europe. If
the Apportionment has not been effected at the end of such two (2)-year period, the
Buyer and the Company shall cause HGST UK to cease to be a participant in the UK
Scheme. Any amount of debt that becomes payable by the Company or any of the
Subsidiaries to the trustee of the UK Scheme under Section 75 as a result of such
cessation shall be paid in cash by the Seller to the Buyer (or its designated
Affiliate) promptly following the date such debt has been certified and such
certificate has been provided to the Seller (the Section 75 Debt). Upon
payment of the Section 75 Debt, the Buyer shall cause the Company to promptly pay to
the UK Scheme the Section 75 Debt as set forth in the certification thereof.
(j) Rest of World. Except as otherwise provided in Section 6.12(c) (Seller
Benefit Plans), (h) (Company U.S. Benefit Plans), and (i) (UK Employees; UK
Benefit Plans), from and after the Closing, the Company and the Subsidiaries shall continue to
sponsor and administer their respective Benefit Arrangements, and the Seller and its Affiliates
shall not be liable for any adjustments, true-ups, contributions, payments or other obligations of
any kind whatsoever in respect of such Benefit Arrangements; provided, however,
that this Section 6.12(j) shall not be construed to relieve the Seller of its obligations
under Article IX.
(k) No Third Party Beneficiaries. No provision of this Agreement shall create any
third party beneficiary rights in any employee of the Company, any employee of any of the
Subsidiaries, or any Seller Employee, or any of their respective beneficiaries, dependents, or
collective bargaining representatives, with respect to the compensation, terms and conditions
of employment and benefits that may be provided to any employee of the Company, any employee
of any of the Subsidiaries, or any Seller Employee by the Buyer or its Affiliates or under any
Benefit Arrangement which the Buyer or its Affiliates may maintain, or otherwise. Except as
provided in this Section 6.12, no provision of this Agreement shall be construed to
prohibit the Buyer or its Affiliates from amending or terminating any Buyer Benefit Plans.
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Section 6.13 Separation of Network and Infrastructure. Prior to the Closing or, pursuant
to the Transition Services Agreement, thereafter, the Seller shall, to the extent not already done,
(a) separate the networks and IT infrastructure components of the Company and each of the
Subsidiaries from the Sellers and its other Affiliates networks and IT infrastructure, and (b)
ensure that the operation of all networks and IT infrastructure components of the Company and each
of the Subsidiaries is not dependent upon any networks or IT infrastructure of the Seller or its
other Affiliates, it being agreed that the Buyer Parent shall pay the fees and reimburse the
expenses of the Seller in connection with the Sellers performance of all such activities as
provided in the Transition Services Agreement, as if such agreement were already in effect for such
purposes.
Section 6.14 SEC Filings and Financing Cooperation. The Seller shall cause the Company and
each of the Subsidiaries and their respective accounting and legal advisors to provide all
cooperation reasonably requested by the Buyer Parent or the Buyer in connection with the Buyer
Parent or the Buyer SEC filings related to the proposed purchase, and the purchase, of the Company
and the arrangement of debt financing for the transactions contemplated by this Agreement (provided
that such requested cooperation does not unreasonably interfere with the ongoing operations of the
Company and the Subsidiaries and all reasonable out of pocket expenses incurred by the Company and
its Subsidiaries in connection with such filings and financing shall be paid by the Buyer Parent),
including, to the extent applicable (a) participating in a reasonable number of meetings,
presentations, road shows, due diligence sessions and sessions with rating agencies, (b) reasonably
assisting in the preparation of one or more appropriate and customary offering documents and other
appropriate and customary marketing materials to be used in connection with such debt financing
(including any bank book prepared in connection with any bank financing), (c) preparing and
delivering financial statements and other financial data of the Company as are required by or
otherwise customarily included in such offering documents (including any bank book prepared in
connection with any bank financing), (d) permitting reasonable access to the Companys independent
auditors and their work papers (to the extent permitted by the independent auditors), (e)
requesting timely delivery of (i) any independent auditor consents required in connection with any
filing with the SEC and (ii) appropriate and customary comfort letters and bring down comfort
letters and providing customary representations to the Companys independent auditors in connection
therewith, (f) facilitating any pledging of collateral, (g) providing authorization letters to one
or more financing sources authorizing the distribution of information to prospective lenders
provided that they are bound by the confidentiality agreement between the parties, and (h)
furnishing as promptly as reasonably practicable such financial and other pertinent information
regarding the Company as may be reasonably requested. Notwithstanding anything in this Agreement
to the contrary, neither the Seller, the Company nor any of their subsidiaries shall be required to
pay any commitment or other fee or incur any other liability or obligation in connection with the
Buyer and the Buyer Parents arrangement of debt financing
(except for the Company and the Subsidiaries from and after the consummation of the Closing and
except for any fees reimbursed by the Buyer Parent).
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Section 6.15 Environmental Approvals. With respect to material environmental permits and
approvals, the Company shall, and shall cause each of the Subsidiaries to, cooperate with the Buyer
Parent and the Buyer prior to and after Closing in the transfer, assignment, issuance or reissuance
of such environmental approvals from the Company and the Subsidiaries to the Buyer Parent and the
Buyer.
Section 6.16 Negotiation of External Storage Brand Agreement. Promptly following the
execution of this Agreement, the Seller and the Buyer shall negotiate in good faith, but without
obligation as to result, concerning the right to continued use of the Seller brand with respect to
the Companys external storage products for a mutually agreed period of time after Closing.
Section 6.17 Termination of Accounts Receivable Guarantee. The Parties acknowledge
that nothing in this Agreement shall restrict the Seller from terminating its guarantee or any
credit support in connection with the Companys trade account receivable program.
ARTICLE VII
CONDITIONS PRECEDENT TO THE BUYERS OBLIGATIONS
The obligations of the Buyer under this Agreement shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions:
Section 7.1 No Adverse Governmental Action, Proceeding or Injunction. No Governmental
Entity having jurisdiction over the Company, the Seller, the Buyer or the Buyer Parent shall have
issued an order, decree or ruling or taken any other material action enjoining or otherwise
prohibiting consummation of the acquisition of the Stock on the terms contemplated by this
Agreement; provided that any order, decree or ruling with respect to Antitrust Laws other
than those set forth on Schedule 7.2 shall be disregarded for purposes of this Section
7.1.
Section 7.2 Antitrust Approvals. The approvals required to consummate the transactions
contemplated by this Agreement pursuant to the Antitrust Laws of the jurisdictions listed in
Schedule 7.2 shall have been obtained or any applicable waiting periods thereunder (and any
extensions thereof) shall have expired or been terminated.
Section 7.3 Representations and Warranties of the Company. Except for those
representations and warranties of the Company that address matters only as of a particular date
prior to the date of this Agreement (which representations and warranties shall have been true and
correct in all respects as of such particular date, except where the failure of such
representations and warranties to be true and accurate (individually or in the aggregate) as of
such particular date would not have a Material Adverse Effect on the Company and the Subsidiaries
taken as a whole), the representations and warranties of the Company contained herein shall be true
and accurate in all respects as of the Closing Date as if made on the Closing Date, except where
the failure of such representations and warranties to be true and accurate
(individually or in the aggregate) as of the Closing Date would not have a Material Adverse Effect
on the Company and the Subsidiaries, taken as a whole; and the Buyer shall have received at the
Closing a certificate, dated the Closing Date, signed by an authorized executive officer of the
Company on behalf of the Company to such effect. For purposes of determining whether a Material
Adverse Effect on the Company has occurred, (a) all references to material, materiality or
Material Adverse Effect contained in any of the Companys representations and warranties shall be
disregarded, and (b) any disclosures made pursuant to Section 6.3 of a breach of any
representation, warranty, covenant or obligation of the Company shall not be a qualification to the
original representation, warranty, covenant or obligation.
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Section 7.4 Representations and Warranties of the Seller. Except for those representations
and warranties of the Seller that address matters only as of a particular date prior to the date of
this Agreement (which representations and warranties shall have been true and correct in all
respects as of such particular date, except where the failure of such representations and
warranties to be true and accurate (individually or in the aggregate) as of such particular date
would not prevent Seller from consummating the transactions contemplated by this Agreement), the
representations and warranties of the Seller contained herein shall be true and accurate in all
respects as of the date of this Agreement and as of the Closing Date as if made on the Closing
Date, except where the failure of such representations and warranties to be true and accurate
(individually or in the aggregate) as of the Closing Date would not prevent Seller from
consummating the transactions contemplated by this Agreement; and the Buyer shall have received at
the Closing a certificate, dated the Closing Date, signed by an authorized executive officer of the
Seller on behalf of the Seller to such effect. For purposes of determining whether a Material
Adverse Effect on the Seller has occurred, (a) all references to material, materiality or
Material Adverse Effect contained in any of the Sellers representations and warranties shall be
disregarded, and (b) any disclosures made pursuant to Section 6.3 of a breach of any
representation, warranty, covenant or obligation of the Seller shall not be a qualification to the
original representation, warranty, covenant or obligation.
Section 7.5 Performance. The Seller and the Company shall have performed and complied, in
all material respects, with all agreements, obligations and conditions required to be performed or
complied with by them on or prior to the Closing; and the Buyer shall have received at the Closing
a certificate, dated the Closing Date, signed by an authorized executive officer(s) of each of the
Seller and the Company to such effect.
Section 7.6 No Material Adverse Effect. From the execution of this Agreement until the
Closing, there shall not have occurred a Material Adverse Effect on the Company.
Section 7.7 Payoff Letters. At least two (2) Business Days prior to the Closing, the Buyer
shall have received evidence reasonably satisfactory to it that upon payment by it of the
Indebtedness to be paid on the Closing Date, the Indebtedness will be paid in full and all lines of
credit available to the Company or any of its Subsidiaries will be terminated, and, concurrently
with such payment or termination, all related Encumbrances shall be released.
Section 7.8 Retained Land. The Companys real property in San Jose, California, as more
particularly described on Schedule 7.8 (the Retained Land), has been transferred
from the Company to the Seller or a third party.
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Section 7.9 Resignation Letters. The Buyer and the Buyer Parent shall have received the
resignations of each of the officers in the agreed form of the Company and each of the Subsidiaries
specified on a list to be provided by the Buyer to the Seller and the Company not less than five
(5) Business Days prior to the Closing, and each member of the board of directors (or equivalent)
and each legal representative of the Company and each of the Subsidiaries, in each case, effective
as of the Closing Date, and, provided that the Buyer has provided all necessary information no
later than ten (10) Business Days prior to the Closing, any other documentation required to be
executed and delivered by the incumbent directors or legal representative or other officers of the
Company and each of the Subsidiaries to effect the appointment of the new directors to the board of
directors of each of the Subsidiaries and the new legal representatives (if any) of any of the
Subsidiaries under applicable Law.
Section 7.10 Non-Competition Agreement. The Buyer and the Buyer Parent shall have received
the non-competition agreement, in the form attached as Exhibit A (the Non-Competition
Agreement), executed by the Seller.
Section 7.11 IP License Agreement. The Buyer and the Buyer Parent shall have received the
intellectual property license agreement, in the form attached as Exhibit B (the IP
License Agreement), executed by the Seller.
Section 7.12 Investor Rights Agreement. The Buyer and the Buyer Parent shall have received
the investor rights agreement, in the form attached as Exhibit C (the Investor Rights
Agreement), executed by the Seller.
Section 7.13 Customer Agreement. The Buyer and the Buyer Parent shall have received the
customer agreement, in the form attached as Exhibit D (the Customer Agreement),
executed by the Seller.
Section 7.14 R&D Services Agreement. The Buyer and the Buyer Parent shall have received
the R&D services agreement, in the form attached as Exhibit E (the R&D Services
Agreement), executed by the Company and the Seller.
Section 7.15 Branding Agreement. The Buyer and the Buyer Parent shall have received the
branding agreement, in the form attached as Exhibit F (the Branding Agreement),
executed by the Company and the Seller.
Section 7.16 Secondment Agreement. The Buyer and the Buyer Parent shall have received the
Secondment Agreement executed by the Seller and HGST Japan.
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ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANYS AND THE SELLERS OBLIGATIONS
The obligations of the Company and the Seller under this Agreement shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions:
Section 8.1 No Adverse Governmental Action, Proceeding or Injunction. No Governmental
Entity having jurisdiction over the Company, the Seller, the Buyer or the Buyer
Parent shall have issued an order, decree or ruling or taken any other material action enjoining or
otherwise prohibiting consummation of the acquisition of the Stock on the terms contemplated by
this Agreement; provided that any order, decree or ruling with respect to Antitrust Laws
other than those set forth on Schedule 7.2 shall be disregarded for purposes of this
Section 8.1.
Section 8.2 Antitrust Approvals. The approvals required to consummate the transactions
contemplated by this Agreement pursuant to the Antitrust Laws of the jurisdictions listed in
Schedule 7.2 shall have been obtained or any applicable waiting periods thereunder (and any
extensions thereof) shall have expired or been terminated.
Section 8.3 Representations and Warranties. Except for those representations and
warranties of the Buyer and the Buyer Parent that address matters only as of a particular date
prior to the date of this Agreement (which representations and warranties shall have been true and
correct in all respects as of such particular date, except where the failure of such
representations and warranties to be true and accurate (individually or in the aggregate) as of
such particular date would not have a Material Adverse Effect on the Buyer or the Buyer Parent
taken as a whole), the representations and warranties of the Buyer and the Buyer Parent contained
herein shall be true and accurate in all respects as of the Closing Date as if made on the Closing
Date, except where the failure of such representations and warranties to be true and accurate
(individually or in the aggregate) as of the Closing Date would not have a Material Adverse Effect
on the Buyer or the Buyer Parent; and the Company and the Seller shall have received at the Closing
a certificate, dated the Closing Date, signed by an authorized executive officer(s) of the Buyer
and the Buyer Parent on behalf of the Buyer and the Buyer Parent to such effect. For purposes of
determining whether a Material Adverse Effect on the Buyer or the Buyer Parent has occurred, all
references to material, materiality or Material Adverse Effect contained in any of the
Buyers or the Buyer Parents representations and warranties shall be disregarded.
Section 8.4 Performance. The Buyer and the Buyer Parent shall have performed and complied
with, in all material respects, all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing, and the Company and
the Seller shall have received at the Closing a certificate, dated the Closing Date, signed by an
executive officer(s) of each of the Buyer and the Buyer Parent to such effect.
Section 8.5 No Material Adverse Effect. From the execution of this Agreement until the
Closing, there shall not have occurred a Material Adverse Effect on the Buyer.
Section 8.6 IP License Agreement. The Seller shall have received the IP License Agreement
executed by the Buyer and the Buyer Parent.
Section 8.7 Investor Rights Agreement. The Seller shall have received the Investor Rights
Agreement executed by the Buyer Parent.
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ARTICLE IX
INDEMNIFICATION
Section 9.1 Survival.
(a) Survival of Representations and Warranties. The Parties respective
indemnification obligations with respect to representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Closing Date and continue
until 5:00 p.m. on the date which is twelve (12) months after the Closing Date (the
Expiration Date), except for (i) representations and warranties set forth in (A)
Section 3.1 (Organization), Section 3.2 (Authorization; Enforceability),
Section 3.3 (Ownership of the Stock), Section 3.8 (Investment), Section
3.9 (Brokers, Finders Fees, etc.), Section 4.1 (Organization), Section 4.2
(Authority; Enforceability), Section 4.5 (Capitalization), Section 4.6(a)
(Subsidiaries and Affiliates), Section 4.27 (Brokers, Finders Fees, etc.) and (B)
Section 5.1 (Organization), Section 5.2 (Authorization; Enforceability),
Section 5.10 (Accredited Investor), Section 5.11 (Buyer Parent Stock), Section
5.13 (Brokers, Finders Fees, etc.) (any claim related to the breach of such Section in
clause (A) a Seller Excluded Claim and any claim related to the breach of such Section
in clause (B) a Buyer Excluded Claim), which shall survive the Closing Date and continue
until the applicable statute of limitations, if any, (ii) representations and warranties set forth
in Section 4.19 (Environmental Matters), which shall survive the Closing Date and continue
until 5:00 p.m. on the date which is 36 months after the Closing Date, and (iii) representations
and warranties set forth in Section 4.16 (Taxes), which shall survive the Closing Date
until ninety (90) days following the expiration of the relevant statute of limitations period (as
may be extended prior to such expiration by the Buyer at the request of the applicable
Governmental Entity). The Parties respective indemnification obligations with respect to
covenants, obligations and agreements in this Agreement or in any instrument delivered pursuant to
this Agreement which contemplate performance or compliance after the Closing Date shall survive
the Closing Date and shall terminate in accordance with the respective terms of such covenants,
obligations and agreements. The Parties respective indemnification obligations with respect to
covenants, obligations and agreements in this Agreement or in any instrument delivered pursuant to
this Agreement which contemplate performance or compliance at or prior to the Closing Date shall
survive the Closing Date and shall terminate as of the Expiration Date. Any claim for indemnity
under Section 9.2 or Section 9.3 shall be deemed time-barred, and no such claim
shall be made after the period specified in the immediately preceding three sentences;
provided, however, that in the event a Buyer Indemnitee or the Seller Indemnitee
has incurred a Loss or received written notice from a third party of a third party claim for which
such Buyer Indemnitee or the Seller Indemnitee is entitled to indemnification under Section
9.2 or Section 9.3 and such Indemnitee provides written notice of a claim for
indemnification under Section 9.2 or Section 9.3, as the case may be, to the Buyer
or the Seller, as the case may be, in good faith and in accordance with the requirements of
Article IX before the expiration of the applicable survival period that describes such
claim in reasonable detail (including the facts underlying each particular claim) and includes
copies of all material written evidence upon which such claim is based, then the indemnification
rights pursuant to Section 9.2 or Section 9.3 that would otherwise terminate as
set forth above shall survive as to such claim until such time as such claim is fully and finally
resolved.
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Section 9.2 Indemnification of the Buyer.
(a) Subject to the limitations set forth herein, from and after the Closing, the Seller shall
indemnify and hold harmless the Buyer (and its stockholders, directors, officers, employees,
agents, Affiliates, representatives, successors, and assigns) (collectively, the Buyer
Indemnitees) from and against any and all Losses incurred by a Buyer Indemnitee arising out
of (i) the breach of any representation or warranty made by the Seller or the Company in this
Agreement other than Section 4.16 (Taxes) (provided, that for any representation
or warranty that is limited by materiality, Material Adverse Effect, or other similar qualifiers,
the amount of damages will be determined as if the materiality, Material Adverse Effect, or other
similar qualifiers were not included therein), (ii) the breach of any covenant, obligation or
agreement made by the Seller or the Company in this Agreement (other than Section
6.1(b)(xv)), any other Seller Transaction Document or any Company Transaction Documents (A)
which contemplate performance or compliance solely prior to the Closing Date other than the
covenants, obligations or agreements set forth in Section 6.1 and (B) which contemplate
performance or compliance at or after the Closing Date, (iii) Losses in excess of $2,000,000 for a
breach of any covenant, obligation or agreement made by the Seller or the Company in Section
6.1(a) or Section 6.1(b), which contemplate performance or compliance solely prior to
the Closing Date, (iv) any understatement of any of the Closing Payments and Assumed Obligations,
(v) any liabilities associated with the Retained Land, including environmental liabilities and
liabilities arising from the transfer or distribution of the Retained Land prior to the Closing,
(vi) Losses in excess of $11,000,000 incurred for Remedial Activities (as defined in Section
9.7(a) hereof) to address the release of Hazardous Substances into the environment at, in, on,
under or migrating from the Indemnified Properties, to the extent such conditions existed prior to
the Closing Date (Pre-Closing Environmental Liabilities), provided however, that such
Pre-Closing Environmental Liabilities shall not include costs incurred for closure and
post-closure related requirements under Hazardous Waste Facility Permit Number 05-SAC-02 issued by
the California Department of Toxic Substances Control (DTSC) as currently secured by the
Letter Of Credit issued to DTSC by the Mizuho Corporate Bank, Ltd., dated May 28, 2010, (vii) any
claim set forth on Schedule 9.2(a)(vii) by any of the Equity Award Holders that such
holders are entitled to amounts in excess of the payments made by the Buyer at Closing pursuant to
Section 2.3(a)(v) provided that the Buyer has made such payments and (viii) any
claim by the assignee of any receivable, with respect to any receivables assigned prior to or on
the Closing Date, pursuant to the factoring program described in Item 5 of Schedule 6.1.
(b) Notwithstanding the provisions of Section 9.2(a), the Seller shall have no
liability under Section 9.2(a)(i), unless and until the Losses incurred by the Buyer
Indemnitees in the aggregate exceed $15,000,000 (the Indemnification Basket) (in which
event the Seller shall be obligated to indemnify the Buyer Indemnitees for Losses in excess of the
Indemnification Basket), provided that the foregoing Indemnification Basket shall not
apply to Losses related to, any claim for indemnification with respect to (i) any of the Seller
Excluded Claims, (ii) any of the items set forth in Section 9.2(a)(ii)-(viii), and (iii)
fraud or intentional misrepresentation.
(c) The maximum aggregate liability for the Seller under Section 9.2(a)(i),
Section 9.2(a)(ii)(A) and Section 9.2(a)(iii) of this Agreement shall be limited
to $350,000,000 (Indemnification Cap); provided that the foregoing
Indemnification Cap shall not apply to,
and the Seller shall be responsible for any Losses related to, any claim for indemnification
with respect to (i) any of the Seller Excluded Claims, (ii) any of the items set forth in
Section 9.2(a)(ii)(B) and Section 9.2(a)(iv)-(viii), and (iii) fraud or
intentional misrepresentation by the Company or the Seller of any of the representations and
warranties set forth in Article III and Article IV.
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Section 9.3 Indemnification of the Seller.
(a) Subject to the limitations set forth herein, from and after the Closing, the Buyer and
the Buyer Parent shall jointly and severally indemnify and hold harmless the Seller (and its
stockholders, directors, officers, employees, agents, Affiliates, representatives, successors, and
assigns) (collectively, the Seller Indemnitees) from and against any and all Losses
incurred by a Seller Indemnitee arising out of (i) the breach of any representation or warranty
made by the Buyer in this Agreement (provided, that for any representation or warranty
that is limited by materiality, Material Adverse Effect or other similar qualifiers, the amount of
damages will be determined as if the materiality, Material Adverse Effect or other similar
qualifiers were not included therein), and (ii) the breach of any covenant, obligation or
agreement made by the Buyer or the Buyer Parent in this Agreement, any other Buyer Transaction
Document (A) which contemplate performance or compliance solely prior to the Closing Date and (B)
which contemplate performance or compliance at or after the Closing Date.
(b) The maximum aggregate liability for the Buyer and the Buyer Parent under Section
9.3(a)(i) and Section 9.3(a)(ii)(A) of this Agreement shall be limited to amount equal
to the Indemnification Cap; provided that the foregoing Indemnification Cap shall not
apply to, and the Buyer and the Buyer Parent shall be responsible for any Losses related to, any
claim for indemnification with respect to (i) any of the Buyer Excluded Claims, and (ii) fraud or
intentional misrepresentation by the Buyer of any of the representations and warranties set forth
in Article V.
Section 9.4 Indemnification Claim Procedures.
(a) In the event that a Party entitled to indemnification pursuant to the terms hereof (an
Indemnified Party) proposes to make any claim for indemnification pursuant to this
Article IX, such Indemnified Party shall deliver a written demand signed by any officer of
the Indemnified Party (a Claim Certificate) to the Seller (in the case of an
indemnification claim from a Buyer Indemnitee) or to the Buyer (in the case of an indemnification
claim from a Seller Indemnitee) which Claim Certificate contains (i) a description of and if
reasonably determinable at the time such demand is delivered, the amount of any Losses incurred or
reasonably expected to be incurred by such Indemnified Party, (ii) a statement that the
Indemnified Party is entitled to indemnification under this Article IX and a reasonable
explanation of the basis therefore, (iii) a copy of any related notices or claims filed with or
received from any Governmental Entity or other Person, if readily available, and (iv) a demand for
indemnification hereunder and payment of all such Losses.
(b) The Party providing indemnity hereunder (the Indemnifying Party) shall deliver
to the Indemnified Party, an amount equal to the Losses set forth in the Claim
Certificate within thirty (30) days of receipt thereof, unless the Indemnifying Party shall
object in a written statement to the claim or claims made in the Claim Certificate, and such
statement shall have been delivered to the Indemnified Party prior to the expiration of such
thirty (30) day period. In the event the Indemnifying Party does not object to a Claim
Certificate within thirty (30) days following its receipt by the Indemnifying Party, the
Indemnifying Party shall be deemed to have accepted and agreed to the claim set forth in the Claim
Certificate and shall be precluded from raising any objection thereto following such date.
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(c) In case the Indemnifying Party shall object in writing to any claim or claims made in any
Claim Certificate, the Indemnified Party shall have fifteen (15) days after receipt of such
objection to respond thereto in a written statement. If after such fifteen (15)-day period there
remains a dispute as to any claim the Negotiation Procedures shall apply and the Indemnifying
Party and the Indemnified Party shall attempt in good faith, pursuant to the Negotiation
Procedures, to agree upon the rights of the respective Parties with respect to such claim. If the
Parties should so agree, a memorandum setting forth such agreement shall be prepared and signed by
both Parties and the Indemnifying Party shall deliver to the Indemnified Party the amount set
forth in such memorandum in accordance with the terms thereof. In the event that the Parties are
not able to reach an agreement, or the memorandum contains an agreement as to only a portion of
the Losses in question, the Parties may resolve such dispute in the manner provided in Section
12.7(d) hereof.
(d) In the event a claim set forth in the Claim Certificate is contested by the Indemnifying
Party solely on the grounds that Losses have not been finally determined, then such claim shall be
treated as an unresolved claim only with respect to the amount of Losses and not with respect to
whether the Indemnified Party is entitled to indemnification and there shall be no indemnification
for amounts incurred in connection with investigation or defending such claim until such Losses
are finally determined.
Section 9.5 Additional Indemnity Provisions. The indemnification obligations of the Buyer
and the Seller hereunder shall be subject to the following terms and conditions:
(a) Except as provided in Article XI and Section 12.11, the right of the
Parties after the Closing to assert indemnification claims and receive indemnification payments
pursuant to this Article IX shall be the sole and exclusive right and remedy exercisable
by the Parties with respect to any inaccuracy or breach in any representation, warranty, covenant
or obligation contained in this Agreement or in any instrument delivered pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement except in the case
of actual fraud.
(b) The term Loss or Losses shall mean any and all assessments,
disbursements, penalties, fines, losses, Taxes (other than income Taxes imposed upon any payments
made as indemnification under Section 9.2 or Section 9.3), damages, costs and/or
expenses, whether or not arising out of third-party claims, including interest, penalties,
accounting fees and related disbursements, reasonable attorneys fees and expenses (including both
reasonable fees and expenses of counsel incurred in connection with the defense or prosecution of
an indemnifiable claim, court costs and all reasonable amounts paid in investigation, defense or
settlement); provided that, notwithstanding anything to the contrary
contained in this Agreement, Losses shall not include and in no event shall an Indemnifying
Party be liable to and Indemnified Party for any consequential, punitive, special, incidental or
indirect damages or lost profits, except to the extent recovered from an Indemnified Party in a
Third Party Claim.
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(c) Any payments made as indemnification under Section 9.2 or Section 9.3
shall be considered adjustments to the Purchase Price to the extent permitted under applicable
Law.
(d) The Buyer shall use its commercially reasonable efforts to make and pursue a claim under
any insurance policies and make and pursue a claim for indemnification, reimbursement, offset or
recovery against third parties who have a contractual obligation existing as of the Closing Date
to provide to the Company such indemnity, reimbursement, offset or recovery. Any amounts actually
received from such insurers or such other third parties (net of any out-of-pocket expenses
incurred relating to such insurance or third-party claim) shall reduce the amount of Losses for
purposes of determining the amount of the Sellers indemnity obligation under Section 9.2.
If received after an indemnification payment has been made under Section 9.2, any amounts
recovered from insurers or other third parties shall be paid by the Buyer within five (5) days of
receipt to the Seller, as applicable, up to an amount previously paid by the Seller as Losses
pursuant to Section 9.2.
(e) In calculating the amount of any Loss, there shall be deducted an amount equal to the net
Tax benefit (for clarity, net of any Tax costs associated therewith) actually received by the
Indemnified Party in connection therewith; provided, that such net Tax benefit shall be paid by
the Indemnified Party only at such time or times and to the extent that such net Tax benefit is
actually realized (i.e., calculated on the basis of the actual reduction in cash payments or
increase in cash refunds for Taxes attributable to such Loss, taking account of all other items of
deduction and loss prior to utilizing such Loss).
(f) The right to indemnification or any other remedy based on representations, warranties,
covenants and agreements of the Seller and the Company or any of the Subsidiaries in this
Agreement or any other Transaction Document shall not be affected by any investigation conducted
by the Buyer at any time, or any knowledge acquired (or capable of being acquired) by the Buyer at
any time, whether before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such representations,
warranties, covenants or agreements. The waiver by the Buyer of any condition based on the
accuracy of any representation or warranty of the Seller, the Company, or any of the Subsidiaries,
or on the performance of or compliance with such covenants or agreements of the Seller, the
Company, or any of the Subsidiaries, will not affect the right to indemnification or any other
remedy based on such representations, warranties, covenants and agreements.
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(g) The right to indemnification or any other remedy based on representations, warranties,
covenants and agreements of the Buyer and the Buyer Parent in this Agreement or any other
Transaction Document shall not be affected by any investigation conducted by the Company or the
Seller at any time, or any knowledge acquired (or capable of being acquired) by the Company or the
Seller at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representations, warranties, covenants or agreements.
The waiver by the Company or the Seller of any condition based on the accuracy of any
representation or warranty of the Buyer or the Buyer Parent or on the performance of or compliance
with such covenants or agreements of the Buyer or the Buyer Parent, will not affect the right to
indemnification or any other remedy based on such representations, warranties, covenants and
agreements.
(h) Each Indemnified Party shall use its reasonable efforts to mitigate any indemnifiable
Loss. In the event an Indemnified Party fails to so mitigate an indemnifiable Loss, the
Indemnifying Party shall have no liability for any portion of such Loss that reasonably could have
been avoided had the Indemnified Party made such efforts.
(i) The Parties agree that nothing in this Agreement shall limit or impair the obligations of
any Party under applicable law for Losses arising out of fraud or intentional misrepresentation.
Section 9.6 Defense of Third-Party Claims.
(a) In the event that an Indemnified Party becomes aware of any Action (including appeals) in
respect of such item (or items) by any Person other than the Indemnified Party (a Third-Party
Claim), the Indemnified Party shall promptly notify the Indemnifying Party of such
Third-Party Claim; provided, however, that the failure to give prompt notice shall
not affect the indemnification provided hereunder except to the extent the Indemnifying Party has
been actually prejudiced as a result of such failure. The notice of any Third-Party Claim shall
include, based on information then available to the Indemnified Party, a summary in reasonable
detail of the basis for the claim and a reasonable estimate of the Losses. The Indemnifying Party
shall have the right in its discretion and at its expense to assume and control the defense or
settlement of such Third-Party Claim through counsel of its choice (such counsel to be reasonably
acceptable to the Indemnified Party) if it gives notice of its intention to do so to the
Indemnified Party within twenty (20) Business Days of the receipt of such notice from the
Indemnified Party; provided, however, that the Indemnifying Party shall not have
the right to assume the defense of the Third-Party Claim if (i) any such claim seeks, in addition
to or in lieu of monetary losses, any injunctive or other equitable relief, (ii) involves criminal
allegations, (iii) if such Third-Party Claim is a claim for indemnification under Section
9.2 and such claim would cause the aggregate Losses that would otherwise be paid by the
Indemnifying Party under this Article IX to exceed the Indemnification Cap, or (iv) there
is an actual conflict of interest that would make it inappropriate (in the judgment of the
Indemnified Party after consultation with outside counsel) for the same counsel to represent both
the Indemnified Party and the Indemnifying Party. In the event that the Indemnifying Party
assumes the defense of such Third-Party Claim, it will conduct the defense actively, diligently
and at its own expense. The Indemnified Party shall cooperate with the Indemnifying Party in such
defense and shall make available to the Indemnifying Party, at the Indemnifying Partys expense,
all witnesses, pertinent records, materials and information in the Indemnified Partys possession
or under the Indemnified Partys control relating thereto as reasonably requested by the
Indemnifying Party. Except with the written consent of the Indemnified Party (not to be
unreasonably withheld,
conditioned or delayed), the Indemnifying Party will not, in the defense of a Third-Party
Claim, consent to the entry of any judgment or enter into any settlement.
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(b) In the event that the Indemnifying Party is not entitled to assume the defense of the
Indemnified Party, or if the Indemnifying Party fails or elects not to assume the defense of the
Indemnified Party, against such Third-Party Claim pursuant to Section 9.6(a), the
Indemnified Party shall have the right, at its own expense (which expenses the Indemnified Party
can recover if it is otherwise entitled to indemnification with respect to such Third-Party
Claim), to defend or prosecute such Third-Party Claim in any manner as it may reasonably deem
appropriate after giving written thereof to the Indemnifying Party, and the Indemnifying Party
shall have the right, at its own expense, to defend or prosecute such Third-Party Claim. Except
with the written consent of the Indemnifying Party (not to be unreasonably withheld, conditioned
or delayed), the Indemnified Party will not, in the defense of a Third-Party Claim, consent to the
entry of any judgment or enter into any settlement. In such case, the Indemnified Party shall
conduct the defense of the Third-Party Claim actively and diligently, and the Indemnifying Party
shall cooperate with the Indemnified Party in such defense and make available to the Indemnified
Party, at the Indemnified Partys Expense, all such witnesses, records, materials and information
in the Indemnifying Partys possession or under the Indemnifying Partys control relating thereto
as are reasonably requested by the Buyer. If any Indemnifying Party does not elect to assume the
defense of a Third Party Claim, which it has the right to assume hereunder, the Indemnified Party
shall have no obligation to do so.
(c) Any Losses for which it is finally determined in accordance with this Agreement that the
Indemnified Party is entitled to indemnification shall be promptly paid by the Indemnifying Party
to the Indemnified Party in cash by wire transfer of immediately available funds.
Section 9.7 Additional Environmental Remediation Procedures.
(a) Notwithstanding anything to the contrary contained in this Agreement, the Sellers
obligation to indemnify and hold harmless the Buyer, and its stockholders, officers, employees,
agents, directors Affiliates, representatives, successors and assigns pursuant to Section
9.2(a)(i) and (v) to the extent predicated on the release of Hazardous Substances into the
environment, from and against all Losses shall be limited to remedial activities that are: (i)
required by a Governmental Entity under an applicable Environmental Law; (ii) necessary to achieve
the least stringent remediation standards that would be applicable given the use of the property as
of the day before the Closing Date; (iii) conducted using the most cost effective methods
consistent with applicable Environmental Law or the requirements of a Governmental Entity
(Remedial Activities). To the extent that the Losses incurred in connection with the
Remedial Activities covered by this Section 9.7 are in excess of Losses that would be
incurred for activities meeting the conditions set forth in this Section 9.7 (a), the
Seller shall have no obligation to indemnify the Buyer and its officers, directors and affiliates
for such excess amounts.
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(b) Notwithstanding anything to the contrary contained in this Agreement, the Seller and the
Buyer further agree that the Sellers indemnity obligations for Remedial Activities pursuant to
Section 9.2(a) (i) and (v) to the extent predicated on the release of Hazardous Substances
into the environment, shall be subject to the following limitations: (i) if the cost of
Remedial Activities is increased after the Closing Date due to an act or omission by any person
other than the Seller or its affiliates or any of their respective employees or representatives,
the Seller shall not be responsible for any such increase in costs incurred; (ii) the Seller shall
not be responsible for any capital improvements, closure, repairs or modifications to capital
improvements made after the Closing Date; (iii) the Seller shall not be responsible for any costs
to the extent such costs are incurred due to any change in uses related to any properties or
resulting or arising from the closure or sale of a facility or property, and (iv) the Seller shall
not be responsible for any Remedial Activities that Buyer or any third party voluntarily initiates,
performs or causes to be performed or that is not required by any Environmental Law or a
Governmental Entity.
(c) For claims relating to Remedial Activities within the scope of this Section 9.7,
the Seller shall have the right to assume responsibility for managing such Remedial Activities and
matters related thereto by providing written notice to the Buyer. If the Seller assumes
responsibility for management of Remedial Activities under this subsection, the Seller shall be
obligated to comply with all applicable Environmental Laws with respect to such cleanup,
provided, that the Seller reserves the right to seek reimbursement of costs for Remedial
Activities that are incurred for work that is in excess of work that would be required in
accordance with the conditions set forth in Sections 9.7(a) and 9.7(b).
(d) For claims relating to Remedial Activities within the scope of this Section 9.7,
the Buyer and the Seller each shall: (i) cooperate in conducting the Remedial Activities and
related matters, and provide access to books, records, employees and properties as reasonably
necessary to do so; (ii) have the right to comment on any scope of work, work plans and other
significant documents concerning the selection and evaluation of Remedial Activities prior to the
submission of such documents to any Governmental Authority; (iii) have the right to participate in
any significant meetings (or teleconferences) with Governmental Entities or others relating to the
Remedial Activities (including reasonable prior notice thereof) and to receive copies of all
reports, data and other communications to or from Governmental Authorities and other documentation
relating to the Remedial Activities; and (iv) execute and record such documents as may be
reasonably necessary to accomplish the Remedial Activities, including without limitation any deed
restrictions, covenants or similar documents limiting future use of the property; provided,
however, that no such deed restrictions, covenants or similar documents will be recorded without
approval of the Buyer (which shall not be unreasonably withheld or delayed).
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ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 Methods of Termination. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time prior to the Closing:
(a) by mutual consent of the Parties;
(b) by any of the Parties at any time after the date that is twelve (12) months following the
date of execution of this Agreement (the Termination Date), if the Closing shall
not have occurred and the Party seeking termination is not in material violation or breach of
its respective representations, warranties, covenants or obligations contained in this Agreement;
(c) by the Buyer by written notice to the Seller, upon a breach of any representation,
warranty, covenant or agreement on the part of the Seller or the Company set forth in this
Agreement, or if any representation or warranty of the Seller or the Company shall have become
untrue or inaccurate, such that if not cured on or prior to the Closing Date, the conditions set
forth in Section 7.3, Section 7.4 or Section 7.5 would not be satisfied;
provided, that if such inaccuracy or breach in the Sellers or the Companys
representations and warranties or the breach by the Seller or the Company is curable, through the
exercise of commercially reasonable efforts, within thirty (30) days after receipt of written
notice from the Buyer of such breach hereunder, then the Buyer may not terminate this Agreement
under this Section 10.1(c) prior to the end of such thirty (30)-day period,
provided, that the Seller or the Company, as applicable, continues to exercise
commercially reasonable efforts to cure such inaccuracy or breach through such thirty (30)-day
period (it being understood that the Buyer may not terminate this Agreement pursuant to this
Section 10.1(c) if the Buyer shall have materially breached this Agreement or if such
inaccuracy or breach by the Seller or the Company, as applicable, is cured prior to the end of
such thirty (30)-day period); or
(d) by the Seller by written notice to the Buyer, upon a breach of any representation,
warranty, covenant or agreement on the part of the Buyer set forth in this Agreement, or if any
representation or warranty of the Buyer shall have become untrue or inaccurate, such that if not
cured on or prior to the Closing Date, the conditions set forth in Section 8.3 or
Section 8.4 would not be satisfied; provided, that if such inaccuracy or breach in
the Buyers representations and warranties or breach by the Buyer is curable, through the exercise
of commercially reasonable efforts, within thirty (30) days after receipt of written notice from
the Seller of such breach hereunder, then the Seller may not terminate this Agreement under this
Section 10.1(d) prior to the end of such thirty (30)-day period, provided, that
the Buyer continues to exercise commercially reasonable efforts to cure such inaccuracy or breach
through such thirty (30)-day period (it being understood that the Seller may not terminate this
Agreement pursuant to this Section 10.1(d) if the Seller, the Company, or any of the
Subsidiaries shall have materially breached this Agreement or if such inaccuracy or breach by the
Buyer is cured prior to the end of such thirty (30)-day period).
Section 10.2 Procedure Upon Termination.
(a) In the event of termination and abandonment by the Seller, the Company or the Buyer, or
all of them, pursuant to this Article X, written notice thereof shall forthwith be given
to the other Parties, and this Agreement shall terminate and be abandoned without further action
by any of the Parties. If this Agreement is terminated as provided herein, none of the Parties
shall have any liability or further obligation to perform its respective obligations under this
Agreement, except as provided in Section 6.9 with respect to confidentiality and
Section 6.10 with respect to expenses (each of which shall survive the termination of this
Agreement); provided, however, that nothing in this Section 10.2 shall limit legal or
equitable rights and remedies which any Party may have by reason of any breach or violation of
this Agreement by any other Party.
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(b) If this Agreement is terminated by any Party pursuant to Section 10.1(b), and if,
as of the time of such termination the conditions to Closing set forth in Sections 7.1 or
Section 7.2 shall not have been satisfied due to the failure to receive any required
antitrust or competition consent, approval or clearance from a Governmental Entity listed on
Schedule 7.2 or any action by any Governmental Entity listed on Schedule 7.2 to
prevent the acquisition of the Stock by the Buyer for antitrust or competition reasons, then the
Buyer Parent shall, concurrently with such termination, pay the Seller a fee of $250,000,000 in
cash. Upon payment of such fee, each of the Buyer and the Buyer Parent shall have no further
liability to the Company or the Seller with respect to this Agreement or the transactions
contemplated hereby, provided that nothing herein shall release Buyer or the Buyer Parent from
liability for intentional breach or fraud. All payments contemplated by this Section
10.2(b) shall be made by wire transfer of immediately available funds to an account designated
by the Seller.
ARTICLE XI
TAX MATTERS
Section 11.1 Tax Indemnification.
(a) If the Closing shall occur, the Seller shall be responsible for, pay or cause to be paid,
and shall indemnify Buyer and its subsidiaries and Affiliates (each a Buyer Tax
Indemnitee) and hold each Buyer Tax Indemnitee harmless from and against, without
duplication, any and all (x) Pre-Closing Taxes, (y) Taxes attributable to any breach of a
representation or warranty in
Section 4.16(a)(xii), and (z) Taxes attributable to any
breach of covenant in Section 6.1(b)(xv) and Taxes or the Tax Attribute Indemnifiable
Amount, as the case may be, attributable to any breach of representation or warranty in
Section 4.16 other than any breach arising from a representation or warranty relating to
any Tax attributes of the Company or the Subsidiaries other than (i) net operating losses, capital
loss carryforwards, Tax credits or similar items reflected on the December 31, 2010 Financial
Statement or (ii) the breach of representation or warranty in Section 4.16(a)(xii). With
respect to any representation or warranty in clause (x), (y) or (z) that is limited by materiality
or other similar qualifiers, the amount of Taxes or the Tax Attribute Indemnifiable Amount, as the
case may be, attributable to a breach of such representation or warranty, will be determined as if
the materiality qualifier or other similar qualifiers were not included therein. For the
avoidance of doubt, except as provided in clause (y) of this Section 11.1(a), the Seller
shall not be responsible to indemnify Buyer with respect to any Taxes attributable to any election
under Section 338 of the Code (or any similar provision of state, local or foreign Law) made by or
at the direction of the Buyer with respect to the Company or any of the Subsidiaries or any Taxes
under Section 1445 of the Code as a result of the transfer (or deemed sale) of the U.S.
Subsidiary. In the case of any breach arising from a representation or warranty relating to any
net operating losses, capital loss carryforwards, Tax credits or similar items of the Company or
the Subsidiaries as described in clause (z) of this Section 11.1(a) in respect of which
indemnification may be sought hereunder, (i) the amount of such indemnification (the Tax
Attribute Indemnifiable Amount) associated with such breach shall be equal to the excess of
(x) the amount of the relevant net operating loss, capital loss carryforward, Tax credit or
similar item that is the subject of the breach, as stated as a deferred tax asset and as reflected
on the opening balance sheet of the Company or the relevant Subsidiary, as established by the
Buyer for financial reporting purposes and after taking into
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account, and reduced by, any
valuation allowances and/or directly related reserves established pursuant to FASB Interpretation No. 48 (FIN 48, and any such reduction,
a FIN 48 or Valuation Allowance Reduction), for the financial statement period that
commences with, or includes, on the Closing Date over (y) the amount of such relevant net
operating loss, capital loss carryforward, Tax credit or similar item that is the subject of the
breach, as stated as a deferred tax asset, that would have been reflected on such opening balance
sheet had the Buyer known of such breach when establishing such opening balance sheet and after
taking into account any FIN 48 or Valuation Allowance Reduction and (ii) no indemnification may be
sought hereunder for any such breach that results in a reduction to any such net operating losses,
capital loss carryforwards, Tax credits or similar items to the extent that such reduction gives
rise to a decrease of, or offset to, the valuation allowance and/or FIN 48 reserve established for
such attribute as reflected on such opening balance sheet.
(b) If the Closing shall occur, the Buyer shall be responsible for, pay or cause to be paid,
and shall indemnify Seller and its subsidiaries and Affiliates (each a Seller Tax
Indemnitee) and hold each Seller Tax Indemnitee harmless from and against any and all (i)
Taxes of or imposed on the Company or the Subsidiaries, or for which the Company or the
Subsidiaries are liable under applicable Law, in each case except to the extent that such Taxes
(A) are the responsibility of Seller under Section 9.2(a) or Section 11.1(a).
(c) For purposes of apportioning liability for Taxes of the Company or any of the
Subsidiaries in connection with any Straddle Period (i) in the case of Taxes other than those
referred to in clause (ii) below, the amount of any such Taxes allocable to the portion of the
taxable period ending on the Closing Date shall be determined based on an interim closing of the
books as of the close of business on the Closing Date; and (ii) in the case of property Taxes and
ad valorem Taxes and exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, the amount of such Taxes and items allocable to the
portion of the taxable period ending on the Closing Date shall be the product of (A) the amount of
such Taxes and items for the entire period and (B) a fraction, the numerator of which is the
number of calendar days in the period ending with the Closing Date and the denominator of which is
the number of calendar days in the entire period.
Section 11.2 Tax Returns.
(a) The Seller shall prepare or cause to be prepared and file all Tax Returns of the Company
and each of the Subsidiaries that are required to be filed or that may be filed on or before the
Closing Date with respect to any Pre-Closing Tax Period (other than a Straddle Period). All such
Tax Returns shall be prepared in a manner consistent with past practice of the Company or the
applicable Subsidiary (as applicable) unless otherwise required by applicable Law. A copy of each
such Tax Return shall be provided to the Buyer for its review and approval (not to be unreasonably
withheld, conditioned or delayed) at least fifteen (15) days prior to its filing date; provided
that the Buyers review and approval shall not be required with respect to any Tax Return if none
of the positions taken in or other contents of such Tax Return would be reasonably expected to
materially affect the Tax Liability of the Company or any of the Subsidiaries for any Post-Closing
Tax Period.
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(b) The Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns of the Company and each of the Subsidiaries due after the Closing Date.
Any such Tax Return that covers a Tax period (or portion thereof) ending on or prior to the
Closing Date shall be prepared in a manner consistent with past practice of the Company or the
applicable Subsidiary (as applicable) unless otherwise required to comply with applicable Law and
shall be provided to the Seller for its review and approval (which shall not be unreasonably
withheld, conditioned or delayed) at least fifteen (15) days prior to the filing date; provided
that the Sellers review and approval shall not be required if the Taxes shown as due in respect
of such Tax Return would not be reasonably expected to result in the Seller bearing any additional
liability or incurring any obligation to the Buyer under this Agreement, including the
indemnification provisions hereof.
(c) The Buyer and the Seller shall consult with each other and attempt in good faith to
resolve any issues arising as a result of any Tax Returns described in this Section 11.2.
If any dispute with respect to a Tax Return is not resolved prior to the date that is eight (8)
days prior to the due date for filing any such Tax Return, then such dispute shall be referred to
the Accounting Arbitrator for resolution. The costs of the Accounting Arbitrator shall be borne
fifty percent (50%) by the Seller and fifty percent (50%) by the Buyer. If the Accounting
Arbitrator cannot resolve the dispute by the due date of such Tax Return, the preparing party
shall be entitled to file the Tax Return without the consent of the non-preparing party, but the
amount of Taxes for which the parties are entitled to indemnification hereunder shall be based on
the amount of Taxes that is ultimately determined by the Accounting Arbitrator to be due,
notwithstanding the fact that the Tax Return as filed reflects a different amount.
Section 11.3 Conduct and Notice of Audits. Notwithstanding anything in this Agreement to
the contrary, the provisions of this Section 11.3 shall solely govern the conduct of
Proceedings.
(a) Each party entitled to an indemnity payment pursuant to Section 11.1 (a Tax
Indemnified Party) agrees to give written notice to the indemnifying party (the Tax
Indemnitor) of any assertion of any Proceeding in respect of which indemnity may be sought
(an Indemnifiable Tax) within thirty (30) days of such receipt or such earlier time as
would allow the Tax Indemnitor to timely respond to such Proceeding.
(b) The Tax Indemnitor shall, at its own expense, assume control of the defense of any
Proceeding for any Indemnifiable Tax. Subject to Section 11.3(c), if the Tax Indemnitor
assumes control of such defense, the Tax Indemnitor shall (i) notify the Tax Indemnified Party of
significant developments with respect to such Proceeding and keep the Tax Indemnified Party
reasonably informed, (ii) consult with the Tax Indemnified Party with respect to any issue that
reasonably could be expected to have an adverse effect on the Tax Indemnified Party or any of its
affiliates (including by giving rise to an indemnity obligation of the Tax Indemnified Party or
any of its affiliates), (iii) give to the Tax Indemnified Party a copy of any Tax adjustment
proposed in writing with respect to such Proceeding and copies of any other material
correspondences with the relevant Taxing Authority with respect to such Proceeding and (iv) not
settle any issue in such Proceeding without the prior written consent of the Tax Indemnified Party
unless such issue could not reasonably be expected to materially impact the Taxes of the Company,
any Subsidiary or any Affiliate thereof for a Post-Closing Tax Period. The Seller may, however,
elect to have the Buyer assume control of the defense of any Proceeding described in this
Section 11.3(b) that Seller would otherwise be entitled to
control, in which case Buyer shall represent the interests of the Company and each of the
Subsidiaries relating to such Proceeding in the same manner and subject to the same procedures and
conditions that apply with respect to Proceedings described in Section 11.3(c); provided
that any reasonable costs (excluding, without limitation, any overhead costs) incurred by the
Buyer in the conduct of such defense shall be borne by the Seller.
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(c) The Buyer shall, at Buyers own expense, represent the interests of the Company and each
of the Subsidiaries in any Proceeding relating to Tax Returns of the Company and any of the
Subsidiaries for any Straddle Period; provided, however, that the Buyer shall (i)
notify Seller of significant developments with respect to such Proceeding and keep Seller
reasonably informed, (ii) consult with Seller with respect to any issue that reasonably could be
expected to result in the Seller (or its subsidiaries and affiliates) bearing any liability or
incurring any obligation under this Agreement, including the indemnification provisions hereof,
which shall include obtaining prior written consent of the Seller before pursuing any strategy
and/or negotiation with respect to such Proceeding, (iii) give to the Seller a copy of any Tax
adjustment proposed in writing with respect to such Proceeding and copies of any other material
correspondences with the relevant taxing authority with respect to such Proceeding and (iv)
otherwise permit Seller to participate in all aspects of any proceedings (including all meeting
with any tax authorities) relating to such Proceeding. Buyer shall not pay or compromise any Tax
liability asserted with respect to any Proceeding relating to Taxes for any Straddle Period,
without the prior written consent of Seller, which consent shall not be unreasonably withheld,
delayed or conditioned.
Section 11.4 Cooperation on Tax Matters. The Buyer, the Company, each of the Subsidiaries
and the Seller shall cooperate fully, as and to the extent reasonably requested by any other Party,
in connection with the filing of all Tax Returns (including any amended Tax Return or claim for
refund) and any audit, litigation, Tax Claim or other proceeding with respect to Taxes and in
connection with Section 11.8 hereof, obtaining an independent expert appraisal of the fair
market value of any Subsidiaries located in the PRC. Such cooperation shall include the retention
and the provision of records and information reasonably relevant to any such audit, litigation or
other proceeding, and the provision of powers of attorney; provided, however, that
the Party retaining such records may destroy such records after seven (7) years with the consent of
the other Parties (and if such other Parties do not consent, such other Parties shall pay the costs
of delivering such records to such other Parties and the costs of further retention). The Buyer
and the Seller shall make themselves (and their respective employees) reasonably available on a
mutually convenient basis to provide explanations of any documents or information provided under
this Section 11.4. The Buyer and the Seller further agree to use commercially reasonable
efforts to obtain any certificate or other document from any Governmental Entity or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed. In
addition, the Company shall during the period preceding the Closing Date, provide to the Buyer a
copy of any submissions made to any relevant Governmental Entity in connection with any agreement
for a Tax holiday or incentive described in Section 4.16(a)(x) (a Submission) to
the extent that such Submissions are in the possession of the Company or the Subsidiaries
provided, that the Company shall use reasonable efforts to obtain any such Submissions that
are not in the possession of the Company or the Subsidiaries. In the event that the Company is
unable to obtain any Submission, the Company shall promptly notify the Buyer of such event, and
shall use reasonable efforts to make available to the Buyer an
abstract of such Submission. If the Buyer or the Seller become aware of any Taxes relating to any
agreement for Tax holidays or incentives that could arise as a result of the transactions
contemplated by this Agreement, then the Buyer or the Seller, as the case may be, shall promptly
notify the other party that such Taxes could be imposed. The Buyer and the Seller further agree to
cooperate fully to take any action as may be necessary to mitigate, reduce or eliminate any Tax
described in the immediately preceding sentence.
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Section 11.5 Tax Sharing Agreements. All Tax sharing agreements or similar agreements
(other than this Agreement or any agreement by and among the Company or the Subsidiaries), if any,
to which any of the Company or the Subsidiaries are parties shall be terminated as of the Closing
Date so that neither the Seller or any of its affiliates nor any of the Company or the Subsidiaries
shall have any rights or obligations thereunder after the Closing.
Section 11.6 Tax Treatment. The Parties intend that transactions contemplated by this
Agreement shall be treated as a fully taxable transaction for United States federal income tax
purposes. Except to the extent otherwise required pursuant to a determination (within the
meaning of Section 1313(a) of the Code or any similar provision of state, local or foreign law),
the Parties and their respective affiliates shall treat any and all payments under Article
XI or Section 2.7 as an adjustment to the Purchase Price for Tax purposes. The Parties
agree to report the transactions contemplated by this Agreement in a manner consistent with the
foregoing.
Section 11.7 Transfer Taxes. The Buyer shall be responsible for and shall pay all of stock
transfer Taxes, sales Taxes, documentary stamp Taxes, recording charges and other similar Taxes,
charges, fees or other amounts arising in connection with the transactions contemplated by this
Agreement, but not including any Taxes included in subsection (D) of the definition of Pre-Closing
Taxes (collectively, Transfer Taxes). Each of the Parties shall prepare and file all
Tax Returns and other documentation with respect to Transfer Taxes which such party is required by
Law to file, and, if required by Law, the other party shall, and shall cause its affiliates to,
join in the execution of any such Tax Returns and other documentation.
Section 11.8 Certain Non-U.S. Tax Filings. The Seller shall prepare and file all Tax
Returns required by applicable Law to be filed by it in any jurisdiction in connection with the
transactions contemplated by this Agreement, including all agreements, reports, communications,
explanation, documents, reports or other information and Tax Returns as described in PRC Tax
Circular 698 with respect to the indirect transfer of any of the Subsidiaries located in the PRC.
Section 11.9 Conflicts. Notwithstanding anything in this Agreement to the contrary, in the
event of a conflict between this Article XI and Article IX or any other provision
of this Agreement, this Article XI shall govern and control.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment and Modification. This Agreement may only be amended, modified and
supplemented by written agreement of each of the Parties.
Section 12.2 Extension; Waiver. At any time prior to the Closing, a Party may (a) extend
the time for the performance of any of the obligations or acts of any other Party, (b) waive any
inaccuracies in the representations and warranties of any other Party contained herein or in any
document delivered pursuant hereto, (c) waive compliance with any of the agreements of any other
Party contained herein or (d) waive any condition to its obligations hereunder. Any agreement on
the part of a Party to any such extension or waiver shall be valid only if set forth in a written
instrument signed by such Party. Except as otherwise expressly provided herein, no failure to
exercise, delay in exercising, or single or partial exercise of any right, power or remedy by any
Party, and no course of dealing among the Parties, shall constitute a waiver of any such right,
power or remedy.
Section 12.3 Notices. All notices, requests, consents, waivers and other communications
hereunder shall be in writing and shall be deemed given: (a) when delivered if delivered
personally (including by courier); (b) on the third day after mailing, if mailed, postage prepaid,
by registered or certified mail (return receipt requested); (c) on the day after mailing if sent by
a internationally recognized overnight delivery service that maintains records of the time, place,
and recipient of delivery; or (d) upon receipt of a confirmed transmission during the normal
business hours of the recipient (or the next Business Day if it is not received during the normal
business hours of the recipient), if sent by telex, telecopy or facsimile transmission or e-mail,
in each case to the other Parties at the following addresses, facsimile numbers or e-mail addresses
or to such other addresses as may be furnished in writing by one Party to the others:
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(a) |
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if to the Company or any of the Subsidiaries prior to the Closing to: |
Viviti Technologies Ltd.
c/o Hitachi Global Storage Technologies, Inc.
3403 Yerba Buena Road
San Jose, CA 95135
Attention: Christopher Dewees
Facsimile: (408) 717-9063
E-mail: Christopher.Dewees@hitachigst.com
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue
Palo Alto, California 94301
Attention: Thomas J. Ivey, Esq.
Facsimile: (650) 470-4570
E-mail: Thomas.Ivey@skadden.com
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Hitachi, Ltd., Business Development Office
6-6 Marunouchi 1-chome
Chiyoda-ku
Tokyo 100-8280, Japan
Attention: General Manager
Facsimile: 81-3-4564-6260
with a copy (which shall not constitute notice) to:
Morrison & Foerster LLP
Shin-Marunouchi Building, 29th Floor
5-1, Marunouchi 1-chome
Chiyoda-ku, Tokyo 100-6529
Japan
Attention: Kenneth A. Siegel, Esq.
Facsimile: 011-81-3-3214-6512
E-mail: KSiegel@mofo.com
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(c) |
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if to the Buyer (or the Company or any of the Subsidiaries after the Closing): |
Western Digital Corporation
3355 Michelson Drive, Suite 100
Irvine, California 92612
Attention: Michael Ray
Facsimile: (949) 672-9612
E-mail: Michael.Ray@wdc.com
with a copy (which shall not constitute notice) to:
OMelveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Attention: J. Jay Herron, Esq. and Mark Easton, Esq.
Facsimile: (949) 823-6994
E-mail: jherron@omm.com; measton@omm.com
Section 12.4 Binding Nature; Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be assigned, transferred
or delegated by any of the Parties without prior written consent of all of the other Parties, and
any attempt to make any such assignment, transfer or delegation without such consent shall be null
and void.
Section 12.5 Governing Law. This Agreement and the legal relations among the Parties shall
be governed by and construed in accordance with the Laws of the State of Delaware
without giving effect to any Law or rule that would cause the Laws of any jurisdiction other than
the State of Delaware to be applied.
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Section 12.6 Severability. Any provision of this Agreement that is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way the remaining
provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
Section 12.7 Negotiation Procedure; Consent to Jurisdiction; Service of Process;
Venue.
(a) The Parties intend that all disputes between the Parties arising out of this Agreement or
any other Transaction Documents shall be settled by the Parties amicably through good faith
discussions upon the written request of either Party.
(b) Prior to filing suit, instituting a Proceeding or seeking other judicial or governmental
resolution in connection with any dispute between the Parties or any of their subsidiaries arising
out of this Agreement or any of the Transaction Documents or any of the transactions contemplated
hereby or thereby, the Parties will attempt to resolve such dispute by good faith negotiations.
Such negotiations shall proceed as follows:
(i) Any Party may send a written notice to another Party requesting such
negotiations. Promptly following receipt of such notice by the receiving Party, each
Party shall cause the individual designated by it as having general responsibility
for the affected Agreement or Transaction Document to meet in person with the
individual so designated by the other Party to discuss the dispute.
(ii) If the dispute is not resolved within thirty (30) days after the first
meeting between such individuals (or if earlier within forty five (45) days of the
notice referred to in clause (i) above), then, upon the written request of any Party,
each Party shall cause the individual designated by it as having general
responsibility for the overall relationship defined by this Agreement to meet in
person with the individual so designated by the other Party to discuss the dispute.
(iii) If the dispute is not resolved within fifteen (15) days after the first
meeting between such individuals (or if earlier within thirty (30) days of the notice
referred to in clause (ii) above), then, upon the written request of either Party,
the Buyer Parent shall nominate one corporate officer of the rank of senior vice
president or higher, and the Seller shall nominate one corporate officer of the rank
of Board Director or higher, which corporate officers shall meet in person and
attempt in good faith to negotiate a resolution to the dispute.
Except and only to the limited extent provided in Section 12.7(c), neither Party shall
file suit, institute a Proceeding or seek other judicial or governmental resolution of the dispute
until thirty (30) days after the first meeting between the corporate officers described in clause
(iii)
above (or if earlier forty-five (45) days after the notice referred to in such clause (iii))
but after the expiration of such periods, either Party may file suit, institute a Proceeding or
seek other judicial or governmental resolution. For purposes of this Agreement, the procedures set
forth in this Section 12.7(b) shall be referred to as the Negotiation Procedures.
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(c) Notwithstanding the provisions of Section 12.7(b), any Party may institute a
Proceeding at any time seeking a preliminary injunction, temporary restraining order, or other
equitable relief, if necessary in the sole judgment of that Party to avoid material harm to its
property, rights or other interests, before commencing, or at any time during the course of, the
dispute procedure described in Section 12.7(b). In addition, any Party may file an action
prior to the commencement of or at any time during or after the dispute resolution procedures in
Section 12.7(b) if in the sole judgment of that Party it is necessary to prevent the
expiration of a statute of limitations or filing period or the loss of any other substantive or
procedural right.
(d) Each of the Parties irrevocably and unconditionally submits to the exclusive jurisdiction
of the Delaware Court of Chancery (and if jurisdiction in the Delaware Court of Chancery shall be
unavailable, any Delaware State court and the Federal court of the United States of America
sitting in the State of Delaware) for the purposes of any Action or other proceeding arising out
of this Agreement or any transaction contemplated by this Agreement (and agrees that no such
Action or proceeding relating to this Agreement shall be brought by it or any of the subsidiaries
except in such courts). Each of the Parties further agrees that, to the fullest extent permitted
by applicable Law, service of any process, summons, notice or document by registered or certified
mail, return receipt requested, to such persons respective address set forth in Section
12.3 above shall be effective service of process for any Action or proceeding in the State of
Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above
in the immediately preceding sentence. Each of the Parties irrevocably and unconditionally waives
(and agrees not to plead or claim), any objection to the laying of venue of any Action or
proceeding arising out of this Agreement or the transactions contemplated by this Agreement in the
Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in any
Delaware State court or the Federal court of the United States of America sitting in the State of
Delaware) or that any such Action or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 12.8 Complete Agreement. This Agreement (including the Company Disclosure Schedule
and the exhibits and instruments referred to herein), the Common Interest Agreement and the
Confidentiality Agreements contain the complete agreement between the Parties and supersede any
prior understandings, agreements or representations by or between the Parties, written or oral,
which may have related to the subject matter hereof in any way.
Section 12.9 No Third-Party Beneficiaries. This Agreement is intended and agreed to be
solely for the benefit of the Parties, and no third party shall accrue any benefit, claim or right
of any kind whatsoever pursuant to, under, by or through this Agreement, except as otherwise
contemplated by Section 12.4.
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Section 12.10 Guarantee. Buyer Parent guarantees each and every obligation of the Buyer
under the terms of the provisions of the Agreement and the Transaction Documents subject to the
terms hereby and thereby, including without limitation, each and every
representation and warranty of the Buyer, and/or any of its respective permitted assigns (and where
any such representation or warranty is made to the Knowledge of the Buyer, such guarantee shall be
deemed made to the Knowledge of the Buyer Parent), and the full and timely performance of the
Buyers obligations under the provisions of the Agreement and the Transaction Documents subject to
the terms hereby and thereby. This is a guarantee of payment and performance and the Buyer Parent
acknowledges and agrees that this guarantee is unconditional.
Section 12.11 Notification pursuant to The Financial Instruments and Exchange Law of Japan.
In accordance with the provision of Article 23-13, Paragraph 4 of the Financial Instruments and
Exchange Law of Japan (kinyushouhintorihikihou) (the FIEL), the Buyer hereby notifies the
Seller, and the Seller hereby acknowledges the receipt of such notice that the solicitation for
acquisition of the Buyer Parent Stock has not been registered and will not be registered pursuant
to Article 4, Paragraph 1 of the FIEL since such solicitation will fall under the Solicitation for
Small Number of Investors (shouninzumuke kanyu) as provided in Article 23-13, Paragraph 4 of the
FIEL.
Section 12.12 Specific Performance. Each Party acknowledges and agrees that the other
Parties would be irreparably damaged in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached and money damages may
not be an adequate remedy for any such failure to perform or breach. Accordingly, each Party
agrees that, in addition to any other remedy to which such Party may be entitled at Law or in
equity or under this Agreement, each shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof, and each Party expressly waives the defense that a remedy in damages
will be adequate.
Section 12.13 Counterparts and Signatures. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
Section 12.14 Waiver of Jury Trial. Each Party hereby waives, to the fullest extent
permitted by applicable Law, any right it may have to a trial by jury in respect of any suit,
Action or other proceeding directly or indirectly arising out of, under or in connection with this
Agreement. Each Party (a) certifies that no representative, agent or attorney of any other Party
has represented, expressly or otherwise, that such Party would not, in the event of any Action or
proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other Parties
have been induced to enter into this Agreement, by, among other things, the mutual waiver and
certifications in this Section 12.14.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of the date
first written above.
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BUYER PARENT
WESTERN DIGITAL CORPORATION
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By: |
/s/ John F. Coyne
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Name: |
John F. Coyne |
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Title: |
Chief Executive Officer |
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BUYER
WESTERN DIGITAL IRELAND, LTD.
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By: |
/s/ Michael C. Ray
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Name: |
Michael C. Ray |
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Title: |
Vice President |
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SELLER
HITACHI, LTD.
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By: |
/s/ Hiroaki Nakanishi
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Name: |
Hiroaki Nakanishi |
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Title: |
Representative Executive Officer and
President |
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COMPANY
VIVITI TECHNOLOGIES LTD.
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By: |
/s/ Stephen Dwight Milligan
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Name: |
Stephen Dwight Milligan |
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Title: |
President and Chief Executive Officer |
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Exhibit A
Form of
AGREEMENT NOT TO COMPETE
This Agreement Not to Compete (Agreement) is entered into by and between Hitachi, Ltd., a
corporation registered under the laws of Japan (Hitachi) and Western Digital Corporation, a
Delaware corporation (Buyer Parent). (Hitachi and Buyer Parent are collectively referred to
herein as the Parties and each, individually, as a Party). This Agreement shall be effective
as of
_____
(the Effective Date).
RECITALS
WHEREAS, Hitachi, Buyer Parent, Viviti Technologies Ltd. (formerly known as Hitachi Global Storage
Technologies Holdings Pte. Ltd., HGST) and Western Digital Ireland, Ltd., a corporation organized
under the laws of the Cayman Islands and an indirect wholly-owned subsidiary of the Buyer Parent
(the Buyer), have entered into that certain Stock Purchase Agreement dated as of March 7, 2011
(the Purchase Agreement). (All capitalized terms used but not defined herein shall have the
meaning ascribed to them in the Purchase Agreement.)
WHEREAS, pursuant to the Purchase Agreement, Hitachi will sell all of the outstanding and issued
Stock in HGST to the Buyer; and
WHEREAS, in connection with such sale, Hitachi has agreed to certain non-competition covenants, as
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein
contained, the parties, intending to be legally bound, agree as follows:
Section 1. Definitions
(a) Additional Source Supplier shall mean a supplier of an HDD Product to Hitachi, in
addition to HGST or other than HGST.
(b) Code shall mean computer programming code including microcode, as applicable, and
including both Object Code and Source Code.
(c) External Drive shall mean an enclosure that encases an HDD or SSD and related peripheral
hardware, or Software or Firmware components (other than RAID)
(d) HDD Components shall mean any and all components and subassemblies thereof incorporated
within such a device (including, without limitation, substrates, magnetic media, read and write
heads, motors, read and write channels, suspensions, controller hardware, firmware, Semiconductors,
data/command interfaces, mechanicals, printed circuit boards, Code and other parts of an HDD
Product) designed for operation in an HDD Product, regardless of whether the component is sold
separately or within an HDD Product enclosure.
1
(e) HDD Product shall mean a product designed to magnetically write, read, and erase digital
information which includes, in a single enclosure, (a) one or more rigid rotating magnetic disks as
data storage media, (b) one or more spindle motors to rotate said magnetic disk, (c) one or more
Magnetic Heads to write, read and erase the digital information, and (d) one or more actuators for
positioning the Magnetic Head across the magnetic disk; provided, however, the definition of HDD
Product does not include (i) any other type of disk drive or storage device that does not meet all
of the foregoing conditions, such as optical disk drives, non-magnetic memory products, magnetic
RAM or holographic storage devices or (ii) any other type of media, such as flash memory, with a
capacity that can be used as a part of HDD Product memory when combined with other storage media.
For removal of doubt, (i) RAID (defined below), (ii) Information Versatile Disk for Removable usage
(iVDR) (iii) SSD (defined below), and (iv) External Drive are not HDD Products. Furthermore, HDD
Product does not mean HDD Components individually.
(f) HDD Included Products shall mean products that include an HDD Product among their
components but are a combination of such HDD Product with at least one other device distinct from
such HDD Product and provide a material function that is not provided by a single HDD Product.
Examples of HDD Included Products are storage systems (including RAID), External Drives, JBODs,
enterprise systems, servers, server blades, desktop computers, portable computers (including
notebook and handheld computers), personal digital assistants, digital video recorders, digital
cameras, game consoles, mobile phones and global positioning systems that include an HDD Product
among their components. For the avoidance of doubt, a combination of two or more HDD Products
contained in an enclosure is an HDD Included Product and is not an HDD Product per se; provided,
that each of the individual HDD Products contained in such enclosure is an HDD Product, and each is
therefore subject to the noncompetition provisions relating to HDD Products contained in Section
2(a) of this Agreement.
(g) Key HGST Employees shall mean the employees of HGST and/or its Subsidiaries that are (a)
engaged in technical research activities and (b) identified on Exhibit B to this Agreement.
(h) Magnetic Head shall mean
a device having one or more transducers, each transducer operative to write and/or read
electromagnetic signals representing any form of information to or from a magnetic storage medium.
(i) Multiple Use Technology shall mean any product, component, software, design, or
instrumentality that is used or is usable with or may be incorporated in both an HDD Product and at
least one apparatus that is not an HDD Product. Multiple Use Technology shall include (i) Code
that is used or useable in both an HDD Product and another apparatus, (ii) electronic functions
that are used or useable in both an HDD Product and in another apparatus, including independent
device functions (such as partial response maximum likelihood detection (PRML), run length
limited checking(RLL), error checking and correction(ECC), and small computer system interface
(SCSI) and other interface protocols), cooperative functions (such as a SCSI function which
enables an HDD Product and another apparatus to communicate), and architecturally partitioned
functions that can be implemented in an HDD Product or another apparatus of a system based on
architecture considerations, and (iii) research
and development activities that may be related to or useful in both an HDD Product and another
apparatus, but are not being conducted in violation of Section 2(a)(ii).
2
(j) National Projects shall mean any of the projects funded by NEDO (New Energy and
Industrial Technology Development Organization) set forth in Exhibit A.
(k) Object Code shall mean computer programming code substantially in binary form. It is
directly executable by a computer after processing, but without compilation or assembly.
(l) Source Code shall mean computer programming code other than Object Code, and includes
code that may be displayed in a form readable and understandable by a programmer of ordinary skill.
It includes related Source Code level system documentation, comments and procedural code, such as
job control language.
(m) RAID shall mean a collection of multiple HDD Products and/or other storage media,
combined with associated Software or Firmware provided for the purpose of data storage and
retrieval to protect data from a single component failure.
(n) Subsidiary shall mean, as to an entity, another entity (i) more than fifty percent (50%)
of whose outstanding shares or securities (representing the right to vote for the election of
directors or other managing authority) are, now or hereafter, owned or controlled, directly or
indirectly, by the first entity; or (ii) which does not have outstanding shares or securities, as
may be the case in a partnership, joint venture or unincorporated association, but more than fifty
percent (50%) of whose ownership interest representing the right to make the decisions for such
corporation, company or other entity is now or hereafter, owned or controlled, directly or
indirectly, by the first entity. For removal of doubt, HGST and its Subsidiaries shall not be
considered Hitachis Subsidiaries under this Agreement.
(o) Semiconductor shall mean an integral unit including a plurality of active and/or passive
circuit elements formed at least in part of semiconductor material and associated on, or in, one
substrate comprising the first level of packaging for such elements.
(p) Software or Firmware shall mean a set of instructions, that either (i) directly provides
instructions to the computer hardware, or, (ii) indirectly serves as an input to another piece of
software.
(q) SSD shall mean a product, component, subcomponent or subassembly thereof designed, in
whole or in part, to electrically write, read and/or erase persistent data from storage media or
memory (including, without limitation, NOR-flash, NAND-flash, or MRAM semiconductor microchips),
which utilizes an HDD Product-type interface (or an interface also employed for HDDs), including
without limitation, PATA, SATA, SAS, PCI Express, SCI, Fibre Channel, USB 3.0 and InfiniBand.
(r) Wholly Owned Subsidiary shall mean, as to an entity, another entity one hundred percent
(100%) of whose outstanding shares or securities (representing the right to vote for the election
of directors or other managing authority) are, now or hereafter, owned or
controlled, directly or indirectly, by the first entity. For avoidance of doubt, as of the
Closing Date Hitachi Data Systems is a Wholly Owned Subsidiary of Hitachi.
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Section 2. Covenant Not to Compete
(a) Prohibited Activities. Hitachi agrees that, for a period of ten (10) years following the
Closing Date (the Noncompete Period), Hitachi will not, and will not permit any of its
Wholly-Owned Subsidiaries to engage in any of the following activities (Prohibited Activities),
directly or indirectly, anywhere in the world:
(i) the manufacture or assembly of any HDD Products; or
(ii) the marketing, distribution for sale or sale of HDD Products (Sales Activities)
(iii) research or development which is related in any material aspect to the design,
development, manufacture or assembly of any HDD Products (R&D Activities) other than the
research and developments under the R&D Services Agreement between the parties, dated
_____
and the research and developments under the existing National Projects.
For the avoidance of doubt, the restrictions of this Section 2 (a) in this Agreement shall apply to
only Hitachi and its Wholly-Owned Subsidiaries. Subsidiaries and affiliates that are not Wholly
Owned Subsidiaries of Hitachi shall have no restrictions or obligations under this Section 2 (a).
(b) Permitted Activities. Notwithstanding anything in the foregoing paragraph (a) to the
contrary, Hitachi and its Wholly-Owned Subsidiaries will have the right to engage in the following
activities, to the extent not otherwise prohibited by any other agreements between Hitachi and
HGST:
(i) manufacture, assembly, marketing, distribution for sale, sale, research,
development, licensing, transfer of, or any other activities related to any products that
are not HDD Products;
(ii) manufacture, assembly, marketing, distribution for sale, sale, research,
development, licensing, or transfer of or any other activities related to Multiple Use
Technology or HDD Included Products, including RAID, that are not HDD Products;
(iii) manufacture, assembly, marketing, distribution for sale, sale, research,
development, licensing, or transfer of or any other activities related to Semiconductors or
HDD Components, even if designed for operation in a HDD Product, provided that such
activities do not involve manufacture, assembly, marketing, distribution for sale, sale,
research, or development of HDD Products otherwise prohibited by Section 2(a);
(iv) performance of maintenance services, or including the procurement of a third party
to engage in maintenance services, with respect to any Multiple Use Technology, HDD Included
Products or any other products that are not HDD Products;
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(v) any activities with Additional Source Suppliers directly relating to addressing
failures of HDD Products supplied by such Additional Source Suppliers for use in HDD
Included Products of Hitachi to operate (a) in accordance with the applicable specifications
for such HDD Products or (b) as intended with such HDD Included Products of Hitachi;
(vi) the licensing or sale to an Additional Source Supplier of the results of any
research or development activities for the purpose of enabling such Additional Source
Supplier to use such results in HDD Products to be supplied to Hitachi for incorporation
into HDD Included Products of Hitachi, provided that such research and development
activities are not prohibited activities under Section 2(a);
(vii) Sales Activities with respect to HDD Products which Hitachi markets, distributes
for sale or sells as integral components of HDD Included Products;
(viii) any research or development activities, or the licensing or sale of any results
thereof, that are not Prohibited Activities when started but which over time become
Prohibited Activities because of an evolution of the research or development; provided, that
Hitachi may not engage in the manufacture, assembly, marketing or distribution for sale of
the results of such research and development activities that involves using such results
inside an HDD Product;
(ix) the manufacture, assembly, marketing, research, design, development or licensing
of, or sales with respect to, external industrial design packaging for HDD Products,
including packaging for protection from external elements;
(x) any activities required or contemplated by this Agreement or any other agreements
entered into between Hitachi and HGST, or among Hitachi, HGST and any third party;
(xi) licensing or other activities with respect to patents and patent applications
(including licensing of patents and patent applications generated from the results of
research and development activities conducted by Hitachi prior to the Closing Date); For the
avoidance of doubt, such activities are only permitted to the extent they are not otherwise
limited or restricted by any other agreements between Hitachi and HGST; and
(xii) any de minimis activities incidental to the performance of any activity other
than a Prohibited Activity.
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Section 3. Covenant Not to Hire or Solicit Key HGST Employees. During the two (2) year period
immediately following the Closing Date, Hitachi and its Wholly-Owned Subsidiaries shall not,
directly or indirectly, hire, solicit, recruit, induce or encourage any Key HGST Employee to become
employed or engaged as a consultant by Hitachi or its Wholly-Owned Subsidiaries or, directly or
indirectly, solicit, encourage or induce any Key HGST Employee to leave the employment of HGST or
any of its Subsidiaries; provided, however, that the foregoing restriction will not
prevent Hitachi from placing general advertisements or solicitations on websites, in trade
journals, newspapers or similar publications, or from conducting other general recruiting
activities, which are not directed at the employees of HGST or any of its Subsidiaries.
Section 4. Covenant Not to Provide Technical Assistance. During the Noncompete Period, Hitachi and
its Wholly Owned Subsidiaries shall not provide to any Subsidiaries of Hitachi that are not Wholly
Owned Subsidiaries any technical assistance services designed to assist such Subsidiaries in the
performance of any activities which, if performed by Hitachi or any of its Wholly-Owned
Subsidiaries, would constitute Prohibited Activities. For the avoidance of doubt, this Agreement
is not intended to and shall not impose any limitation on the provision of technical assistance
with respect to any activity which, if performed by Hitachi or any of its Wholly-Owned
Subsidiaries, would constitute a Permitted Activity.
Section 5. Dispute Resolution
(a) HGST shall promptly notify Hitachi in writing of any activity it believes violates or will
violate any of its rights under Section 2(a) (a Prohibited Activity Notice), which Prohibited
Activity Notice shall indicate whether HGST reasonably believes the alleged or threatened breach is
capable of cure. Hitachi shall respond within 30 business days to any Prohibited Activity Notice it
receives, describing any objection to the assertions set forth in such Prohibited Activity Notice
or, if such matters are not objected to, describing its intentions regarding the cure of such
violation(s).
(b) If a breach or threatened breach of Hitachis obligations under Section 2(a) is capable of
cure (a Remediable Breach), Hitachi shall have 30 days after its receipt of a Prohibited Activity
Notice with respect to such Remediable Breach to cure such Remediable Breach (Covenant Cure
Period); provided, however , that such Covenant Cure Period may, if approved by HGST, such
approval not to be unreasonably withheld, be extended for such additional period of time as shall
be reasonably necessary to permit Hitachi to cure or cause to be cured such Remediable Breach if
such Remediable Breach has not been remedied within the initial Covenant Cure Period, so long as
during the initial Covenant Cure Period Hitachi diligently endeavors to cure or cause to be cured
such Remediable Breach, and if such extension would not reasonably be expected to have a material
adverse effect on HGST. If the existence of a Remediable Breach is disputed in good faith and a
timely manner, but it is then determined pursuant to Section 3(c) that such Remediable Breach
exists, Hitachi shall then have 30 days from the date of such determination (or such longer period
as may be reasonably necessary to cure or caused to be cured such Remediable Breach as may be
permitted on the same terms and conditions set forth in the proviso to the preceding sentence) to
cure or caused to be cured such Remediable Breach.
6
(c) If there is any continuing objection or dispute in connection with a Prohibited Activity
Notice following the Covenant Cure Period, if applicable, the parties shall refer such dispute to a
senior executive officer of each of Hitachi and HGST, who shall within 15 business days attempt in
good faith to resolve such dispute and determine the appropriate remedial action.
Section 6. Miscellaneous
(a) Termination For Bankruptcy. A party may terminate this Agreement by giving written notice
of termination to the other party at any time upon or after:
(i) the filing by the other party of an petition in bankruptcy or insolvency which
petition or proceeding is not dismissed within sixty (60) days;
(ii) any adjudication that the other party is bankrupt or insolvent;
(iii) the filing by the other party of any petition or answer seeking reorganization,
readjustment or arrangement of its business under any law relating to bankruptcy or
insolvency which petition or proceeding is not dismissed within sixty (60) days;
(iv) the appointment of a receiver for all or substantially all of the property of the
other party;
(v) the institution of any proceeding for the liquidation winding up of the other
partys business which petition or proceeding is not dismissed within sixty (60) days.
(b) Severability. If any term or provision of this Agreement is determined to be invalid,
illegal or unenforceable by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement. Upon such
determination that any term or other provision is invalid, illegal or unenforceable, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order that the obligations
contemplated hereby be consummated as originally contemplated to the greatest extent possible.
(c) Amendments and Waivers. This Agreement may only be amended, modified or supplemented by an
agreement in writing signed by the Parties. A waiver by any Party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and signed by the party so waiving. No
waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or
default not expressly identified by such written waiver, whether of a similar or different
character, and whether occurring before or after that waiver. No failure to exercise, or delay in
exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be
construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
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(d) Non-Circumvention. Hitachi shall not, and shall cause Hitachis Wholly Owned Subsidiaries
not to, engage in any transaction or take any other action the principal purpose of
which is to circumvent or to evade the observance or performance of any of the provisions of
this Agreement. The Parties will at all times in good faith observe and perform in accordance with
the provisions of this Agreement. Without limiting the generality of the foregoing, Hitachi will
not form any division or Subsidiary, or acquire any division or Subsidiary, or cause any share of a
Wholly-Owned Subsidiary to be sold or transferred during the Non-Compete Period, with the principal
purpose of circumventing or evading the application of this Agreement thereto.
(e) Certain Acquisitions. Notwithstanding anything above to the contrary, the acquisition by
Hitachi or any of its Wholly-Owned Subsidiaries of a person or business that at the time of such
acquisition is engaged in Prohibited Activities not falling within any of the exceptions set forth
in Section 2(b) and the continuation of such activities following such acquisition will not be a
breach of this Agreement, provided, that as soon as reasonably practicable, and in any event within
eighteen (18) months following the time of such acquisition, Hitachi or such Wholly Owned
Subsidiary sells or transfers to an entity other than Hitachi or any of Hitachis Subsidiaries, or
otherwise discontinues the operations of, the portion of such acquired person or business that is
engaged in Prohibited Activities not falling within any of the exceptions set forth in Section
2(b).
(f) Assignment/Successors. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their permitted successors and assigns. Hitachi may not assign this
Agreement without the prior written consent of HGST.
(g) Governing Law. This Agreement and the legal relations among the Parties shall be governed
by and construed in accordance with the Laws of the State of Delaware without giving effect to any
Law or rule that would cause the Laws of any jurisdiction other than the State of Delaware to be
applied.
(h) Consent to Jurisdiction; Service of Process; Venue. Each of the Parties irrevocably and
unconditionally submits to the exclusive jurisdiction of the Delaware Court of Chancery (and if
jurisdiction in the Delaware Court of Chancery shall be unavailable, any Delaware State court and
the Federal court of the United States of America sitting in the State of Delaware) for the
purposes of any Action or other proceeding arising out of this Agreement or any transaction
contemplated hereby (and agrees that no such Action or proceeding relating to this Agreement shall
be brought by it or any of the Subsidiaries except in such courts). Each of the Parties further
agrees that, to the fullest extent permitted by applicable Law, service of any process, summons,
notice or document by U.S. registered mail to such persons respective address set forth in Section
5(h) below shall be effective service of process for any Action or proceeding in the State of
Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above
in the immediately preceding sentence. Each of the Parties irrevocably and unconditionally waives
(and agrees not to plead or claim), any objection to the laying of venue of any Action or
proceeding arising out of this Agreement or the transactions contemplated hereby in the Delaware
Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in any Delaware
State court or the Federal court of the United States of America sitting in the State of Delaware)
or that any such Action or proceeding brought in any such court has been brought in an inconvenient
forum.
8
(i) Waiver of Jury Trial. Each Party hereby waives, to the fullest extent permitted by
applicable Law, any right it may have to a trial by jury in respect of any suit, Action or other
proceeding directly or indirectly arising out of, under or in connection with this Agreement. Each
Party (a) certifies that no representative, agent or attorney of any other Party has represented,
expressly or otherwise, that such Party would not, in the event of any Action or proceeding, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other Parties have been
induced to enter into this Agreement, by, among other things, the mutual waiver and certifications
in this Section 5(h).
(j) Notices. All notices, requests, consents, waivers and other communications hereunder
shall be in writing and shall be deemed given: (a) when delivered if delivered personally
(including by courier); (b) on the third day after mailing, if mailed, postage prepaid, by
registered or certified mail (return receipt requested); (c) on the day after mailing if sent by a
nationally recognized overnight delivery service that maintains records of the time, place, and
recipient of delivery; or (d) upon receipt of a confirmed transmission, if sent by telex, telecopy
or facsimile transmission or e-mail, in each case to the other Parties at the following addresses,
facsimile numbers or e-mail addresses or to such other addresses as may be furnished in writing by
one Party to the others:
Attention:
Facsimile:
E-mail:
with a copy (which shall not constitute notice) to:
Attention:
Facsimile:
E-mail:
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(b) |
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if to the Buyer Parent: |
Attention:
Facsimile:
E-mail:
with a copy (which shall not constitute notice) to:
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(k) |
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OMelveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Attention: J. Jay Herron, Esq. and Mark Easton, Esq.
Facsimile: (949) 823-6994
E-mail: jherron@omm.com; measton@omm.com |
(l) Headings. The descriptive headings of the Sections and subsections of this Agreement are
for convenience only and do not constitute a part of this Agreement.
(m) No License or Immunity. This Agreement does not grant any license or immunity under any of
HGSTs intellectual property rights, including without limitation patents, copyrights, trademarks
or mask works now or hereafter owned or controlled by HGST.
(n) Entire Agreement. This Agreement constitutes the sole and entire agreement of the parties
to this Agreement with respect to the subject matter contained herein, and supersedes all prior and
contemporaneous understandings and agreements, both written and oral, with respect to such subject
matter.
(o) Counterparts. This Agreement may be executed in counterparts, which together shall
constitute one and the same Agreement. The Parties may execute more than one copy of this
Agreement, each of which copies shall constitute an original. A facsimile signature shall be
deemed to be the same as an original signature.
IN WITNESS WHEREOF, the parties hereto have executed this Non-Competition Agreement as of the
date first above written.
[Remainder of page is intentionally blank.]
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WESTERN DIGITAL CORPORATION
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By: |
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Name: |
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Title: |
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HITACHI, LTD.
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By: |
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Name: |
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Title: |
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Exhibit A
List of National Projects
1. |
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NEDO Development of Nanobit Technology for Ultra-high Density Magnetic Recording (Green IT
Project) |
2. |
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Research and Development for Next-Generation Information Technology by MEXT
-High-Performance Low-Power Consumption Spin Devices and Storage Systems |
Exhibit B
[List of Key HGST Employees]
Exhibit B
Form of
LICENSE AGREEMENT
This License Agreement (Agreement), effective as of the Closing Date (as defined below), is
entered into by and between Western Digital Corporation (Buyer Parent), a Delaware company with
its principal place of business at 3355 Michelson Drive,
Suite 100 Irvine, California 92612, USA, and Hitachi, Ltd. (HITACHI), a Japanese company with its
principal place of business at 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8280, Japan. Each of
the signatories to this Agreement is referred to as a Party, and jointly as the Parties.
RECITALS
WHEREAS, Buyer Parent, Western Digital Ireland, Ltd., a corporation organized under the laws
of the Cayman Islands and an indirect wholly-owned subsidiary of the Buyer Parent (the Buyer),
HITACHI, and Hitachi Global Storage Technologies Holdings Pte. Ltd., a company incorporated under
the laws of the Republic of Singapore (HGST) and a wholly owned subsidiary of HITACHI, have
entered into that certain Stock Purchase Agreement dated as of March 7, 2011 (the Purchase
Agreement);
WHEREAS, pursuant to the Purchase Agreement, Buyer Parent desires to enter into a patent
cross-license with HITACHI for certain technologies and enter into a mutual release of claims
pursuant to the terms and conditions of this Agreement; and
WHEREAS, pursuant to the Purchase Agreement, HITACHI desires to enter into a patent
cross-license with Buyer Parent for certain technologies and enter into a mutual release of claims
pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set out below, the
Parties agree as follows:
TERMS OF AGREEMENT
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1.1 |
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External Drive means an enclosure that encases one or more HDDs or SSDs and
related peripheral hardware, or Software or Firmware components (other than RAID). |
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1.2 |
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Existing Terms means terms and conditions in written agreements existing as
of the Closing Date between HGST or any of its Subsidiaries, on the one hand, and
HITACHI or any HITACHI Sublicensed Subsidiary, on the other hand, with respect to
license limitations, restrictions on use (with respect to any intellectual property
rights, Works or materials not owned by HITACHI or a HITACHI Sublicensed Subsidiary),
restrictions on disclosure, royalties or other consideration, and/or license duration. |
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1.3 |
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Have Made means to have any products or other items subject to the licenses
granted herein made by a third-party manufacturer for the use, lease, sale or other
transfer by a Party or its Subsidiaries; provided, however, that (i) the specifications
for such products or other items were solely or jointly created by or at the direction
of such Party or its Subsidiaries, and (ii) such product or other item is not an
off-the-shelf product of a third-party manufacturer. |
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1.4 |
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HDD means any device designed to magnetically record and/or read digital
information on or from a rotating disk (Rotating Magnetic Storage) that contains one
or more spindle motors, one or more magnetic heads, and one or more actuators, all of
which are incorporated in a single enclosure, and related peripheral hardware, or
Software or Firmware components. For the avoidance of doubt HDD (a) includes any
device that incorporates both Rotating Magnetic Storage and other digital storage
media, such as semiconductor-based memory, but only in the case that the memory
capacity of Rotating Magnetic Storage supersedes that of other digital storage media,
and (b) excludes External Drive, RAID (as defined below), Information Versatile Disk
for Removable Usage (iVDR), and optical disk products. |
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1.5 |
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Buyer Parent SSD Patents means all Patents related to SSD (i) issued or
issuing on patent applications entitled to a first effective filing date on or before
the end of the Term, (ii) under which Buyer Parent or any of its Subsidiaries has now
or during the Term obtains the right to grant licenses within the scope granted herein
without the payment of royalties or other consideration to any third party, and (iii)
that would be, but for this Agreement, directly or indirectly infringed by HITACHI or
HITACHI Sublicensed Subsidiaries making, using, importing, exporting, leasing, selling,
offering to sell, or otherwise disposing of SSD. |
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1.6 |
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Storage Software Products means the Hitachi Backup software product and the
Lifestudio software product. |
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1.7 |
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Storage Software Patents means all Patents related to the Storage Software
Products (i) issued or issuing on patent applications entitled to a first effective
filing date on or before the end of the Term, (ii) under which Hitachi or any HITACHI
Sublicensed Subsidiary has now or during the Term obtains the right to grant licenses
within the scope granted herein without the payment of royalties or other consideration
to any third party, and (iii) that would be, but for this Agreement, directly or
indirectly infringed by Buyer Parent or its Subsidiaries making, using, importing,
exporting, selling, leasing, offering to sell, or otherwise disposing of the version of
either Storage Software Product that is generally commercially available as of the
Closing Date. |
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1.8 |
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HGST RAID Patents means all Patents related to RAID (i) issued or issuing on
patent applications entitled to a first effective filing date on or before the first
anniversary of the Closing Date (ii) under which Buyer Parent or any of its
Subsidiaries has now or hereafter obtains the right to grant licenses within the
scope granted herein without the payment of royalties or other consideration to any
third party, (iii) whose named inventors are or were employees or contractors of
HGST or any of its Subsidiaries on or prior to the Closing Date or that were
assigned or exclusively licensed to HGST or any of its Subsidiaries on or prior to
the Closing Date, and (iv) that would be, but for this Agreement, directly or
indirectly infringed by HITACHI or HITACHI Sublicensed Subsidiaries making, using,
importing, exporting, leasing, selling, offering to sell, or otherwise disposing of
RAID. |
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1.9 |
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Buyer Parent RAID Patents means all Patents related to RAID (i) issued or
issuing on patent applications entitled to a first effective filing date on or before
the end of the Term (ii) under which Buyer Parent or any of its Subsidiaries has now or
hereafter obtains the right to grant licenses within the scope granted herein without
the payment of royalties or other consideration to any third party, and (iii) that
would be, but for this Agreement, directly or indirectly infringed by HITACHI or
HITACHI Sublicensed Subsidiaries making, using, importing, exporting, leasing, selling,
offering to sell, or otherwise disposing of RAID. For clarity, the Buyer Patent RAID
Patents include, but are not limited to, the HGST RAID Patents. |
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1.10 |
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Closing Date has the meaning set forth in the Purchase Agreement. |
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1.11 |
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HITACHI External Drive Patents means all Patents related to External Drive
(i) issued or issuing on patent applications entitled to a first effective filing date
on or before the end of the Term, (ii) under which HITACHI or any HITACHI Sublicensed
Subsidiary has now or during the Term obtains the right to grant licenses within the
scope granted herein without the payment of royalties or other consideration to any
third party, and (iii) that would be, but for this Agreement, directly or indirectly
infringed by Buyer Parent or its Subsidiaries making, using, importing, exporting,
selling, leasing, offering to sell, or otherwise disposing of External Drive. |
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1.12 |
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HITACHI HDD Patents means all Patents related to HDD (i) issued or issuing on
patent applications entitled to a first effective filing date on or before the end of
the Term, (ii) under which HITACHI or any HITACHI Sublicensed Subsidiary has now or
hereafter obtains the right to grant licenses within the scope granted herein without
the payment of royalties or other consideration to any third party, and (iii) that
would be, but for this Agreement, directly or indirectly infringed by Buyer Parent or
its Subsidiaries making, using, importing, exporting, leasing, selling, offering to
sell, or otherwise disposing of HDD. |
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1.13 |
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HITACHI Exclusions means (i) any Works (e.g., Software) that as of the
Closing Date are made generally commercially available by HITACHI or any of the HITACHI
Sublicensed Subsidiaries, and (ii) any proprietary information of HITACHI or any of the
HITACHI Sublicensed Subsidiaries that has been disclosed to HGST or any of its
Subsidiaries in its role as a supplier or potential supplier of products to HITACHI or
a HITACHI Sublicensed Subsidiary. |
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1.14 |
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HITACHI Licensed Copyrights means copyrights owned by HITACHI or any of the
HITACHI Sublicensed Subsidiaries as of the Closing Date in any Works that were provided
to HGST by HITACHI or any HITACHI Sublicensed Subsidiary prior to, and are used by HGST
or any of its Subsidiaries as of, the Closing Date; provided, however, that HITACHI
Licensed Copyrights do not include any copyrights embodied or used in any HITACHI
Exclusions. |
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1.15 |
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HITACHI Licensed Trade Secrets means trade secrets owned by HITACHI or any of
the HITACHI Licensed Subsidiaries as of the Closing Date that were provided to HGST by
HITACHI or any HITACHI Sublicensed Subsidiary prior to, and are used by HGST or any of
its Subsidiaries as of, the Closing Date; provided, however, that HITACHI Licensed
Trade Secrets do not include any trade secrets embodied or used in HITACHI Exclusions. |
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1.16 |
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HITACHI RAID Patents means all Patents related to RAID (i) issued or issuing
on patent applications entitled to a first effective filing date on or before the end
of the Term, (ii) under which HITACHI or any HITACHI Sublicensed Subsidiary has now or
during the Term obtains the right to grant licenses within the scope granted herein
without the payment of royalties or other consideration to any third party, and (iii)
that would be, but for this Agreement, directly or indirectly infringed by Buyer Parent
or its Subsidiaries making, using, importing, exporting, selling, leasing, offering to
sell, or otherwise disposing of RAID. |
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1.17 |
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HITACHI SSD Patents means all Patents related to SSD (i) issued or issuing on
patent applications entitled to a first effective filing date on or before the end of
the Term, and (ii) under which HITACHI or any HITACHI Sublicensed Subsidiary has now or
during the Term obtains the right to grant licenses within the scope granted herein
without the payment of royalties or other consideration to any third party, and (iii)
that would be, but for this Agreement, directly or indirectly infringed by Buyer Parent
or its Subsidiaries making, using, importing, exporting, selling, leasing, offering to
sell, or otherwise disposing of SSD. |
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1.18 |
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HITACHI Sublicensed Subsidiary means any HITACHI Subsidiary to which the
rights, licenses, releases, covenants and privileges are extended in accordance with
Section 2.4. |
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1.19 |
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Non-HDD Business means any entity (or internal business division or
organization of an entity) that is principally engaged in a business other than the
design, sale, or manufacture of HDDs. |
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1.20 |
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Patents means all classes and types of patents, including utility patents,
utility models, design patents, invention certificates, including divisionals,
continuations, continuations-in-part, reexaminations, reissues, extensions and
renewals, in all jurisdictions of the world. |
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1.21 |
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RAID means a device comprised of an assembly of storage media components and
related peripheral hardware, or Software or Firmware components contained
within one or more enclosures, combined with associated Software or Firmware, for
the purpose of data storage and retrieval, designed to protect digital information
from a single component failure or to enhance performance by dividing data among
multiple storage media components. For the avoidance of doubt, RAID excludes
storage media components incorporated therein. |
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1.22 |
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Software or Firmware means a set of instructions, that either (i) directly
provides instructions to the computer hardware, or, (ii) indirectly serves as an input
to another piece of software. |
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1.23 |
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SSD means a product, component, subcomponent or subassembly thereof, and
related peripheral hardware, or Software or Firmware components, designed, in whole or
in part, to electrically write, read and/or erase digital information from storage
media or memory (including, without limitation, NOR-flash, NAND-flash, or MRAM
semiconductor microchips), which utilizes an HDD-type interface (or an interface also
employed for HDDs), including without limitation, PATA, SATA, SAS, PCI Express, SCI,
Fibre Channel, USB 3.0 and InfiniBand. For the avoidance of doubt, SSD excludes HDD
and RAID. |
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1.24 |
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Subsidiary of either party shall mean a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the election
of directors or other governing body are at the time beneficially owned, directly, or
indirectly, by such party. For the purposes of this Agreement, HGST and its
Subsidiaries will be Subsidiaries of Buyer Parent (subject to meeting the requirements
of the preceding sentence) and are not Subsidiaries of HITACHI. |
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1.25 |
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Term means the period from the Closing Date through the fifth anniversary of
the Closing Date. |
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1.26 |
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HDD Component means any component, subcomponent, subassembly, Software or
Firmware which is specifically designed for HDD, whether or not sold as a stand-alone
unit or integrated within an HDD. |
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1.27 |
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Works means works of authorship and other copyrightable materials and subject
matter, including Software to the extent within the subject matter of copyright. |
2. |
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LICENSES, RELEASES, AND COVENANTS GRANTED TO HITACHI |
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2.1 |
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SSD License to HITACHI. Buyer Parent, on behalf of itself and its
Subsidiaries, hereby grants to HITACHI a non-exclusive, irrevocable, fully paid-up,
world-wide term license, without the right to grant a sublicense (other than pursuant
to Section 2.4), under the Buyer Parent SSD Patents, to make, Have Made, use, import,
export, sell, lease, offer to sell, or otherwise dispose of SSD. |
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2.2 |
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RAID License to HITACHI. Buyer Parent, on behalf of itself and its
Subsidiaries, hereby grants to HITACHI a non-exclusive, irrevocable, fully paid-up,
world-
wide, license, without the right to grant a sublicense (other than pursuant to
Section 2.4), under the Buyer Parent RAID Patents, to make, Have Made, use, import,
export, sell, lease, offer to sell, or otherwise dispose of RAID. |
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2.3 |
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Past Release to HITACHI. Buyer Parent, on behalf of itself and its
Subsidiaries, hereby irrevocably releases and forever discharges HITACHI and the
HITACHI Sublicensed Subsidiaries from any and all claims, losses, demands, causes of
action, liabilities, and rights of action of any kind, at law or in equity, whether
known or unknown, suspected and unsuspected, disclosed and undisclosed, liquidated or
unliquidated, for any act of direct or indirect infringement, before the Closing Date,
of any Buyer Parent SSD Patent or Buyer Parent RAID Patent by HITACHI or any HITACHI
Sublicensed Subsidiary making, using, importing, exporting, selling, leasing, offering
to sell, or otherwise disposing of SSD (in the case of Buyer Parent SSD Patents) or
RAID (in the case of Buyer Parent RAID Patents). For the avoidance of doubt, the
foregoing release is intended to and does apply to all activities of HITACHI and the
HITACHI Sublicensed Subsidiaries that fall within the scope of the licenses granted by
Buyer Parent set forth in this Agreement that were carried out before the Closing Date. |
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2.4 |
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Extension to HITACHIs Subsidiaries. HITACHI shall have a right to
extend to its Subsidiaries the rights, releases, licenses, covenants and any other
privileges granted to HITACHI hereunder, if such Subsidiary agrees to abide by the
terms and conditions of this Agreement and include its Patents in HITACHI HDD Patents,
HITACHI External Drive Patents, HITACHI RAID Patents, and HITACHI SSD Patents as if it
were named in the place of HITACHI hereunder, subject to the termination provision in
Section 4.2. |
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2.5 |
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Covenant Not To Sue HITACHI Regarding RAID. Buyer Parent and its
Subsidiaries shall reserve the right to sue the sellers and/or manufacturers of HDD
incorporated into RAID sold to HITACHI or HITACHI Sublicensed Subsidiaries for
infringement of Buyer Parent Patents related to HDD by making, using, selling, offering
to sell, leasing, importing or otherwise disposing of such HDD incorporated into RAID;
provided however, that Buyer Parent, on behalf of itself and its Subsidiaries,
covenants not to sue HITACHI, HITACHI Sublicensed Subsidiaries, or their customers (to
the extent the RAID was purchased from HITACHI or HITACHI Sublicensed Subsidiaries) for
infringement of Buyer Parent Patents related to HDD by using, leasing, importing,
exporting, selling, offering to sell such HDD incorporated into RAID. |
3. |
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LICENSES, RELEASE AND COVENANTS GRANTED TO BUYER PARENT |
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3.1 |
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HDD/HDD Component License to Buyer Parent. HITACHI, on behalf of itself
and HITACHI Sublicensed Subsidiaries, hereby grants to Buyer Parent and its
Subsidiaries a non-exclusive, irrevocable, fully paid-up, world-wide, license, without
the right to grant a sublicense, under the HITACHI HDD Patents, to make, Have Made,
use, import, export, sell, lease, offer to sell, or otherwise dispose of HDD and HDD
Components. |
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3.2 |
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SSD License to Buyer Parent. HITACHI, on behalf of itself and HITACHI
Sublicensed Subsidiaries, hereby grants to Buyer Parent and its Subsidiaries a
non-exclusive, irrevocable, fully paid-up, world-wide term license, without the right
to grant a sublicense, under HITACHI SSD Patents, to make, Have Made, use, import,
export, sell, lease, offer to sell, or otherwise dispose of SSD. |
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3.3 |
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RAID License to Buyer Parent. HITACHI, on behalf of itself and HITACHI
Sublicensed Subsidiaries, hereby grants to Buyer Parent and its Subsidiaries a
non-exclusive, irrevocable, fully paid-up, world-wide term license, without the right
to grant a sublicense, under HITACHI RAID Patents, to make, Have Made, use, import,
export, sell, lease, offer to sell, or otherwise dispose of RAID. |
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3.4 |
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External Drive License to Buyer Parent. HITACHI, on behalf of itself
and HITACHI Sublicensed Subsidiaries, hereby grants to Buyer Parent and its
Subsidiaries a non-exclusive, irrevocable, fully paid-up, world-wide term license,
without the right to grant a sublicense, under HITACHI External Drive Patents, to make,
Have Made, use, import, export, sell, lease, offer to sell, or otherwise dispose of
External Drive. |
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3.5 |
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Storage Software License. HITACHI, on behalf of itself and HITACHI
Sublicensed Subsidiaries, hereby grants to Buyer Parent and its Subsidiaries a
non-exclusive, irrevocable, fully paid-up, world-wide, term license, without the right
to grant a sublicense, under the Storage Software Patents, to make, Have Made, use,
import, export, sell, lease, offer to sell, or otherwise dispose of the Storage
Software Products, including future versions thereof. |
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3.6 |
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HITACHI Licensed Copyrights License. Subject, in the case of any
particular HITACHI Licensed Work, to any applicable Existing Terms, HITACHI, on behalf
of itself and the HITACHI Sublicensed Subsidiaries, hereby grants to Buyer Parent and
its Subsidiaries a nonexclusive, irrevocable, fully paid-up, world-wide, perpetual
license under the HITACHI Licensed Copyrights to reproduce, distribute, display,
perform, and make derivative works of any Works covered by the HITACHI Licensed
Copyrights (HITACHI Licensed Works), in each case, in the ordinary course of the
business of Buyer Parent and its Subsidiaries (such license, the HITACHI Licensed
Copyrights License). Buyer Parent and its Subsidiaries may grant sublicenses under
the HITACHI Licensed Copyrights License to third parties in connection with the
development, manufacture, distribution, provision, sale and use of any products or
services of Buyer Parent and its Subsidiaries, in each case, solely in such fields,
provided that any disclosure to such third parties of HITACHI Licensed Trade Secrets
embodied in HITACHI Licensed Works (and any use of such HITACHI Licensed Trade Secrets
by such third parties) shall be only as permitted by Section 3.8. |
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3.7 |
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HITACHI Licensed Trade Secrets License. Subject to the terms and
conditions of this Agreement and, in the case of any particular HITACHI Licensed Trade
Secret, to any applicable Existing Terms, HITACHI, on behalf of itself and the HITACHI
Sublicensed Subsidiaries, hereby grants to Buyer Parent and its
Subsidiaries, a nonexclusive, irrevocable, fully paid-up, worldwide, perpetual
license under the HITACHI Licensed Trade Secrets to use the HITACHI Licensed Trade
Secrets, in each case, in the ordinary course of the business of Buyer Parent and
its Subsidiaries (the HITACHI Licensed Trade Secrets License). The HITACHI
Licensed Trade Secrets shall be deemed Confidential Information of HITACHI and the
HITACHI Trade Secret License shall be subject to the terms and conditions of Section
3.8. Notwithstanding the preceding sentence, Buyer Parent and its Subsidiaries may
disclose the HITACHI Licensed Trade Secrets to and allow use of the HITACHI Licensed
Trade Secrets by third parties as reasonably necessary in connection with the
development, manufacture, distribution, provision, sale, and use of the products and
services of Buyer Parent and its Subsidiaries, in each case, solely in such fields,
provided that such third parties are bound in writing by confidentiality terms at
least as protective as those set forth in Section 3.8. Except as expressly set
forth in the preceding sentence or as expressly permitted by Section 3.8, Buyer
Parent and its Subsidiaries shall not (and shall have no right to) disclose or allow
the use of any HITACHI Licensed Trade Secret. |
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3.8 |
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Confidentiality. Buyer Parent and its Subsidiaries shall maintain the
HITACHI Licensed Trade Secrets with at least the same degree of care it uses to protect
its own proprietary information of a similar nature or sensitivity, but no less than
reasonable care under the circumstances. Buyer Parent and its Subsidiaries shall not
disclose any HITACHI Licensed Trade Secrets to third parties except where (i) such
disclosure is required by law or order of a court of competent jurisdiction, provided
that, in such event, Buyer Parent shall provide HITACHI prompt, advance notice of such
requirement to allow intervention (and shall cooperate with HITACHI) to contest or
minimize the scope of the disclosure (including through application for a protective
order), (ii) the HITACHI Licensed Trade Secret disclosed was in the public domain prior
to the disclosure to Buyer Parent or its Subsidiaries, (iii) the HITACHI Licensed Trade
Secret disclosed becomes part of the public domain by publication or otherwise except
by breach of this Agreement, or (iv) Buyer Parent can establish by competent proof the
HITACHI Licensed Trade Secret disclosed was received from a third party without
restrictions on confidentiality. Buyer Parent shall be responsible to HITACHI for the
acts and omissions of any Subsidiary, employee or agent with respect to such
confidentiality obligations. To the extent a particular HITACHI Licensed Trade Secret
is subject to confidentiality obligations under a written agreement existing as of the
Closing Date between HGST or any of its Subsidiaries, on the one hand, and HITACHI or
any HITACHI Sublicensed Subsidiary, on the other hand, the obligations set forth in
this Section 3.8 will not extend in duration beyond the expiration of the
confidentiality obligations set forth in such written agreement.
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3.9 |
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Past Release to Buyer Parent. HITACHI, on behalf of itself and HITACHI
Sublicensed Subsidiaries, hereby irrevocably releases and forever discharges Buyer
Parent and its Subsidiaries from any and all claims, losses, demands, causes of action,
liabilities, and rights of action of any kind, at law or in equity, whether known or
unknown, suspected and unsuspected, disclosed and
undisclosed, liquidated or unliquidated, for any act of direct or indirect
infringement, before the Closing Date, of any HITACHI HDD Patent, HITACHI SSD
Patent, HITACHI External Drive Patent, HITACHI RAID Patent or Storage Software
Patent by Buyer Parent or its Subsidiaries making, using, importing, exporting,
selling, leasing, offering to sell, or otherwise disposing of HDD (in the case of
HITACHI HDD Patents), External Drive (in the case of HITACHI External Drive
Patents), SSD (in the case of HITACHI SSD Patents), RAID (in the case of HITACHI
RAID patents) or Storage Software Products (in the case of Storage Software
Patents). For the avoidance of doubt, the foregoing release is intended to and does
apply to all activities of Buyer Parent and its Subsidiaries that fall within the
scope of the licenses granted by HITACHI set forth in this Agreement that were
carried out before the Closing Date. |
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3.10 |
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No Licenses to Third Parties. Nothing in this Agreement shall be
deemed to grant any license, immunity, release, or other right to any person or entity,
other than the Parties and their respective Subsidiaries, as provided herein. |
4. |
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TERMS AND TERMINATIONS |
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4.1 |
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Termination and Survival. The licenses granted in Sections 2.1, 3.2,
3.3, 3.4 and 3.5 shall terminate at the end of Term. Further, the license grant in
Sections 2.2 and 3.1 shall terminate in part: with respect to Section 2.2, only the
license under Buyer Parent RAID Patents that are not HGST RAID Patents shall terminate
at the end of the Term; with respect to Section 3.1, only the license under Patents
issued or issuing on patent applications entitled to a first effective filing date
after the first anniversary of the Closing Date shall terminate at the end of the Term.
The remainder of the licenses set forth in Sections 2.2 and 3.1, including their
transferability, shall continue and remain in full force and effect until the
expiration of the life of the last Patent, as defined herein. In addition, the
covenant set forth in Section 2.5 shall terminate (a) at the end of the Term, with
respect to Patents issued or issuing on patent applications entitled to a first
effective filing date after the first anniversary of the Closing Date and (b) upon the
expiration of the life of the last Patent subject to the covenant, as to all other
Patents subject to the covenant. The remainder of this Agreement, including the
licenses set forth in Sections 3.6 and 3.7 and the provisions of Section 3.8, shall
continue and remain in full force for so long as any HITACHI License Copyright or
HITACHI Licensed Trade Secret continues to exist and be enforceable. |
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4.2 |
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Termination of the Rights Granted to Subsidiaries. All rights,
licenses and covenants granted to any Subsidiaries of either Party shall automatically
terminate in the event that such Subsidiaries no longer fall under the definition of
Subsidiary, as defined herein. |
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4.3 |
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Termination For Material Breach. If Buyer Parent or any of its
Subsidiaries breaches Section 2.5 of this Agreement, and if such material breach is not
corrected within sixty (60) days after written notice by HITACHI, the continuing
covenants, rights, licenses, and any other privileges granted to Buyer Parent and
its Subsidiaries in this Agreement may be terminated by HITACHI forthwith by written
notice to Buyer Parent; provided that no such termination shall terminate, modify or
limit, in any manner, any of the continuing covenants, rights, licenses, and any
other privileges granted to HITACHI and the HITACHI Sublicensed Subsidiaries in this
Agreement, all of which shall continue unaffected. |
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4.4 |
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Termination For Bankruptcy. A Party may terminate this Agreement by
giving written notice of termination to the other Party at any time upon or after: |
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(a) |
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the filing by the other Party of an petition in bankruptcy or
insolvency which petition or proceeding is not dismissed within sixty (60)
days; |
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(b) |
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any adjudication that the other Party is bankrupt or insolvent; |
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(c) |
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the filing by the other Party of any petition or answer seeking
reorganization, readjustment or arrangement of its business under any law
relating to bankruptcy or insolvency which petition or proceeding is not
dismissed within sixty (60) days; |
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(d) |
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the appointment of a receiver for all or substantially all of
the property of the other Party; |
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(e) |
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the institution of any proceeding for the liquidation winding
up of the other Partys business which petition or proceeding is not dismissed
within sixty (60) days. |
Notwithstanding the foregoing, the occurrence of any of the events provided above
shall not be deemed to terminate, modify or limit, in any manner (or permit a Party
to terminate, modify or limit, in any manner), any of the continuing covenants,
rights, licenses and any other privileges granted to the terminating Party and its
Subsidiaries in this Agreement, all of which shall continue unaffected by such
event.
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4.5 |
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No Release on Termination. No termination in this Agreement pursuant
to Section 4.2, 4.3, or 4.4 above shall relieve either Party of any obligation or
liability accrued hereunder prior to such termination. |
5. |
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REPRESENTATIONS AND WARRANTIES |
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5.1 |
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Authority. Each Party represents and warrants that it has the corporate
power and authority to enter this Agreement, and to carry out the terms and obligations
set forth in this Agreement, and that the persons executing this Agreement on its
behalf have the authority to act for and bind the Party and/or, in case of Buyer
Parent, its Subsidiaries, and in case of HITACHI, HITACHI Sublicensed Subsidiaries. |
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5.2 |
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Buyer Parents Right To Grant. Buyer Parent, on behalf of itself and
its Subsidiaries, represents and warrants that Buyer Parent (or a Subsidiary of Buyer
Parent) owns, and that Buyer Parent has the right to license, the Patents licensed
by Buyer Parent; and that it is not a party to any agreements or obligations
inconsistent with this Agreement. |
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5.3 |
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HITACHIs Right To Grant. HITACHI, on behalf of itself and HITACHI
Sublicensed Subsidiaries, represents and warrants that HITACHI (or a HITACHI
Sublicensed Subsidiary) owns, and that HITACHI has the right to license, the Patents
licensed by HITACHI; and that it is not a party to any agreements or obligations
inconsistent with this Agreement. |
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5.4 |
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No Warranty by Buyer Parent. This Agreement does not and shall not be
interpreted or construed to include: (a) any warranty or representation on the part of
Buyer Parent as to the validity, enforceability, or scope of any Patent licensed by
Buyer Parent; (b) any warranty or representation that any specific apparatus or method
used by HITACHI in connection with any Patents licensed by Buyer Parent is or will be
free from infringement of patents of others or other intangible rights of third
parties; (c) any requirement to file any patent application, or secure or maintain any
patent; (d) any obligation to bring or prosecute any action for infringement of any
Patent licensed by Buyer Parent; (e) any obligation to furnish any technical or support
information; (f) any license or right by implication or estoppel; or (g) any warranty
of MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE for
implementations of Patents licensed by Buyer Parent. |
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5.5 |
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No Warranty by HITACHI. This Agreement does not and shall not be
interpreted or construed to include: (a) any warranty or representation on the part of
HITACHI as to the validity, enforceability, or scope of any Patent licensed by HITACHI;
(b) any warranty or representation that any specific apparatus or method used by Buyer
Parent or its Subsidiaries in connection with any Patent licensed by HITACHI is or will
be free from infringement of patents of others or other intangible rights of third
parties; (c) any requirement to file any patent application, or secure or maintain any
patent; (d) any obligation to bring or prosecute any action for infringement of any
Patent licensed by HITACHI; (e) any obligation to furnish any technical or support
information; (f) any license or right by implication or estoppel; or (g) any warranty
of MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE for
implementations of the Patents licensed by HITACHI. |
All notices and other communications required or permitted hereunder shall be in writing and
shall be mailed by Federal Express or other internationally recognized express carrier, registered
or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to a
Party at the addresses set forth below, or at such other address as a Party may substitute by
written notice provided to the other Party in such manner. Such notices shall be deemed to have
been served when delivered.
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If to HITACHI:
IP Business Division
Intellectual Property Group
Hitachi, Ltd.
Atten: General Manager
6-1 Marunouchi 1-chome, Chiyoda-ku
Tokyo 100-8220 Japan
If to Buyer Parent:
7. |
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BUSINESS ACQUISITION, TRANSFER, CHANGE OF CONTROL, ETC. |
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7.1 |
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Assignment and Change of Control of Buyer Parent HDD Business. Buyer
Parent may assign or transfer the rights, licenses, and covenants under Section 3.1 of
this Agreement in connection with any sale or other transfer of (i) all or
substantially all of Buyer Parents HDD business, (ii) all or substantially all of
Buyer Parents HDD-related assets in a single transaction or a series of transactions,
or (iii) any transaction under which Buyer Parent undergoes a change in control. |
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7.2 |
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Assignment of Buyer Parent Non-HDD Business. In connection with any
sale or other transfer of (a) all or substantially all of Buyer Parents RAID, External
Drive, and/or SSD business, or (b) all or substantially all of Buyer Parents RAID-,
External Drive-and/or SSD-related assets in a single transaction or a series of
transactions, Buyer Parent may assign or transfer the rights, licenses and covenants
under Sections 3.2, 3.3, 3.4, 3.5 and/or 3.6 corresponding to the sold or transferred
business, subject to the following limitations: |
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The rights, licenses, and covenants under Sections 3.2, 3.3,
3.4, 3.5 and/or 3.6 shall be assignable provided that: the acquiring third
party (Acquiring 3rd Party) agrees to grant a royalty-free license to HITACHI
and the HITACHI Sublicensed Subsidiaries under the Patents which would fall
within the scope of Buyer Parent SSD Patents or Buyer Parent RAID Patents if
the Acquiring 3rd Party were named in the place of Buyer Parent in
Sections 1.4 and 1.5 hereunder, in each case for the applicable term set forth
in Section 4.1; |
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The rights, licenses, and covenants under Sections 3.2, 3.3,
3.4, 3.5 and/or 3.6 shall not be extended to the business originally run by the
Acquiring 3rd Party or any of its Subsidiaries. To the extent that
such rights, licenses and covenants continue to extend to the acquired portion
of the business, the extension shall be limited to a revenue of such business
equal to no more than the revenue of the acquired business in the twelve (12)
months preceding such sale or transfer plus twenty percent (20%); and shall
also be limited, in each of the successive twelve-month periods following such
transfer or sale, to a revenue equal to no more than the immediately
preceding twelve-month period plus twenty percent (20%). To the extent that
the business exceeds this cap, and the Acquiring 3rd Party
desires to obtain further rights and licenses, the Acquiring 3rd
Party and HITACHI shall discuss a mutually acceptable resolution; and, |
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In no event shall the rights, licenses, and covenants under
Sections 3.2, 33, 3.4, 3.5 and/or 3.6 supersede or relieve any obligation by
any party to pay on-going royalties under any existing patent license agreement
with respect to business operations of the Acquiring 3rd Party. |
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The rights, licenses, and covenants under Sections 3.2, 3.3,
3.4, 3.5 and/or 3.6 may not be assigned or transferred by Buyer Parent to any
Acquiring 3rd Party if such Acquiring 3rd Party or any of
its Subsidiaries has made, in court or otherwise, a written allegation of
patent infringement against HITACHI that existed prior to the completion of the
assignment or transfer and has not been resolved prior to the completion of the
assignment or transfer. |
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7.3 |
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Impact of Change of Control of Buyer Parent or HGST on Sections 3.2, 3.3,
3.4, 3.5, and 3.6 Licenses. In the event that in a single transaction or in a
series of transactions Buyer Parent is acquired by a third party, through a merger,
stock sale, asset purchase, or otherwise, HITACHI may, at its option, terminate the
rights, licenses, and covenants under Section 3.2. 3.3, 3.4, 3.5 or 3.6 of this
Agreement (but not the license under Section 3.1), if and only if the Acquiring
3rd Party or any of its Subsidiaries is a competitor in the RAID business.
Buyer Parent shall timely notify HITACHI in writing of the acquisition with the
information reasonably required for HITACHI to determine whether or not to terminate
those rights, including the framework and schedule of the acquisition. HITACHI shall
notify, in turn, Buyer Parent in writing of its election whether or not to terminate
the license within ninety (90) days after receipt of the notice. In the event that
HITACHI chooses to terminate the license pursuant to the terms of this provision,
HITACHI and Buyer Parent shall have a good faith basis upon which to renegotiate the
license. Notwithstanding the foregoing, the rights, licenses and covenants in Sections
3.1 and 3.8 shall not be terminated in any event. |
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7.4 |
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Acquisition of Non-HDD Business by Buyer Parent. In the event that
Buyer Parent directly or indirectly acquires a Non-HDD Business pursuant to a merger,
asset or stock purchase, or otherwise in a single transaction or a series of
transactions during the Term, HITACHI shall have an option not to extend the rights,
licenses, releases, and covenants under Section 3 to such Non-HDD Business;
provided, however, if HITACHI exercises the option, the Patents owned
or controlled by the acquired Non-HDD Business shall not be included in the definitions
of Buyer Parent SSD Patents or Buyer Parent RAID Patents. Buyer Parent shall notify
HITACHI in writing of the acquisition with information of the acquired Non-HDD Business
reasonably required for HITACHI to
determine the exercise of the option. HITACHI shall notify, in turn, Buyer Parent in
writing of its exercise of the option or not within ninety (90) days after HITACHI
received such notice without delay. |
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7.5 |
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Assignment of RAID Business By HITACHI. HITACHI may assign or transfer
the rights, licenses and covenants under Section 2.2 in connection with any sale or
other transfer of (i) all or substantially all of HITACHIs RAID business or (ii)
substantially all of HITACHIs related RAID assets in a single transaction or a series
of transactions. |
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7.6 |
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Assignment of SSD Business By HITACHI. HITACHI may assign or transfer
the rights, licenses and covenants under Section 2.1 in connection with any sale or
other transfer of (i) all or substantially all of HITACHIs SSD business or (ii)
substantially all of HITACHIs related SSD assets in a single transaction or a series
of transactions during the Term. |
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7.7 |
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Change of Control of HITACHI. In the event that in a single transaction
or in a series of transactions HITACHI is acquired by a third party, through a merger,
stock sale, asset purchase, or otherwise, this Agreement shall remain effective and
shall not be terminated. |
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7.8 |
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Notice of Assignment/Transfer. In the event of a valid assignment or
transfer (i.e., one made pursuant to the terms of Section 7.1, 7.2, 7.5 or 7.6 above)
by either Party of this Agreement, the transferring or assigning Party shall, within
ninety (90) calendar days, provide the other Party notice, in writing, of such
assignment or transfer and shall identify the person to whom it has made such
assignment or transfer. |
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7.9 |
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Effect of Assignment. Any license, covenants and/or any other rights
assigned by either Party pursuant to any provision of this Section 7 shall be effective
with respect to the assignee (and its business and operations) on a prospective basis
only. Accordingly, no such assignment shall relieve, release or discharge any assignee
from any liability for damages accruing prior to the effective date of the applicable
assignment due to the infringement of any Patent licensed under this Agreement. Should
either Party assign or otherwise transfer this Agreement or any of its respective
Patents, such transfer shall not operate to terminate, impair or in any way modify the
licenses and releases provided by the Parties herein, except as expressly provided for
under the terms of this Agreement. |
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7.10 |
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Assignment of Patents. From and after any assignment or transfer of a
Patent by either Party or its Subsidiaries, the assignee shall be bound by the terms
and conditions of this Agreement with respect to such Patents. |
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7.11 |
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Sublicense. Neither party, nor their Subsidiaries, may sublicense any
rights under this Agreement unless otherwise provided hereunder. |
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8.1 |
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Entire Agreement. This Agreement contains the complete agreement
between, and contains all of the promises and undertakings made to each other by, the
Parties regarding the subject matter of this Agreement. Any and all prior agreements,
representations, negotiations, and undertakings between the Parties, oral or written,
express or implied, with respect to the subject matter hereof are hereby superseded and
merged by and into this Agreement. This Agreement may not be revised or modified
without the mutual written consent of the Parties. |
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8.2 |
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Severability. If any paragraph, provision or clause of this Agreement
shall be found or held to be invalid or unenforceable by a court or other
decision-making body of competent jurisdiction, in a judgment from which no further
appeal can be taken, the remainder of this Agreement shall remain valid and
enforceable, and to the extent required in the pursuit of this Agreement, the Parties
shall negotiate in good faith a substitute, valid and enforceable provision that
reflects the Parties intent in entering this Agreement. |
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8.3 |
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No Other Rights. Nothing contained in this Agreement shall be construed
as conferring any rights by implication, estoppel or otherwise, under any non-patent
intellectual property right, or any patent, other than the Patents licensed to Buyer
Parent and HITACHI. Neither Party is required hereunder to furnish or disclose to the
other any technical or other information (including copies of Patents licensed to Buyer
Parent and HITACHI.) |
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ADR Provision. The Parties agree that, in the event of a dispute
arising under this Agreement, the Parties shall agree to attend a non-binding mediation
prior to bringing any action in a court of law. The mediation shall be facilitated by a
neutral third-party, selected by the parties. A representative from each Party with
authority to settle on behalf of that party shall attend the mediation in person. The
purpose of the mediation is to resolve the disputed issue(s) without the need for
formal legal proceedings. |
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8.5 |
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Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts entered into
and fully performed in such state. |
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8.6 |
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Jurisdiction. The Parties agree that the Delaware Court of Chancery
(and if jurisdiction in the Delaware Court of Chancery shall be unavailable, any
Delaware State court and the Federal court of the United States of America sitting in
the State of Delaware) shall have exclusive jurisdiction of interpreting or enforcing
this Agreement. The parties expressly waive their right to a trial by jury. |
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8.7 |
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Counterparts. This Agreement may be executed in identical counterparts,
each of which shall constitute an original and all of which shall constitute one and
the same agreement. |
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8.8 |
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Bankruptcy Code. The Parties acknowledge and agree that the rights and
licenses granted in this Agreement, including but not limited to Section 2.0, are
intellectual property as defined in Section 101 (35) of the United States Bankruptcy
Code, as the same may be amended from time to time (the Code), for purposes of
Section 365(n) of the Code, and have been licensed in this Agreement in a
contemporaneous exchange for value. |
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8.9 |
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Further Assurances. Each Party hereto shall execute and cause to be
delivered to each other Party hereto such instruments and other documents, and shall
take such other actions, as such other Party may reasonably request, to effect,
evidence, record or perfect any of the licenses and other rights set forth in this
Agreement. The requesting Party shall reimburse the other Party for its reasonable
out-of-pocket costs in responding to a request under this Section. |
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8.10 |
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Disclosure. The terms of this Agreement shall remain confidential and
neither Party shall disclose this Agreement or its terms to any individual or entity,
except (a) with the prior written consent of the other Party, (b) to the extent
disclosure by a Party is required by law or order of a court of competent jurisdiction,
provided that, in such event, such Party shall provide the other Party prompt, advance
notice of such requirement to allow intervention (and shall cooperate with the other
Party) to contest or minimize the scope of the disclosure (including through
application for a protective order) or (c) in confidence by a Party to its auditors or
legal counsel in connection with the provision of audit or legal services
(respectively) to such Party, to the extent required for the provision of such
services. |
[Remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to execute this
Agreement on the dates indicated below.
For and on behalf of
Hitachi Ltd., and HITACHI Sublicensed Subsidiaries,
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By:
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Name:
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Naoya Takahashi |
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Title:
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Executive Vice President and Executive Officer |
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For and on behalf of |
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Western Digital Corporation, a Delaware corporation, and its Subsidiaries, |
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By:
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Date: |
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[Signature Page for IP License Agreement]
Exhibit C
Form of
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement
(the Agreement) is made as of this [_____] day of [_____]
among Western Digital Corporation, a Delaware corporation (the Company), and Hitachi,
Ltd., a company incorporated under the laws of Japan (the Investor).
WHEREAS, the Company, Western Digital Ireland, Ltd., a corporation organized under the laws of
the Cayman Islands and an indirect wholly owned subsidiary of the Company (the Buyer),
the Investor, and Viviti Technologies Ltd., a company incorporated under the laws of the Republic
of Singapore and a wholly-owned subsidiary of the Investor (Viviti), are parties to that
certain Stock Purchase Agreement, dated as of March 7, 2011 (the Stock Purchase
Agreement), pursuant to which the Investor will receive from the Buyer on the Closing Date
Twenty Five Million (25,000,000) shares of the Companys Common Stock (the Shares) as a
portion of the consideration for the sale of the Investors stock in Viviti; and
WHEREAS, in connection with the Stock Purchase Agreement and the transfer of the Shares to the
Investor, the parties desire to enter into this Agreement in order to establish certain rights and
restrictions relating to the Investors ownership of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
for other good and valid consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. The following terms shall have the following meanings:
13D Group means any partnership, limited partnership, syndicate or other group, as
those terms are used within the meaning of Section 13(d)(3) of the Exchange Act.
Action means any action, suit, proceeding, hearing, order, charge, complaint, claim,
arbitration or investigation at Law or in equity, or before any Governmental Entity.
Affiliate means any Person now or hereafter controlling, controlled by or under
common control with another Person.
Agreement has the meaning set forth in the Preamble.
Beneficial Owner, Beneficial Ownership, Beneficially Own or
Beneficially Owned shall refer to the concept of beneficial ownership in Rule 13d-3
promulgated under the Exchange Act.
Board or Board of Directors means the Board of Directors of the Company.
brokers transaction has the meaning ascribed to such term under Rule 144(g) under
the Securities Act.
Business Day means a day, other than Saturday, Sunday or public holidays in the
United States of America.
Buyer has the meaning set forth in the Recitals.
Change of Control means the existence or occurrence of any of the following: (i) the
sale, conveyance or disposition by the Company of more than fifty percent (50%) of the Companys
assets; (ii) the consolidation, merger or other business combination of the Company with or into
any other entity, unless, immediately after such consolidation, merger or other business
combination, shareholders of the Company immediately prior to the consummation of the transaction
continue to own Equity Securities representing, directly or indirectly, more than fifty percent
(50%) of the aggregate voting rights of such new or surviving entity; or (iii) the acquisition by
any Person, whether singly or as part of a 13D Group, as a result of one transaction or a series of
transactions over time, of Equity Securities representing, directly or indirectly, more than fifty
percent (50%) of the aggregate voting rights of the Company. For purposes of this definition, a
sale of more than fifty percent (50%) of the Companys assets includes a sale of more than fifty
percent (50%) of the aggregate value of the assets of the Company and its Affiliates or the sale of
equity interests of one or more of the Companys Affiliates with an aggregate value in excess of
fifty percent (50%) of the aggregate value of the Company and its Affiliates or any combination of
methods by which more than fifty percent (50%) of the aggregate value of the Company and its
Affiliates is sold.
Closing has the meaning set forth in the Stock Purchase Agreement.
Closing Date has the meaning set forth in the Stock Purchase Agreement.
Common Stock means the Common Stock of the Company, par value 0.01 United States
dollars.
Company has the meaning set forth in the Preamble.
Company Indemnitees has the meaning set forth in Section 4.06(b).
Company Supported Distribution means a public underwritten offering by the Company
of Registrable Securities that is designated by the Investor as a Company Supported Distribution
in the applicable Shelf Take-Down Notice or Demand Notice.
Competitors has the meaning set forth in Section 3.03(b)(i).
Competitor List Letter has the meaning set forth in Section 3.03(b)(i).
Competitor Transferees has the meaning set forth in Section 3.03(b)(i).
Demand Notice has the meaning set forth in Section 4.02(a).
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Demand Registration has the meaning set forth in Section 4.02(a).
Demand Registration Statement has the meaning set forth in Section 4.02(a).
Election Meetings has the meaning set forth in Section 2.01.
Equity Securities of the Company means any capital stock or other equity interests
of the Company, any securities convertible into, exercisable for or exchangeable for capital stock
or other equity interests of the Company, and any other rights, warrants or options to acquire any
of the foregoing securities.
Exchange Act means the Securities Exchange Act of 1934, as amended, and any
successor federal statute, and the rules and regulations thereunder, all as the same shall be in
effect from time to time.
Existing Shelf Registration Statement has the meaning set forth in Section
4.01(a).
FINRA means the Financial Industry Regulatory Authority.
FIRPTA Certificate has the meaning set forth in Section 3.03(e).
Governmental Entity means any supranational, foreign, domestic, federal,
territorial, state, county, city, township or other local governmental authority, or any
regulatory, self-regulatory, administrative or other agency, instrumentality, court, government
organization, quasi-governmental organization, mediator, arbitrator or arbitral forum (whether
public or private), commission, tribunal thereof, or any political or other subdivision, department
or branch of any of the foregoing, or any private body exercising any tax, regulatory or
governmental or quasi-governmental authority.
Indemnified Party has the meaning set forth in Section 4.06(c).
Indemnifying Party has the meaning set forth in Section 4.06(c).
Investor has the meaning set forth in the Preamble.
Investor Designee Termination Event has the meaning set forth in Section
2.06.
Investor Designee and Investor Designees have the meanings set forth in
Section 2.01.
Investor Indemnitees has the meaning set forth in Section 4.06(a).
Law means any foreign or domestic constitutional provision, act, statute or other
law, ordinance, rule, regulation or interpretation of any Governmental Entity and any binding and
enforceable decree, injunction, judgment, order, ruling, assessment, writ, doctrine, assessment or
arbitration award or similar form of decision or determination issued by a Governmental Entity.
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Lockup Period means, with respect to the Shares Beneficially Owned by the Investor,
the period commencing on the date of this Agreement and ending on the day that is one (1) year from
the date of this Agreement.
Losses shall have the meaning set forth in Section 4.06(a).
Other Securities means the Common Stock or other securities of the Company which the
Company is registering pursuant to a Registration Statement covered by ARTICLE 4.
Permitted Acquisition has the meaning set forth in Section 3.01(a).
Permitted Transfer has the meaning set forth in Section 3.03(d).
Person means any individual, sole proprietorship, partnership, limited liability
company, corporation, association, joint stock company, trust, joint venture, unincorporated
organization, any other business organization or entity, or Governmental Entity.
Piggyback Notice has the meaning set forth in Section 4.03(a).
Piggyback Registration has the meaning set forth in Section 4.03(a).
Prospectus means the prospectus included in any Registration Statement, as amended
or supplemented by any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such prospectus.
Registrable Securities means the Shares acquired by the Investor pursuant to the
Stock Purchase Agreement, as well as any shares of Common Stock or other securities issued as (or
issuable upon the conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange generally for, or in
replacement generally of, such Shares or other Registrable Securities and any securities issued in
exchange for such Shares or other Registrable Securities in any merger, reorganization,
consolidation, share exchange, recapitalization, restructuring or other comparable transaction of
the Company. As to any particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (i) a Registration Statement with respect to the sale by the
Investor has been declared or deemed effective by the SEC and such securities have been disposed of
pursuant to such effective Registration Statement, (ii) such securities have been otherwise
Transferred (other than pursuant to Section 3.03(d)(i) and in accordance with Section
6.04), (iii) such securities shall have ceased to be outstanding or (iv) such securities have
been or could all be sold in a single transaction without volume or other limitations pursuant to
Rule 144 (or any similar provisions then in force) under the Securities Act.
Registration Expenses has the meaning set forth in Section 4.04(a).
Registration Statement means any registration statement of the Company under the
Securities Act which permits the public offering of any of the Registrable Securities pursuant to
the provisions of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration
statement.
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SEC means the U.S. Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and any successor
federal statute, and the rules and regulations thereunder, all as the same shall be in effect from
time to time.
Shares has the meaning set forth in the Preamble.
Shelf Date has the meaning set forth in Section 4.01(a).
Shelf Registration Statement has the meaning set forth in Section 4.01(a).
Shelf Take-Down Notice has the meaning set forth in Section 4.01(b).
Significant Subsidiary means a significant subsidiary (as defined under the Exchange
Act) of the Company.
Standstill Period means the period commencing on the Closing Date and continuing
until the earlier to occur of (i) a Change of Control or (ii) the date which is 90 days following
the termination of the Investors rights pursuant to Section 2.06.
Stock Purchase Agreement has the meaning set forth in the Recitals.
Suspension Period has the meaning set forth in Section 4.05(a)(ii).
Transfer means (i) sell, assign, give, pledge, encumber, hypothecate, mortgage,
exchange or otherwise dispose, (ii) grant to any Person any option, right or warrant to purchase or
otherwise receive, or (iii) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences or other rights of ownership.
Viviti has the meaning set forth in the Recitals.
5
ARTICLE 2
BOARD REPRESENTATION
Section 2.01 Investor Designee Appointment and Nomination Right. The Investor shall
have the right to designate two nominees to serve as directors of the Company (each, an
Investor Designee and, together, the Investor Designees). The initial Investor
Designees shall be [_____] and [_____]. Promptly after the Closing, the Company shall increase
the size of the Board by two, and fill the resulting vacancies with the initial Investor Designees
in accordance with the Companys Bylaws. Thereafter, the Company shall (a) include the Investor
Designees in its slate of nominees for election to the Board of Directors at each annual or special
meeting of stockholders of the Company following the Closing at which directors are to be
elected and at which the seats held by the Investor Designees are subject to election (such
annual or special meetings, the Election Meetings) and (b) recommend that the Companys
stockholders vote in favor of the election of the Investor Designees, support the Investor
Designees for election in a manner no less favorable than the manner in which the Company supports
its other nominees, and otherwise use commercially reasonable efforts to cause the election of the
Investor Designees to the Board of Directors at each of the Election Meetings. The foregoing
appointment and nomination rights will be subject to the Investor Designees satisfying the
Companys Board Qualifications (as defined in Section 2.03); provided that, if an
Investor Designee does not meet the Board Qualifications, (i) the Company will not nominate a
replacement candidate in place of the rejected Investor Designee (unless the Investor does not
nominate a replacement candidate pursuant to its rights in the following clause (ii) within the
time period stated in such clause), and (ii) the Investor shall have the right (if exercised as
promptly as reasonably practicable and in any event within 30 days) to nominate a replacement
candidate in place of the rejected Investor Designee until such time as an Investor Designee that
meets the Board Qualifications is put forward by the Investor. For the avoidance of doubt, the
Company hereby affirms that each of the initial Investor Designees identified above satisfies the
Board Qualifications.
Section 2.02 Vacancies. At any time prior to an Investor Designee Termination Event,
if an Investor Designee who has been duly elected to the Board resigns from the Board, is removed
(with or without cause) pursuant to applicable Law or the Companys Bylaws, fails to satisfy the
Board Qualifications, dies or otherwise cannot or is not willing to stand for reelection or to
continue to serve as a member of the Board, the Company shall use commercially reasonable efforts
to cause the vacancy to be filled by a new Investor Designee prior to or concurrent with any
further meeting or action by the Board.
Section 2.03 Board Qualifications. Each Investor Designee shall, at the time of
nomination and at all times thereafter until such individuals service on the Board of Directors
ceases, (a) meet any applicable requirements under applicable Law, stock exchange rules or the
Companys corporate governance policies to be a member of the Board of Directors, (b) be an
executive officer or former executive officer of the Investor, (c) not be an officer or director of
any Competitor or Competitor Transferee, and (d) prior to being nominated, agree to comply with the
requirements of this Section 2.03 (the Board Qualifications). The Company shall not
revise or amend the Board Qualifications in a manner that has the intent or effect of adversely
affecting the nomination or election of an Investor Designee (by for instance, adding requirements
that all directors meet citizenship or independence requirements that would disqualify Persons
known by the Company to be the Investors probable designees).
Section 2.04 Compensation, Indemnification and Insurance. Investor Designees shall be
entitled to the same retainer, equity compensation or other fees or compensation, including travel
and expense reimbursement, paid to the non-employee directors of the Company for their services as
a director, including any service on any committee of the Board. For so long as an Investor
Designee continues to serve as a director and for a period of six (6) years thereafter, the Company
shall, to the extent permitted by applicable Laws, indemnify such Investor Designees and shall
maintain in full force and effect directors and officers liability insurance in reasonable
amounts from established and reputable insurers to the same extent it now indemnifies and provides
insurance for the non-executive members of the Board of
Directors. In all directors and officers insurance policies, each Investor Designee shall
be covered as an insured in such a manner as to provide the Investor Designee with rights and
benefits under such insurance policies no less favorable than provided to the other non-executive
directors of the Company.
6
Section 2.05 Committees. Unless otherwise agreed to by the Board of Directors, the
Investor Designees shall not be appointed to or otherwise gain membership on any of the Board
committees.
Section 2.06 Termination of Investor Designee Rights. Notwithstanding the foregoing:
(a) the Investors rights under this ARTICLE 2 with respect to one of the Investor
Designees shall terminate automatically at the end of the second full calendar year following the
Closing Date; and
(b) all of the Investors rights under this ARTICLE 2 shall terminate automatically
(in the case of (i) and (ii)) or following written notice from the Company (in the case of (iii))
upon the earliest to occur of:
(i) the Investor ceasing to Beneficially Own at least fifty percent (50%) of the Shares
received pursuant to the Stock Purchase Agreement;
(ii) if the Investor has first sold at least ten percent (10%) of the Shares received
pursuant to the Stock Purchase Agreement, the Investor ceasing to Beneficially Own at least
five percent (5%) of the total issued and outstanding Common Stock; or
(iii) any (A) breach by the Investor of the provisions of ARTICLE 3 of this
Agreement or (B) material breach by the Investor of the Non-Competition Agreement between
the parties entered into upon the Closing of the transactions contemplated by the Stock
Purchase Agreement, provided that in the case of (B), if such breach is a Remediable Breach
(as such term is defined in the Non-Competition Agreement) and such breach is cured pursuant
to the dispute resolution procedures set forth in Section 4 thereof, then such breach shall
not be an Investor Designee Termination Event (as defined below) hereunder.
(each of the events described in subsections (a) and (b) of this Section 2.06 are referred to as an
Investor Designee Termination Event). The Investor shall cause any applicable Investor
Designee to tender his resignation from the Board of Directors promptly upon the occurrence of an
Investor Designee Termination Event.
Section 2.07 Non-Transferability. The Investor may not Transfer to any Person all or
any portion of its rights under this ARTICLE 2 under any circumstances, notwithstanding the
Transfer of all or any portion of the Shares.
7
ARTICLE 3
INVESTOR RESTRICTIONS
Section 3.01 Standstill. During the Standstill Period and unless otherwise approved
by the Board of Directors (excluding any Investor Designees), the Investor will not, and will cause
each of its Affiliates, directors, officers or employees not to, directly or indirectly, acting
alone or as part of a 13D Group:
(a) acquire or agree, offer, seek or propose, whether by purchase, tender or exchange offer,
by joining any 13D Group or otherwise, to acquire ownership of any, (x) of the businesses or
material assets of the Company or any Significant Subsidiary (except for any transaction in the
ordinary course of business), (y) any Equity Securities or any equity securities of any Significant
Subsidiary, or (z) rights or options to acquire such ownership other than (i) the delivery of the
Shares pursuant to the Stock Purchase Agreement, (ii) the acquisition of the Companys securities
as a result of any stock splits, stock dividends or other distributions or recapitalizations or
offerings made available by the Company to holders of Common Stock, including rights offerings,
(iii) any acquisition of the Companys securities approved by the Board of Directors (excluding any
Investor Designees), or (iv) any acquisition of the Companys securities pursuant to a Permitted
Transfer (each event listed in clauses (i) through (iv), a Permitted Acquisition);
(b) engage in any solicitation (within the meaning of the Exchange Act) of proxies or
consents relating to the election of directors with respect to the Company, or become a
participant in any election contest (both within the meaning of the Exchange Act) seeking to
elect directors not nominated by the Board of Directors, other than the Investor Designees, or
call, or seek or propose to call, any meeting of the Companys shareholders in connection
therewith;
(c) in any manner, agree, attempt, seek or propose to deposit any securities of the Company or
any rights to acquire (whether currently, upon lapse of time, following the satisfaction of any
conditions, upon the occurrence of any event or any combination of the foregoing) any Equity
Securities of the Company in any voting trust or similar arrangement;
(d) form or join in the formation of a 13D Group (other than a 13D Group consisting only of
the Investor and its Affiliates) with respect to any Equity Securities or equity securities of any
Significant Subsidiary, or grant to any Person any proxy with respect to the exercise of voting
rights with respect to the Shares; or
(e) publicly announce any intention, plan or arrangement or finance (or arrange financing for)
any Person in connection with any of the foregoing.
Section 3.02 Permitted Actions.
(a) The restrictions set forth in Section 3.01(a)-Section 3.01(e) shall cease
to have effect if any of the following occurs (provided, that if any event described in
this Section 3.02 occurs and, during the following 12 months, none of the transactions
described below has been consummated, then the restrictions set forth in Section 3.01 shall
thereafter resume and continue to apply in accordance with their terms):
(i) in the event that the Company enters into a definitive agreement for a merger,
consolidation or other business combination transaction as a result of which the
stockholders of the Company immediately prior to the consummation of such transaction
would not own (including Beneficial Ownership) more than fifty percent (50%) of the
aggregate voting rights of the surviving entity;
8
(ii) in the event that a tender offer or exchange offer for more than 50% of the Common
Stock is commenced by any Person (and not involving any breach of Section 3.01)
which tender offer or exchange offer, if consummated, would result in a Change of Control,
and the Board of Directors recommends that the stockholders of the Company tender their
shares in response to such offer within ten (10) Business Days after the commencement
thereof or such longer period as shall then be permitted under U.S. federal securities Laws;
or
(iii) in the event that the Company makes any public announcement indicating that it is
actively pursuing a Change of Control, and such announcement is not disavowed by the Company
pursuant to a public announcement made within two Business Days of such first announcement.
(b) Notwithstanding the foregoing, this Section 3.02 shall not restrict or otherwise
apply to the activities of any Investor Designee in such Persons capacity as a director of the
Company, acting in good faith and in satisfaction of such Persons duties to the Company in such
capacity.
Section 3.03 Dispositions.
(a) Lockup Period. The Investor agrees that during the Lockup Period, without the
prior written consent of the Company, the Investor shall not, and shall not authorize, permit or
direct its subsidiaries or Affiliates to, directly or indirectly, Transfer any of the Shares.
(b) Competitor Transferees.
(i) During the term of this Agreement, the Investor agrees that it shall not, and shall
not allow any of its Affiliates to, Transfer, directly or indirectly, any of the Shares
knowingly to any Person identified in that certain competitor list letter (the
Competitor List Letter), dated as of the Closing Date, and provided to the
Investor at the Closing, as such letter may be amended from time to time in accordance with
Section 3.03(b)(ii) (collectively, Competitors), or to any Affiliate of
any such Person (Competitors and their respective Affiliates collectively, Competitor
Transferees), and any such Transfer shall be null and void; provided,
however, that the foregoing shall not prohibit any sale of Shares through brokers
transactions to a Person who the Investor has no reason to believe is a competitor (and, for
the avoidance of doubt, Investor shall have no duty of inquiry in connection with such
brokers transactions).
(ii) The Competitor List Letter identifies the Competitors as of the date hereof. The
Company may amend the Competitor List Letter following the date hereof to add or remove
Competitors from such Competitor List Letter, each such amendment to be effective upon
delivery of written notice thereof to the Investor, provided that (x) any Person so
added to the Competitor List Letter as a Competitor must be a material direct competitor of
the Company in one of its principal lines of business, as determined in
good faith by the Company, (y) there shall not be more than ten (10) Competitors in
total identified on the Competitor List Letter at any time, and (z) the Company may not
amend the Competitor List Letter (A) prior to the six month anniversary of the Closing, or
(B) more than twice per each twelve-month period thereafter.
9
(c) 5% Threshold. During the term of this Agreement, the Investor agrees that it
shall not, and shall not allow any of its Affiliates to, Transfer, directly or indirectly, any of
the Shares knowingly to any member of a 13D Group and any such Transfer shall be null and void;
provided, however, that the foregoing shall not prohibit any sale of Shares through
brokers transactions to a Person who the Investor has no reason to believe is a member of a 13D
Group (and, for the avoidance of doubt, Investor shall have no duty of inquiry in connection with
such brokers transactions).
(d) Permitted Transfers. Notwithstanding the foregoing, the following Transfers of the
Shares shall be permitted at any time (each a Permitted Transfer):
(i) by the Investor to any of its Affiliates and by any Affiliate of the Investor to
any other Affiliate of the Investor, provided that prior to and as a condition to
any such Transfer, (A) the Company is furnished with written notice of the name and address
of such Affiliate and the Shares Transferred, and (B) such Affiliate agrees in writing to be
bound by and subject to the terms and conditions of this Agreement; and provided,
further, that, with respect to any Transfer of registration rights under ARTICLE
4 in connection with any Permitted Transfer under this Section 3.03(d)(i) prior
to and as a condition to any such Transfer, such Affiliate agrees to designate the Investor
as its exclusive representative, agent and attorney-in-fact to exercise all of its rights
thereunder pursuant to a written agreement in form reasonably satisfactory to the Company;
or
(ii) by the Investor to a third party pursuant to a tender offer, exchange offer,
merger, consolidation or other transaction (A) which is recommended to the stockholders of
the Company by the Board of Directors; or (B) in the case of a merger or other business
combination transaction, which has been approved by the stockholders of the Company.
(e) Real Property Interests. In connection with a subsequent disposition of Shares,
the Investor may request a certification, in accordance with applicable Treasury Regulations, to
the effect that (i) any interests in the Company do not constitute U.S. real property interests
within the meaning of section 897(c)(1) of the Internal Revenue Code of 1986, as amended and (ii)
the Company is not, and has not been during the shorter of (A) the 5 years preceding the date of
the certification or (B) the Investors holding period for the Shares, a United States real
property holding corporation within the meaning of section 897(c)(2) of the Code (a FIRPTA
Certificate). Upon the request of a FIRPTA Certificate by the Investor, the Company agrees to
execute and deliver such FIRPTA Certificate within 10 days of such request, unless the Company
determines, after reasonable diligence, that it cannot execute the certification because it cannot
certify as to the information contained in clauses (i) or (ii). The Companys obligation under
this Section 3.03(e) shall continue until such time as the Investor has disposed of all of
the Shares received pursuant to the Stock Purchase Agreement.
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ARTICLE 4
REGISTRATION RIGHTS
Section 4.01 Shelf Registration.
(a) On or before the expiration of the Lockup Period (the Shelf Date), so long as
the Company is eligible to do so, the Company shall file with the SEC a Registration Statement
providing for registration and resale, on a continuous or delayed basis pursuant to Rule 415 under
the Securities Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC, of all of the Registrable Securities, provided
that such obligation shall be satisfied if the Company shall have in effect an automatically
effective shelf registration statement on Form S-3ASR (or any comparable or successor form or forms
then in effect) (an Existing Shelf Registration Statement) as of the Shelf Date (any such
registration statement, a Shelf Registration Statement) that covers resale of the
Registrable Securities; provided, further, that for the avoidance of doubt, the
existence of an Existing Shelf Registration Statement shall not have any effect on the restrictions
set forth in Section 3.03. The Shelf Registration Statement shall be on Form S-3 (or any
comparable or successor form or forms then in effect) under the Securities Act; provided,
however, that if the Company is a well-known seasoned issuer (as defined in Rule 405 under
the Securities Act) at the time of filing of the Shelf Registration Statement with the SEC, such
Shelf Registration Statement shall be designated by the Company as an automatic shelf registration
statement (as defined in Rule 405 under the Securities Act). The Company shall use its
commercially reasonable efforts to keep the Shelf Registration Statement continuously effective
under the Securities Act until the Investor no longer holds any Registrable Securities. If the
Shelf Registration Statement is not on Form S-3ASR, the Company shall use commercially reasonable
efforts to cause the Shelf Registration Statement to become effective, as promptly as practicable,
but in no event later than one hundred twenty (120) days following the filing of the Shelf
Registration Statement.
(b) The Investor agrees that if it wishes to sell Registrable Securities pursuant to a Shelf
Registration Statement and related Prospectus, it will do so in accordance with this Section
4.01(b) and Section 4.05. In the event the Investor wishes to sell Registrable
Securities pursuant to a Shelf Registration Statement and related Prospectus, whether in an
underwritten offering or otherwise that would require action by the Company pursuant to Section
4.01(b)(i), the Investor agrees to notify the Company of such intent (a Shelf Take-Down
Notice) and shall deliver a Shelf Take-Down Notice at least twenty (20) Business Days prior to
any intended distribution of Registrable Securities under the Shelf Registration Statement, it
being agreed that if the Investor intends to distribute any Registrable Securities by means of an
underwritten offering it shall promptly so advise the Company and the Company shall reasonably
cooperate with the Investor to facilitate such distribution, including the actions required
pursuant to Section 4.05(a)(viii) and, if a Company Supported Distribution is requested,
Section 4.05(a)(xiv). From and after the date the Shelf Registration Statement is declared
or deemed effective, the Company shall, as promptly as practicable after the date of the Shelf
Take-Down Notice:
(i) if required by applicable Law, file with the SEC a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable Law, file a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document so that
the Investor is named as a selling security holder in the Shelf Registration Statement and
the related Prospectus in such a manner as to permit the Investor to deliver or be deemed to
have delivered such Prospectus to purchasers of Registrable Securities in accordance with
applicable Law and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use commercially reasonable efforts to cause such post-effective
amendment to be declared or deemed effective under the Securities Act as promptly as
practicable;
11
(ii) provide the Investor copies of any documents filed pursuant to Section
4.01(b)(i); and
(iii) notify the Investor as promptly as practicable after the effectiveness under the
Securities Act of any post-effective amendment filed pursuant to Section 4.01(b)(i);
provided, however, that if such Shelf Take-Down Notice is delivered during a
Suspension Period, the Company shall so inform the Investor and shall take the actions set
forth in clauses (i) and (ii) above promptly upon expiration of the Suspension Period in
accordance with Section 4.05; provided, further, that the Investor
shall not be entitled to deliver to the Company more than one (1) Shelf Take-Down Notice in
any twelve (12) month period and each Shelf Take-Down Notice may only be made if the sale of
the Registrable Securities covered thereby is reasonably expected to result in aggregate
gross cash proceeds in excess of Fifty Million Dollars ($50,000,000) (without regard to any
underwriting discount or commission) and, provided, further, that the
Investor shall not be entitled to request more than three (3) Company Supported
Distributions in the aggregate. A Shelf Take-Down Notice may not be made without the
Companys prior written consent (not to be unreasonably withheld, delayed or conditioned) if
the sale of the Registrable Securities covered thereby is reasonably expected to exceed the
greater of (i) the value of twelve million five hundred thousand (12,500,000) Shares at the
time of the sale or (ii) Five Hundred Million Dollars ($500,000,000).
(c) If any of the Registrable Securities to be sold pursuant to a Shelf Registration Statement
are to be sold in a firm commitment underwritten offering which underwritten offering was initially
requested by the Investor pursuant to a Shelf Take-Down Notice, and the managing underwriter of
such underwritten offering advises the Investor that it is their good faith opinion that the total
number or dollar amount of Registrable Securities proposed to be sold in such offering, together
with any Other Securities proposed to be included by the Company or holders thereof which are
entitled to include securities in such Registration Statement, exceeds the total number or dollar
amount of such securities that can be sold without having an adverse effect on the price, timing or
distribution of the Registrable Securities to be so included, together with all such Other
Securities, then there shall be included in such firm commitment underwritten offering the number
or dollar amount of Registrable Securities and such Other Securities that in the opinion of such
managing underwriter can be sold without so adversely affecting such offering, and such number of
Registrable Securities and Other Securities shall be allocated for inclusion as follows:
(i) first, the Registrable Securities for which inclusion in such underwritten offering
was requested by the Investor; and
(ii) second, among the Company and any holders of Other Securities, pro rata, based on
the number of Other Securities proposed to be included in such underwritten offering by the
Company and the number of Other Securities Beneficially Owned by each such holder of Other
Securities;
12
(d) The Investor shall have the right to notify the Company that it has determined that the
Shelf Take-Down Notice be abandoned or withdrawn, in which event the Company shall promptly abandon
or withdraw all activities undertaken in connection with such offering with respect to Registrable
Securities, and such withdrawn Shelf Take-Down Notice shall not count against the limit of Shelf
Take-Down Notices or Company Supported Distributions, as applicable; provided,
however, that the Company shall not be required to pay for expenses of any registration
proceeding begun pursuant to Section 4.01(a), which has been subsequently abandoned or
withdrawn pursuant to this Section 4.01(d) at the request of the Investor, and shall be
reimbursed by the Investor for reasonable and documented out-of-pocket expenses (including legal
fees and printing expenses) so incurred, unless the withdrawal is based upon material adverse
information concerning the Company that the Company has not publicly disclosed in compliance with
applicable securities Laws at least five (5) Business Days prior to the Companys receipt of such
withdrawal request.
(e) In the event that the SEC sets forth a limitation on the securities that may be registered
on a particular Shelf Registration Statement, the Company may reduce the number of securities to be
registered on such Shelf Registration Statement to such number of securities as allowed by the SEC.
Section 4.02 Demand Registration.
(a) At any time following the expiration of the Lockup Period, if the Company is unable to
file, cause to be effective or maintain the effectiveness of a Shelf Registration Statement as
required under Section 4.01, the Investor shall have the right, by delivering a written
notice to the Company (a Demand Notice), to require the Company to register under and in
accordance with the provisions of the Securities Act the number of Registrable Securities
Beneficially Owned by the Investor and requested by such Demand Notice to be so registered (a
Demand Registration); provided, however, that the Company shall not be
required to effect more than three (3) Demand Registrations for underwritten offerings pursuant to
this Section 4.02(a); provided, further, that the Investor shall not be
entitled to deliver to the Company more than two (2) Demand Registrations in any twelve (12) month
period; and provided, further, that a Demand Registration may not be made until at
least one hundred and twenty (120) days after the date of a prior Demand Registration, and, in any
event, a Demand Notice may only be made if the sale of the Registrable Securities requested to be
registered by the Investor is reasonably expected to result in aggregate gross cash proceeds in
excess of Fifty Million Dollars ($50,000,000) (without regard to any underwriting discount or
commission); and provided, further, that the Investor shall not be entitled to
request more than three (3) Company Supported Distributions in the aggregate (including
underwritten Demand Registrations). A Demand Registration may not exceed the greater of (i) the
value of twelve million five hundred thousand (12,500,000) Shares or (ii) Five Hundred Million
Dollars ($500,000,000) without the Companys prior written consent (not to be unreasonably
withheld, delayed or conditioned). A Demand Notice shall also specify the expected method or
methods of disposition
13
of the
applicable Registrable Securities. Following receipt of a Demand Notice, the Company shall use
commercially reasonable efforts to file, as promptly as reasonably practicable, but not later than
ninety (90) Business Days after receipt by the Company of such Demand Notice, a Registration
Statement relating to the offer and sale of the Registrable Securities requested to be included
therein by the Investor in accordance with the methods of distribution elected (a Demand
Registration Statement) and shall use commercially reasonable efforts to cause such
Registration Statement to be declared effective under the Securities Act as promptly as practicable
after the filing thereof, but in no event later than one hundred twenty (120) days following the
date of filing the Registration Statement, it being agreed that if the Investor intends to
distribute any Registrable Securities by means of an underwritten offering it shall promptly so
advise the Company and the Company shall cooperate with the Investor to facilitate such
distribution, including the actions required pursuant to Section 4.05(a)(viii) and, if a
Company Supported Distribution is requested, Section 4.05(a)(xiv).
(b) If any of the Registrable Securities registered pursuant to a Demand Registration are to
be sold in a firm commitment underwritten offering, and the managing underwriter of such
underwritten offering advises the Investor in writing that it is their good faith opinion that the
total number or dollar amount of Registrable Securities proposed to be sold in such offering,
together with any Other Securities proposed to be included by the Company or holders thereof which
are entitled to include securities in such Registration Statement, exceeds the total number or
dollar amount of such securities that can be sold without having an adverse effect on the price,
timing or distribution of the Registrable Securities to be so included together with all such Other
Securities, then there shall be included in such firm commitment underwritten offering the number
or dollar amount of Registrable Securities and such Other Securities that in the opinion of such
managing underwriter can be sold without so adversely affecting such offering, and such number of
Registrable Securities and Other Securities shall be allocated for inclusion as follows:
(i) first, the Registrable Securities for which inclusion in such underwritten offering
was requested by the Investor; and
(ii) second, among the Company and any holders of Other Securities, pro rata, based on
the number of Other Securities proposed to be included in such underwritten offering by the
Company and the number of Other Securities Beneficially Owned by each such holder of Other
Securities;
(c) In the event of a Demand Registration, the Company shall be required to maintain the
continuous effectiveness of the applicable Registration Statement for a period of at least thirty
(30) days after the effective date thereof or such shorter period in which all Registrable
Securities included in such Registration Statement have actually been sold.
(d) The Investor shall have the right to notify the Company that it has determined that the
Registration Statement relating to a Demand Registration be abandoned or withdrawn with respect to
Registrable Securities, in which event the Company shall promptly abandon or withdraw such
Registration Statement with respect to Registrable Securities and such abandoned or withdrawn
registration shall not count against the limit of Demand Registrations or Company Supported
Distributions, as applicable; provided, however, that the Company shall not be
required to pay for expenses of any registration proceeding begun pursuant to Section
4.02(a), which has been subsequently abandoned or withdrawn pursuant to this Section
4.02(d) at the request of the Investor, and shall be reimbursed by the Investor for reasonable
and documented out-of-pocket expenses (including legal fees and printing expenses) so incurred,
unless the withdrawal is based upon material adverse information concerning the Company that the
Company has not publicly disclosed at least five (5) Business Days prior to the Companys receipt
of such withdrawal request.
14
(e) Notwithstanding anything contained herein to the contrary, with the prior written consent
of the Investor (which consent shall not be unreasonably withheld, conditioned or delayed), the
Company shall be entitled to coordinate (but not in violation of Section 4.02) any
offerings under this Section 4.02 with any offerings to be effected pursuant to similar
agreements with the holders of Other Securities, including, if practicable, by filing one
Registration Statement for all Other Securities.
(f) The Investor may not make a Demand Registration in the event that a Shelf Registration
Statement is effective and covers the number of Registrable Securities that the Investor wishes to
sell.
(g) In the event that the SEC sets forth a limitation on the number of securities to be
registered in a particular Demand Registration, the Company may reduce the number of securities to
be registered in such Demand Registration to such number of securities as allowed by the SEC.
Section 4.03 Piggyback Registration.
(a) At any time following the expiration of the Lockup Period, if the Company proposes to file
a registration statement under the Securities Act with respect to an offering (i) by the Company
for its own account (other than a registration statement (A) on Form S-4, Form S-8 or any successor
forms thereto, (B) filed solely in connection with any employee benefit, dividend reinvestment, or
any other similar plan or (C) for the purpose of effecting a rights offering afforded to all
holders of the Shares) or (ii) for the account of any of its security holders, the Company will
give the Investor written notice of such filing at least ten (10) Business Days prior to the
anticipated filing date (the Piggyback Notice). The Piggyback Notice shall offer the
Investor the opportunity to include in such registration statement the number of Registrable
Securities (for purposes of this Section 4.03, Registrable Securities shall be deemed to
mean solely securities of the same type as those proposed to be offered for the account of the
Company or its security holders) as they may request (a Piggyback Registration). Subject
to Section 4.03(b), the Company shall include in each such Piggyback Registration all
Registrable Securities with respect to which the Company has received a written request from the
Investor for inclusion therein within five (5) Business Days after notice has been given to the
Investor. The Company shall be required to maintain the effectiveness of the Registration Statement
for a Piggyback Registration for a period of at least thirty (30) days after the effective date
thereof or such shorter period in which all Registrable Securities included in such Registration
Statement have actually been sold.
15
(b) If any of the securities to be registered pursuant to the registration giving rise to the
Investors rights under this Section 4.03 are to be sold in an underwritten offering, the
Investor shall be permitted to include all Registrable Securities requested to be included in such
registration in such offering on the same terms and conditions as the securities of the Company or
its security holders included therein; provided, however, that if such offering
involves a firm commitment underwritten offering and the managing underwriter of such underwritten
offering advises the Investor in writing that it is their good faith opinion that the total number
or dollar amount of Registrable Securities proposed to be sold in such offering, together with all
Other Securities that the Company and any other Persons having rights to participate in such
registration intend to include in such offering, exceeds the total number or dollar amount of such
securities that can be sold without having an adverse effect on the price, timing or distribution
of the Registrable Securities to be so included together with all such Other Securities, then there
shall be included in such firm commitment underwritten offering the number or dollar amount of
Registrable Securities and such Other Securities that in the opinion of such managing underwriter
can be sold without so adversely affecting such offering, and such number of Registrable Securities
and Other Securities shall be allocated for inclusion as follows:
(i) first, all Other Securities being sold by the Company or by any Person (other than
the Investor) exercising a contractual right to demand registration pursuant to which such
registration statement was filed;
(ii) second, to the Investor, and
(iii) third, among any other holders of Other Securities.
(c) The Company shall have the right to terminate or withdraw any registration initiated by it
under this Section 4.03 prior to the effectiveness of the related Registration Statement
and shall have no obligation to register any Registrable Securities in connection with such
registration, except to the extent provided herein. The Registration Expenses of such withdrawn
Piggyback Registration shall be borne by the Company in accordance with Section 4.04. The
Investor shall have the right to withdraw its request for inclusion of its Registrable Securities
in any Piggyback Registration by giving written notice to the Company of its request to withdraw at
least two (2) Business Days prior to the planned effective date of the related Registration
Statement; provided, however, that the Company shall not be required to pay for
expenses relating to the proposed inclusion of the Investors Registrable Securities in such
Piggyback Registration, and shall be reimbursed by the Investor for reasonable and documented
out-of-pocket expenses (including legal fees and printing expenses) so incurred, unless the
withdrawal is based upon material adverse information concerning the Company that the Company has
not publicly disclosed in compliance with applicable securities Laws at least five (5) Business
Days prior to the Companys receipt of such withdrawal request.
(d) In the event that the SEC sets forth a limitation on the number of securities that may be
registered in a particular Piggyback Registration, the Company may reduce the number of securities
to be registered in such Piggyback Registration to such number of securities as allowed by the SEC.
16
Section 4.04 Registration Expenses.
(a) Expenses of the Company. Except to the extent otherwise provided herein, in
connection with registrations pursuant to Section 4.01, Section 4.02, or
Section 4.03, the Company shall pay all of the registration expenses incurred in connection
with the registration thereunder (the Registration Expenses), including, without
limitation, all: (i) reasonable registration and filing fees, (ii) Financial Industry Regulatory
Authority, Inc. fees, (iii) printing expenses, (iv) fees and disbursements of the Companys
counsel, (v) blue sky fees and expenses, (vi) expenses of the Companys independent accountants in
connection with any regular or special reviews or audits incident to or required by any such
registration, (vii) expenses incurred in connection with making road show presentations and holding
meetings with potential investors and (viii) up to fifty thousand dollars ($50,000) of reasonable
fees and disbursements of one firm of attorneys acting as counsel of the Investor.
(b) Expenses of the Investor. The Investor shall be responsible for (i) any allocable
underwriting fees, discounts or commissions, (ii) any allocable commissions of brokers and dealers,
(iii) fees and disbursements of the Investors counsel other than as provided in Section
4.04(a), and (iv) capital gains, income and transfer taxes, if any, relating to the sale of
Registrable Securities of the Investor.
Section 4.05 Registration Procedures.
(a) In connection with the registration of any Registrable Securities pursuant to this
Agreement, the Company will keep the Investor advised in writing as to the initiation of each such
registration and the Company will:
(i) Use commercially reasonable efforts to keep each Registration Statement
continuously effective during the period such Registration Statement is required to remain
effective pursuant to the terms of this Agreement; upon the occurrence of any event that
would cause the Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for resale of
Registrable Securities during the period such Registration Statement is required to remain
effective pursuant to the terms of this Agreement, the Company shall file promptly an
appropriate amendment to the Registration Statement, a supplement to the Prospectus or a
report filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
in the case of clause (A), correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), the Company shall use commercially reasonable efforts to cause
such amendment to be declared or deemed effective and the Registration Statement and the
related Prospectus to become usable for their intended purposes as soon as practicable
thereafter.
(ii) Notwithstanding anything to the contrary contained herein, the Company may delay
filing or suspend the effectiveness of a Registration Statement and the Investors right to
sell thereunder (each such period, a Suspension Period) if (A) the Company is
pursuing an acquisition, merger, reorganization, disposition or similar transaction and the
Company determines in good faith that the Companys ability to pursue or consummate such a
transaction would be materially adversely affected by any
required disclosure of such transaction in the registration statement, or (B) the
Company has experienced some other material non-public event the disclosure of which at such
time could reasonably be expected to materially adversely affect the Company;
provided that the Company may not take any action pursuant to this Section
4.05(a) for a period of time in excess of 120 days in the aggregate in any twelve (12)
month period.
17
(iii) Prepare and file with the SEC such amendments and post-effective amendments to
each Registration Statement as may be necessary to keep such Registration Statement
effective during the period provided herein.
(iv) Advise the Investor, promptly (which notice pursuant to clauses (B) through (D)
below shall be accompanied by an instruction to suspend the use of the Prospectus until the
Company shall have remedied the basis for such suspension and promptly thereafter notified
the Investor of such remediation):
(A) when the Prospectus or any Prospectus supplement or post-effective
amendment is proposed to be or has been filed, and, with respect to the
Registration Statement or any post-effective amendment thereto, when the same
has become effective;
(B) of any request by the SEC or any other Governmental Entity received
by the Company for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto;
(C) of the issuance by the SEC of any stop order received by the Company
suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction, or the threatening or initiation of any proceeding for any of
the preceding purposes;
(D) of the receipt by the Company 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 existence of any fact or the happening of any event, during
the pendency of a distribution of Registrable Securities pursuant to a
Registration Statement, that makes any statement of a material fact made in
such Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading.
18
(v) Unless any Registrable Securities shall be in book-entry form only, cooperate with
the Investor to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends (unless required
by applicable securities Laws), and enable such Registrable Securities to be in such
denominations and registered in such names as the Investor may request at least two (2)
Business Days before any sale of Registrable Securities.
(vi) Use commercially reasonable efforts to promptly register or qualify any
Registrable Securities under such other securities or blue sky laws of such jurisdictions
within the United States as any Investor reasonably requests and which may be reasonably
necessary or advisable to enable such Investor to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Investor, keep such registrations
or qualifications in effect for so long as the applicable Registration Statement is required
to remain in effect and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Investor to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Investor; provided,
however, that the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify but for
this Agreement, (B) subject itself to taxation in any jurisdiction where it would not
otherwise be subject to taxation but for this Agreement or (C) consent to general service of
process in any jurisdiction where it would not otherwise be subject to such service but for
this Agreement.
(vii) Use commercially reasonable efforts to promptly cause any Registrable Securities
covered by a Registration Statement to be registered with or approved by such other
Governmental Entity within the United States as may be necessary to enable the Investor to
consummate the disposition of such Registrable Securities in accordance with the intended
methods of disposition set forth in such Registration Statement.
(viii) In the event that the Investor advises the Company that the Investor intends to
distribute any Registrable Securities by means of an underwritten offering, whether pursuant
to Section 4.01 or Section 4.02, enter into an underwriting agreement in
customary form, scope and substance (including customary representations, warranties,
covenants and indemnifications) and take all such other actions reasonably requested by the
Investor or by the managing underwriter, if any, to expedite or facilitate the underwritten
disposition of such Registrable Securities and deliver such documents and certificates as
may be reasonably requested by the Investor, its counsel and the managing underwriter, if
any.
(ix) Use its commercially reasonable efforts to prevent, or obtain the withdrawal of,
any stop order or other order suspending the use of any Prospectus.
(x) Deliver to the Investor and each underwriter, if any, without charge, as many
copies of the applicable Prospectus and any amendment or supplement thereto as the Investor
or underwriter may reasonably request.
19
(xi) Cooperate with the Investor and the underwriters, if any, of such Registrable
Securities and their respective counsel in connection with any filings required by Law to be
made with FINRA.
(xii) Obtain opinions of counsel to the Company and updates thereof addressed to the
Investor and the underwriters or initial purchasers, if any, covering matters as are
customarily requested in opinions covering secondary resale offerings of companies of
comparable size, maturities and lines of business as the Company.
(xiii) Obtain comfort letters and updates thereof from the Companys independent
certified public accountants, such letters covering matters as are customarily requested in
comfort letters covering secondary resale offerings of companies of comparable size,
maturities and lines of business as the Company.
(xiv) Only in the case of a Company Supported Distribution, as requested by the
managing underwriter in any such underwritten offering, provide reasonable assistance with
the marketing of any such offering, including causing members of the Companys management
team to participate in a reasonable and customary number of conference calls, investor
meetings and due diligence sessions, in each case and, to the extent to be in-person, to
take place in the continental United States; provided, that any such requested
assistance shall not be required if it would, in the Companys reasonable judgment,
interfere with the normal business operations of the Company in any substantial respect.
(b) The Investor agrees by acquisition of a Registrable Security that the Investor shall not
be entitled to sell any of such Registrable Securities pursuant to a Registration Statement, or to
receive a Prospectus relating thereto, unless the Investor has furnished the Company with the
information set forth in the next sentence at least five (5) Business Days prior to the filing of
the applicable Registration Statement or Prospectus. The Company may require the Investor pursuant
to a Registration Statement to furnish to the Company such customary information regarding the
Investor and the distribution of such Shares as the Company may reasonably require for inclusion in
such Registration Statement. The Investor agrees promptly to furnish to the Company all
information required to be disclosed in order to make the information previously furnished to the
Company by the Investor not misleading. Any sale of any Registrable Securities by the Investor
shall constitute a representation and warranty by the Investor that the information relating to the
Investor and its plan of distribution is as set forth in the Prospectus delivered in connection
with such disposition, that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact provided by the Investor and that such Prospectus does not as of the
time of such sale omit to state any material fact provided by the Investor necessary to make the
statements in such Prospectus, in light of the circumstances under which they were made, not
misleading. The Company may exclude from such Registration Statement the Registrable Securities of
the Investor if the Investor fails to furnish such information within a reasonable time after
receiving such request. The Company shall not include in any Registration Statement any information
regarding, relating to or referring to the Investor or its plan of distribution without the
approval of the Investor in writing. Notwithstanding any other provision of this Agreement, the Investor shall also provide the
Company as a condition to including Registrable Securities in a Registration Statement, such
information as is reasonably requested by the Company in response to the Companys customary
questionnaire seeking the information required by the Securities Act and the rules and regulations
promulgated thereunder.
20
(c) The Investor shall not use any free writing prospectus (as defined in Rule 405 under the
Securities Act) in connection with the sale of Registrable Securities.
(d) Any single offering of Registrable Securities pursuant to any Shelf Registration Statement
or any Demand Registration that is reasonably expected to result in aggregate cash proceeds in
excess of One Hundred Million Dollars ($100,000,000) shall be made pursuant to an underwritten
offering. The Investor shall determine the managing underwriters for any offering initiated by the
Investor, subject to the consent of the Company (which shall not be unreasonably withheld,
conditioned or delayed). The Company shall determine the managing underwriters in any Piggyback
Registration, subject to the consent of the Company (which shall not be unreasonably withheld,
conditioned or delayed).
Section 4.06 Indemnification.
(a) The Company shall indemnify and hold harmless, to the fullest extent permitted by Law, (1)
the Investor if the Registrable Securities are covered by a Registration Statement or Prospectus,
(2) each of the Investors Affiliates, officers, directors, shareholders, employees, advisors,
agents, (3) each underwriter (including the Investor if deemed to be an underwriter pursuant to any
SEC comments or policies), if any, and (4) each Person who controls (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively,
Investor Indemnitees), from and against all losses, claims, damages, liabilities,
penalties, judgments, suits, costs and expenses (including reasonable legal fees and disbursements,
which shall be reimbursed periodically as incurred) (collectively, Losses) in connection
with any sale of Registrable Securities pursuant to a Registration Statement under this Agreement
arising out of or based upon (i) any untrue or alleged untrue statement of a material fact
contained in any such Registration Statement or any Prospectus (including preliminary or final)
relating to the registration of such Registrable Securities or any amendment or supplement thereto
or any document incorporated by reference therein or any omission or (ii) or any alleged omission
to state therein a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading, and will reimburse
to each of the Persons listed above, for any legal or any other expenses reasonably incurred in
connection with investigating and defending any such Losses; provided, however,
that the Company shall not be liable to such Investor Indemnitee in any such case to the extent
that any such Loss, claim, damage, liability or expense arises out of or is based upon (A) an
untrue statement or alleged untrue statement or omission or alleged omission made in such
Registration Statement, including any such preliminary or final Prospectus contained therein or any
such amendments or supplements thereto, or contained in any free writing prospectus (as such term
is defined in Rule 405 under the Securities Act) prepared by the Company or authorized by it in
writing for use by such Investor Indemnitee (or any amendment or supplement thereto), in reliance
upon and in conformity with information regarding such Investor Indemnitee or its plan of
distribution or ownership interests which was furnished in
writing to the Company expressly for use in connection with such Registration Statement,
including any such preliminary or final Prospectus contained therein or any such amendments or
supplements thereto (B) offers or sales effected by or on behalf of such Investor Indemnitee by
means of (as defined in Rule 159A under the Securities Act) a free writing prospectus (as
defined in Rule 405 under the Securities Act) or (C) the failure of any Investor Indemnitee to
deliver or make available to a purchaser of Registrable Securities a copy of any Registration
Statement, including any preliminary or final Prospectus contained therein or any amendments or
supplements thereto (if the same was required by applicable Law to be delivered or made available);
provided that the Company shall have delivered or made available to such Investor
Indemnitee such Registration Statement, including such preliminary or final Prospectus contained
therein and any amendments or supplements thereto.
21
(b) In connection with any Registration Statement in which the Investor is participating by
registering Registrable Securities, the Investor agrees to indemnify and hold harmless, to the
fullest extent permitted by Law, the Company, its Affiliates, the officers, directors,
shareholders, advisors, agents, representatives or other employees of the Company, each Person who
controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company, each underwriter, if any, and each Person who controls (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively,
Company Indemnitees), from and against all Losses, as incurred, arising out of or based
on any untrue or alleged untrue statement of a material fact contained in any such Registration
Statement or preliminary or final Prospectus relating to the registration of such Registrable
Securities or any amendment or supplement thereto or any document incorporated by reference
therein, or any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances in which they
were made, not misleading, in each case solely to the extent that such untrue or alleged untrue
statement or omission or alleged omission is made in such Registration Statement or in any
preliminary or final Prospectus contained therein or any such amendments or supplements thereto or
contained in any free writing prospectus (as such term is defined in Rule 405 under the Securities
Act) in reliance upon and in conformity with written information furnished to the Company by such
Selling Investor expressly for inclusion in such document; provided, however, that
in no event shall the liability of the Investor hereunder be greater in amount than the dollar
amount of the net proceeds received by the Investor upon the sale of the Registrable Securities
under the Registration Statement giving rise to such indemnification obligation.
(c) If any Person shall be entitled to indemnity hereunder (an Indemnified Party),
such Indemnified Party shall give prompt notice to the party from which such indemnity is sought
(the Indemnifying Party) of any claim or of the commencement of any Action with respect
to which such Indemnified Party has actual notice and seeks indemnification or contribution
pursuant hereto; provided, however, that the delay or failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation or liability except
to the extent that the Indemnifying Party has been actually prejudiced by such delay or failure.
The Indemnifying Party shall have the right, exercisable by giving written notice (including an
acknowledgement of its obligation to indemnify the Indemnified Party therefor on the terms set
forth herein) to an Indemnified Party promptly after the receipt of written
22
notice from such
Indemnified Party of such claim or Action, to assume, at the
Indemnifying Partys expense, the defense of any such Action, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that an Indemnified Party shall have the
right to employ separate counsel in any such Action and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless: (i)
the Indemnifying Party agrees to pay such fees and expenses; (ii) the Indemnifying Party fails
promptly to assume, or in the event of a conflict of interest cannot assume, the defense of such
Action or fails to employ counsel reasonably satisfactory to such Indemnified Party, in which case
the Indemnified Party shall also have the right to employ counsel and to assume the defense of such
Action or (iii) in the Indemnified Partys reasonable judgment a conflict of interest between such
Indemnified Party and Indemnifying Party may exist in respect of such Action; provided,
further, that the Indemnifying Party shall not, in connection with any one such Action or
separate but substantially similar or related Actions in the same jurisdiction, arising out of the
same general allegations or circumstances, be liable for the fees and expenses of more than one
firm of attorneys (together with appropriate local counsel) at any time for all of the Indemnified
Parties, or for fees and expenses that are not reasonable.
(d) Neither party shall settle, compromise, discharge or consent to an entry of judgment with
respect to a claim or liability subject to indemnification under this Section 4.06 without
the other partys prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed); provided that the Indemnifying Party may agree without the prior
written consent of the Indemnified Party solely to any settlement, compromise, discharge or consent
to an entry of judgment, in each case that relates only to money damages and by its terms obligates
the Indemnifying Party to pay the full amount of the liability in connection with such claim and
which unconditionally releases the Indemnified Party from all liability in connection with such
claim.
(e) If the indemnification provided for in this Section 4.06 is unavailable to hold
harmless each of the Indemnified Parties against any losses, claims, damages, liabilities and
expenses to which such parties may become subject under the Securities Act, then the Indemnifying
Party shall, in lieu of indemnifying each party entitled to indemnification hereunder, contribute
to the amount paid or payable by such party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect (i) the relative benefits
received by the Indemnifying Party, on the one hand, and the Indemnified Parties, on the other
hand, from the offering or (ii) if the allocation provided by clause (i) above is not permitted by
applicable Law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Indemnifying Party, on the one
hand, and such Indemnified Parties, on the other hand, in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of such parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact, or omission
or alleged omission to state a material fact, relates to information supplied by or concerning the
Indemnifying Party on the one hand, or by such Indemnified Party on the other, and such partys
relative intent, knowledge, access to information and opportunity to have corrected or prevented
such statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of
the Securities Act) shall be entitled to contribution from any Person that is not guilty of such
fraudulent misrepresentation.
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Section 4.07 Miscellaneous.
(a) With a view to making available the benefits of certain rules and regulations of the SEC
which may at any time permit the sale of the Registrable Securities to the public without
registration, the Company agrees, so long as there are outstanding Registrable Securities, to use
its commercially reasonable efforts to file with the SEC in a timely manner all reports and other
documents as the SEC may prescribe under Section 13(a) or 15(d) of the Exchange Act at any time
while the Company is subject to such reporting requirements of the Exchange Act; and
(b) Subject to the provisions hereof, in the event that the Company proposes to enter into an
underwritten public offering, to the extent requested by the managing underwriters, and provided
that the Company and all executive officers (as defined under the Exchange Act) and directors of
the Company are also so bound, the Investor agrees to enter into a customary agreement with the
managing underwriters not to effect any sale or distribution of equity securities of the Company,
or any securities convertible, exchangeable or exercisable for or into such securities, without the
consent of the managing underwriters, during the period beginning upon receipt of notice hereunder
that the Company intends to conduct an offering of its securities in accordance with the terms
hereof and ending ninety (90) Business Days following the effective date of such offering, except
pursuant to such offering in accordance with the terms hereof; provided, however,
that if any executive officer or director is released by such managing underwriters from its lockup
obligations herein, then the Investor shall be so released on a pro rata basis (with the percentage
of the Investors Registrable Securities so released being equal to the percentage of shares so
released for the executive officer or director having the highest percentage of released shares
among all of the executive officers or directors). The Company may impose stop-transfer
restrictions with respect to the securities subject to the foregoing restriction until the end of
the required stand-off period and shall lift such stop-transfer restrictions immediately upon the
end of such period.
(c) The registration rights granted to the Investor under this Agreement shall terminate on
the date on which the Investor no longer owns Registrable Securities.
(d) Except for this Agreement, the Company is not party to any agreement granting any holder
or prospective holder of any securities of the Company registration rights with respect to such
securities. From and after the date hereof, the Company shall not, without the prior written
consent of the Investor, enter into any agreement granting any holder or prospective holder of any
securities of the Company registration rights with respect to such securities unless such new
registration rights, including with respect to underwriters cutbacks and standoff obligations,
do not conflict with, the registration rights granted to Investor hereunder.
ARTICLE 5
TERMINATION
Section 5.01 Termination. Other than the termination provisions applicable to
particular Sections of this Agreement that are specifically provided elsewhere in this Agreement,
this Agreement shall terminate (a) at any time upon the mutual written agreement of the
Company and the Investor and (b) at such time as the Investor ceases to Beneficially Own any
Registrable Securities.
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ARTICLE 6
MISCELLANEOUS
Section 6.01 Amendment and Modification. This Agreement may not be amended, modified
or supplemented except by written agreement of the Company and the Investor.
Section 6.02 Titles and Subtitles; Interpretation. Unless otherwise indicated herein,
with respect to any reference made in this Agreement to a Section (or Article, Subsection,
Paragraph, Subparagraph or Clause), such reference shall be to a section (or article, subsection,
paragraph, subparagraph or clause) of, or an exhibit or schedule to, this Agreement. The table of
contents and any article, section, subsection, paragraph or subparagraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any reference made in this Agreement to a statute or statutory
provision shall mean such statute or statutory provision as it has been amended through the date as
of which the particular portion of the Agreement is to take effect, or to any successor statute or
statutory provision relating to the same subject as the statutory provision so referred to in this
Agreement, and to any then applicable rules or regulations promulgated thereunder. Whenever the
words include, includes or including are used in this Agreement, they shall be deemed, as the
context indicates, to be followed by the words but (is/are) not limited to. The words herein,
hereof, hereunder and words of like import shall refer to this Agreement as a whole, unless the
context clearly indicates to the contrary. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.
Where specific language is used to clarify or illustrate by example a general statement contained
herein, such specific language shall not be deemed to modify, limit or restrict the construction of
the general statement which is being clarified or illustrated.
Section 6.03 Extension; Waiver. At any time prior to the Closing Date, a party to
this Agreement may (a) extend the time for the performance of any of the obligations or acts of the
other party, (b) waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto, (c) waive compliance with any of the
agreements of the other party contained herein or (d) waive any condition to its obligations
hereunder. Any agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in a written instrument signed by such party. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any
right, power or remedy by any party, and no course of dealing among the parties, shall constitute a
waiver of any such right, power or remedy.
Section 6.04 Binding Nature; Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, Transferred or delegated by the Investor without prior
written consent of the Company, and any attempt to make any such assignment, Transfer or delegation
without such consent shall be null and void; provided that the Investor may assign its
registration rights under ARTICLE 4 in connection with any Permitted Transfer under
Section 3.03(d)(i).
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Section 6.05 Severability. Any provision of this Agreement that is invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any way the remaining
provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
Section 6.06 Notices and Addresses. All notices, requests, consents, waivers and
other communications hereunder shall be in writing and shall be deemed given: (a) when delivered if
delivered personally (including by courier); (b) on the third day after mailing, if mailed, postage
prepaid, by registered or certified mail (return receipt requested); (c) on the day after mailing
if sent by a nationally recognized overnight delivery service that maintains records of the time,
place, and recipient of delivery; or (d) upon receipt of a confirmed transmission, if sent by
telex, telecopy or facsimile transmission or e-mail, in each case to the other parties at the
following addresses, facsimile numbers or e-mail addresses or to such other addresses as may be
furnished in writing by one party to the others:
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Attention:
Facsimile:
E-mail:
with a copy (which shall not constitute notice) to:
Attention:
Facsimile:
E-mail:
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Attention:
Facsimile:
E-mail:
with a copy (which shall not constitute notice) to:
OMelveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Attention: J. Jay Herron, Esq. and Mark Easton, Esq.
Facsimile: (949) 823-6994
E-mail: jherron@omm.com; measton@omm.com
Section 6.07 Governing Law. This Agreement and the legal relations among the Parties
shall be governed by and construed in accordance with the Laws of the State of Delaware without
giving effect to any Law or rule that would cause the Laws of any jurisdiction other than the State
of Delaware to be applied.
Section 6.08 Complete Agreement. This document and the documents referred to herein
contain the complete agreement between the parties and supersede any prior understandings,
agreements or representations by or between the parties, written or oral, which may have related to
the subject matter hereof in any way.
Section 6.09 No Third-Party Beneficiaries. This Agreement is intended and agreed to
be solely for the benefit of the parties hereto, and no third party shall accrue any benefit, claim
or right of any kind whatsoever pursuant to, under, by or through this Agreement, except as
otherwise contemplated by Section 6.04.
Section 6.10 Counterparts and Signatures. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
Section 6.11 Further Assurances. Each party shall cooperate and take such action as
may be reasonably requested by another party in order to carry out the provisions and purposes of
this Agreement and the transactions contemplated hereby.
Section 6.12 Specific Performance. The parties acknowledge and agree that irreparable
damage would be caused in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached and money damages may not be an
adequate remedy for any such failure to perform or breach. Accordingly, the parties agree that, in
addition to any other remedy to which each party may be entitled at Law or in equity or under this
Agreement, each shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof, and each party expressly waives the defense that a
remedy in damages will be adequate.
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Section 6.13 Consent to Jurisdiction; Service of Process; Venue. Each of the parties
to this Agreement irrevocably and unconditionally submits to the exclusive jurisdiction of the
Delaware Court of Chancery (and if jurisdiction in the Delaware Court of Chancery shall be
unavailable, any Delaware State court and the Federal court of the United States of America sitting
in the State of Delaware) for the purposes of any action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the parties further agree that, to the
fullest extent permitted by applicable Law, service of any process, summons, notice or document by
U.S. registered mail to such Persons respective address set forth in Section 6.06 above
shall be effective service of process for any action or proceeding in the State of Delaware with
respect to any matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of the parties irrevocably and unconditionally waives (and
agrees not to plead or claim), any objection to the laying of venue of any action or proceeding
arising out of this Agreement or the transactions contemplated hereby in the Delaware Court of
Chancery (and if the Delaware Court of Chancery shall be unavailable, in any Delaware State court
or the Federal court of the United States of America sitting in the State of Delaware) or that any
such action or proceeding brought in any such court has been brought in an inconvenient forum.
Section 6.14 Waiver of Jury Trial. Each of the parties to this Agreement hereby
waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury
in respect of any suit, action or other proceeding directly or indirectly arising out of, under or
in connection with this Agreement. Each party (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such party would not, in
the event of any action or proceeding, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties have been induced to enter into this Agreement, by, among other
things, the mutual waiver and certifications in this Section 6.14.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly executed by their
respective authorized officers on the day and year first above written.
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Western Digital Corporation
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Hitachi, Ltd.
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S-1
Exhibit D
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Western Digital Technologies, Inc.
3355 Michelson Drive
Suite 100
Irvine, CA 92612 |
Re: Customer Agreement
Dear :
Western Digital Corporation (WDC), Western Digital Ireland, Ltd., Hitachi, Ltd. (Hitachi)
and Viviti Technologies Ltd. (Viviti) have entered into that certain Stock Purchase Agreement
dated as of March 7, 2011 (the Stock Purchase Agreement). As a condition to WDCs obligations
under the Stock Purchase Agreement, Hitachi and WDC are executing this letter (the Customer
Agreement) with respect to the purchase by Hitachi of HDD (as defined in the IP License Agreement)
products from WDCs Subsidiaries following the Closing Date.
Effective as of the Closing Date, Hitachi and WDC hereby agree that for a period of two (2)
years after the Closing Date, the supply of HDD products to Hitachis Disk Array Systems Division
(RSD) from any of WDCs Subsidiaries will be subject to the terms and conditions of the Master
Sales Agreement No. 2075 dated April 1, 2003 (the MSA), including as may be amended or superseded
by mutual agreement of Hitachi and Viviti.
Further, Hitachi agrees that, following the Closing Date, RSD will continue to purchase HDD
products from WDCs Subsidiaries in a manner generally consistent with its past practices regarding
purchases from Viviti, so long as the HDD products in question are, as determined by RSD in good
faith, at least competitive with those of other suppliers in terms of price, performance, support
and schedule, as to each applicable generation of HDD product. For clarity, the foregoing does not
apply to SSD, RAID (each as defined in the IP License Agreement) or any other products other than
HDD products, and does not apply to any affiliates or subsidiaries of Hitachi.
WDC acknowledges and agrees that this Customer Agreement does not constitute an obligation to
purchase any specific volume, or any specific percentage of RSDs requirements, of HDD products.
Capitalized terms herein not otherwise defined shall have the meaning attributed to them in
the Stock Purchase Agreement.
The Parties hereto have caused this Customer Agreement to be executed and delivered by their
respective duly authorized representatives and effective as of the date first above written.
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Hitachi, Ltd. |
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[Signature Page for Customer Agreement]
Exhibit E
Form of
R&D SERVICES AGREEMENT
This R&D Services Agreement (Agreement) effective as of the Closing Date (as defined below),
is entered into by and between Western Digital Corporation, a Delaware company with its principal
place of business at 3355 Michelson Drive, Suite 100, Irvine, California 92612 (Company) and Hitachi, Ltd. (Hitachi), a Japanese company with
its principal place of business at 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8280, Japan. Each
of the signatories to this Agreement is referred to as a Party, and jointly as the Parties.
RECITALS
WHEREAS, Company, Western Digital Ireland, Ltd., a corporation organized under the laws of the
Cayman Islands and an indirect wholly-owned subsidiary of the Company (Buyer), Hitachi and Viviti
Technology Ltd., a company incorporated under the laws of the Republic of Singapore (Viviti) have
entered into that certain Stock Purchase Agreement dated as of March 7, 2011 (the Purchase
Agreement);
WHEREAS, prior to the Closing Date, Hitachi has performed, from time to time, certain research
and development services for the Viviti; and
WHEREAS, Company and Hitachi desire that following the Closing Date Hitachi will continue to
provide certain research and development services to Company and its Subsidiaries relating to HDD
(as defined below), of a nature similar to those provided to Viviti prior to the Closing Date,
pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set out herein, the
Parties agree as follows:
TERMS OF AGREEMENT
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1.1 |
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Background Intellectual Property Rights means Intellectual Property Rights,
if any, owned by Hitachi that are (a) embodied in Background Technology, and (b) not
Developed Intellectual Property Rights; provided, however, that a Patent will be a
Background Intellectual Property Right only if Hitachi has the right to grant to
Company a license of the scope set forth in Section 4.2 under such Patent without
incurring any obligation to pay any royalty or other consideration to any third party. |
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Background Technology means Technology, if any, owned by Hitachi or its
Subsidiaries that is (a) embodied in any Deliverable, and (b) not Developed Technology. |
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Closing Date has the meaning set forth in the Purchase Agreement. |
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Deliverables means the deliverables, if any, to be provided by Hitachi as
part of the Services performed hereunder, as specifically described in an applicable
Project Agreement. |
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Developed Intellectual Property Rights means Intellectual Property Rights to
the extent such Intellectual Property Rights (i) are first created by Hitachi in the
course of its performance of the Services pursuant to the applicable Project Agreement
and within the scope and during the term of such applicable Project Agreement, and (ii)
are embodied in Developed Technology. For the avoidance of doubt, Developed
Intellectual Property Rights includes the right to seek Patent protection for
inventions that constitute Developed Intellectual Property, if any, but does not
include any Patents or Patent applications of Hitachi or its Subsidiaries. |
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Developed IP means, collectively, Developed Technology and Developed
Intellectual Property Rights. |
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Developed Technology means Technology embodied in any Deliverable to the
extent such Technology is first developed or created by Hitachi in the course of its
performance of the Services pursuant to the applicable Project Agreement and within the
scope and during the term of such applicable Project Agreement. |
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Fully Burdened Cost means all of Hitachis costs and expenses incurred in
connection with the performance of the Services, including labor and material costs,
expenses, and general and administrative expenses and overhead, all as determined in
accordance with generally accepted accounting principles as consistently applied by
Hitachi. |
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HDD has the meaning set forth in the License Agreement. |
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Intellectual Property Rights means Patents, copyrights, and rights with
respect to trade secrets, whether arising under the laws of the United States, Japan or
any other jurisdiction, including, in each case, any rights apply for, register, and
enforce any of the foregoing. Notwithstanding the foregoing, Intellectual Property
Rights does not include any trademark rights or similar rights with respect to indicia
of source or origin. |
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License Agreement means that certain License Agreement entered into by and
between Company and Hitachi as of the Closing Date. |
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Patents means all classes and types of patents, including utility patents,
utility models, design patents, invention certificates, including divisionals,
continuations, continuations-in-part, reexaminations, reissues, extensions and
renewals, in all jurisdictions of the world. |
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Project Coordinator(s) means the Hitachi representative(s) and Company
representative(s) identified as project coordinator(s) in the applicable Project
Agreement. |
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Services means the research and development services to be performed by
Hitachi hereunder, as specifically described in an applicable Project Agreement. |
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Software or Firmware means a set of instructions, that either (i) directly
provides instructions to the computer hardware, or, (ii) indirectly serves as an input
to another piece of software. |
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Subsidiary of either Party shall mean a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the election
of directors or other governing body are at the time beneficially owned, directly, or
indirectly, by such Party. For the purposes of this Agreement, Viviti and its
Subsidiaries will be Subsidiaries of Company (subject to meeting the requirements of
the preceding sentence) and are not Subsidiaries of Hitachi. |
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Technology means inventions, know-how, designs, specifications, Software or
Firmware and other copyrightable material, technical information, devices, and other
developments and technology. |
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Term means the period beginning on the Closing Date and ending eighteen (18)
months from the Closing Date. |
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Project Agreements. Any services and deliverables to be performed or provided
by Hitachi hereunder shall be mutually agreed and described in written Project
Agreements entered into by the Parties hereunder and specifically referencing this
Agreement (Project Agreements). Each Project Agreement shall describe a specific
research and development project (Project) and set forth in sufficient detail (i) the
type, scope, and nature of the Services and Deliverables to be performed or provided by
Hitachi with respect to such Project, (ii) specific staffing requirements and schedule,
if applicable, for such Project, (iii) the Project Coordinators for such Project, and
(iv) such other matters as the Parties may mutually agree. In addition, Hitachi will
use commercially reasonable efforts to identify in the applicable Project Agreement any
Patents owned by Hitachi and claiming Background Technology Hitachi expects to be
embodied in Deliverables to be delivered to Company in the course of a Project under
which Hitachi does not have the right to grant to company a license of the scope set
forth in Section 4.2 without incurring an obligation to pay a royalty or other
consideration to a third party. All Project Agreements shall be an integral part of
this Agreement and be subject to the terms and conditions set forth herein. |
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Projects. The Projects currently contemplated by the Parties are described in
Schedule 1 hereto. The Parties may mutually agree to add additional Projects
directly related to the business of Company during the Term. Unless otherwise
expressly agreed in writing by the Parties, all Projects will be directed to HDDs. If
the Parties agree in writing to undertake a Project directed in whole or in part to
any product or technology other than HDDs, the Parties will discuss and agree in the
Project Agreement for such Project any additional or revised terms that will apply
to such Project, including without limitation with respect to ownership and licenses
of associated Developed IP and/or Background IP. |
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Services. Hitachi shall use commercially reasonable efforts to perform or
cause to be performed for Company the Services, and to deliver to Company the
Deliverables, as set forth in the applicable Project Agreements. Hitachi shall perform
such Services in a manner that is consistent with its past practice in regards to its
performance of similar services for Viviti prior to the Closing Date (Past Practice). |
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Personnel and Project Coordinators. Hitachi will assign employees and
subcontractors with suitable qualifications to perform the Services consistent with
Past Practice. Hitachi may replace or change employees and subcontractors as required.
The Parties Project Coordinators will be responsible for exchanging information,
coordinating meetings, and arranging all other matters pertinent to the applicable
Project. Each Party may change its Project Coordinator by giving written notice to the
other Party. The Project Coordinators are not authorized to modify or change any term
or condition of this Agreement, including any Project Agreement. |
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Companys Cooperation. Company acknowledges that its timely provision of
reasonable assistance, cooperation, and complete and accurate information and data
(Cooperation) is essential to the performance of the Services, and that Hitachi shall
not be responsible for any deficiency in performing the Services if such deficiency
results from Companys failure to provide such Cooperation as required hereunder. |
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Fees. Unless otherwise specified in the applicable Project Agreement, all
Services shall be provided on a time-and-materials basis at Hitachis Fully Burdened
Cost (such Fully Burdened Costs and any other fees and payments specified in an
applicable Project Agreement, the Fees). |
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Expenses. Company shall reimburse Hitachi for all reasonable travel, lodging,
communications, shipping, and other out-of-pocket expenses incurred by Hitachi in
connection with providing the Services and Deliverables (Expenses). |
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Payment Terms. Hitachi will invoice Company on a monthly basis for all Fees
and Expenses and other payments due under this Agreement and any Project Agreement and,
unless otherwise specified in the applicable Project Agreement, Company shall pay such
invoiced amounts within thirty (30) days of the date of the invoice. Customer agrees
to pay interest at the rate of one and one-half percent (1.5%) per month (or the
maximum rate permitted by applicable law, whichever is less) for all amounts not paid
within thirty (30) days from the date of
the invoice therefor. All payments shall be made in Japanese Yen by wire transfer
in immediately available funds to an account designated by Hitachi. |
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Taxes. In addition to all Fees, Expenses and other amounts payable under this
Agreement and the Project Agreements, Company shall pay or reimburse Hitachi for all
federal, state, local or other taxes, including, without limitation, sales, use,
excise, withholding, and property taxes, or amounts levied in lieu thereof, based on
the Services provided or amounts payable under this Agreement or any Project Agreement.
Company shall have no responsibility for taxes imposed on Hitachis net income. |
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Developed IP. Subject to Companys compliance with the terms and conditions of
this Agreement, including payment of all Fees, Expenses, and other amounts payable
hereunder, Hitachi hereby assigns and agrees to assign all of its right, title and
interest in and to the Developed IP to Company. Company shall have the sole right to
apply for, file, register, or otherwise seek Intellectual Property Rights with respect
to Developed IP, including the right to seek Patent protection for inventions that
constitute Developed IP, if any. Hitachi will provide (and will use commercially
reasonable efforts to cause any inventors of Developed IP in Hitachis or its
Subsidiaries employ to provide) reasonable information and assistance, at Companys
cost and expense, to effect the assignment of rights pursuant to this Section 4.1.
With respect to any Developed Technology, Hitachi reserves and Company hereby grants
and agrees to grant to Hitachi and its Subsidiaries, under the Developed Intellectual
Property Rights, a worldwide, non-exclusive, perpetual and irrevocable license to use
such Developed Technology in the ordinary course of its business. With respect to any
Patents within the Developed Intellectual Property Rights, Hitachi reserves and Company
hereby grants and agrees to grant to Hitachi and its Subsidiaries a worldwide,
non-exclusive, perpetual and irrevocable license to make, have made, use, sell, offer
for sale, and import any article of manufacture or composition of matter and practice
any method or process. |
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Background IP. To the extent, if any, that any Background Technology is
embodied in any Deliverables provided to Company under this Agreement, subject to
Companys compliance with the terms and conditions of this Agreement, including payment
of all Fees, Expenses, and other amounts payable hereunder, Hitachi hereby grants and
agrees to grant to Company and its Subsidiaries, under Hitachis Background
Intellectual Property Rights, a worldwide, non-exclusive, perpetual, and irrevocable
license to use such Background Technology, solely as embodied in such Deliverables, in
the ordinary course of its business. |
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4.3 |
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No Other Rights. Except as expressly set forth in this Agreement, neither
Party grants any rights in or to its Technology or Intellectual Property Rights
pursuant to this Agreement. As between the Parties, each Party shall be solely
responsible
to prepare, file, prosecute, maintain, and enforce its Intellectual Property Rights
in its discretion and at its own cost. Except as expressly set forth in this
Agreement, there shall be no right, license, authority, covenant not to sue,
immunity from suit, or other defense, whether by implication, by reason of
exhaustion, estoppel, or otherwise pursuant to or as a result of this Agreement or
the activities of the Parties under this Agreement. |
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Confidential Information of a Party shall mean Technology of such Party that
is (a) identified as Confidential Information in an applicable Project Agreement, and
(b) marked as proprietary or confidential at the time of disclosure, or, if
disclosed in a form not susceptible to marking, described and designated as
proprietary or confidential in a writing provided to the Recipient within thirty
(30) days of such disclosure. |
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Non-Disclosure. For the term of each Project Agreement, and for a period of
five (5) years from the end of such Project Agreement, the receiving Party agrees to
limit disclosure of the disclosing Partys Confidential Information disclosed in
connection with such Project Agreement to those of the receiving Partys employees who
have a need to know it, and the receiving Party agrees to use the same care and
discretion to avoid disclosure, publication or dissemination outside of those employees
as the receiving Party does with similar information of its own which it does not
desire to publish, disclose or disseminate. In addition, the receiving Party shall not
use, and shall not permit its employees to use, any Confidential Information of the
disclosing Party except in connection with the performance of its obligations pursuant
to this Agreement and the applicable Project Agreement, except as otherwise permitted
hereunder (including pursuant to any license grant set forth herein) or in such Project
Agreement. Notwithstanding the foregoing, the receiving Partys use of Residuals of
the disclosing Partys confidential information for any purpose shall not constitute a
breach of this Section 5.2. As used herein, Residuals shall mean that portion of any
trade secret or other Technology subject to any obligation of confidentiality between
the Parties, which is in intangible form and which is retained in the unaided memory of
any of a Partys employees who have had authorized access to such trade secrets or
other Technology pursuant to this Agreement. |
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Exceptions. The receiving Party may disclose Confidential Information if the
disclosure is required by law, but the receiving Party must give the disclosing Party
reasonable prior notice to allow the disclosing Party an opportunity to obtain a
protective order. The obligations of Section 5.2 above will not apply to information
to the extent it is: (a) already rightfully in the possession of the receiving Party
or its Subsidiaries without an obligation of confidence; (b) independently developed by
the receiving Party or its Subsidiaries; (c) publicly available when received by the
receiving Party, or becomes publicly available through no fault of the receiving Party
or its Subsidiaries; or (d) disclosed by the disclosing Party without obligation of
confidence. |
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6.1 |
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Term. This Agreement, including any Project Agreement, shall be effective
during the Term, unless terminated earlier in accordance with the provisions hereof and
except to the extent any Project Agreement expressly sets forth a different term. |
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Termination for Breach. |
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If any material breach of this Agreement occurs, and such
breach is not cured within thirty (30) days after written notice from the
non-breaching Party, the non-breaching Party shall have the right to terminate
this Agreement by giving the breaching Party five (5) days written notice. |
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If any material breach of any Project Agreement occurs, and
such breach is not cured within thirty (30) days after written notice from the
non-breaching Party, the non-breaching Party shall have the right to terminate
that Project Agreement by giving five (5) days written notice. |
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6.3 |
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Termination for Bankruptcy. A Party may terminate this Agreement by giving
written notice of termination to the other Party at any time upon or after: |
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the filing by the other Party of an petition in bankruptcy or
insolvency which petition or proceeding is not dismissed within sixty (60)
days; |
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any adjudication that the other Party is bankrupt or insolvent; |
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the filing by the other Party of any petition or answer seeking
reorganization, readjustment or arrangement of its business under any law
relating to bankruptcy or insolvency which petition or proceeding is not
dismissed within sixty (60) days; |
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the appointment of a receiver for all or substantially all of
the property of the other Party; |
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the institution of any proceeding for the liquidation winding
up of the other Partys business which petition or proceeding is not dismissed
within sixty (60) days. |
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6.4 |
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Effect of Termination of Agreement. Upon any termination of this Agreement all
Project Agreements shall simultaneously terminate. No termination in this Agreement
shall relieve either Party of any obligation or liability accrued hereunder prior to
such termination. Upon the expiration or earlier termination of this Agreement, the
Parties will immediately cease performing work under all Project Agreements. Upon the
expiration or earlier termination of any Project Agreement, the Parties will
immediately cease performing work under the expired or terminated Project Agreement. |
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Survival. Notwithstanding anything to the contrary in this Agreement, Sections
1, 3, 4, 5 (as provided therein), 6.4, 6.5, 7.2, 7.3, and 10 shall, to the extent
applicable, survive any expiration or termination of this Agreement. |
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REPRESENTATIONS AND WARRANTIES; LIABILITY LIMITATION |
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7.1 |
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Authority. Each Party represents and warrants that it has the corporate power
and authority to enter this Agreement, and to carry out the terms and obligations set
forth in this Agreement, and that the persons executing this Agreement on its behalf
have the authority to act for and bind the Party. |
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7.2 |
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No Other Warranty. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 7, NEITHER
PARTY MAKES ANY OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO ANY OTHER MATTER
WHATSOEVER, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, ACCURACY, NON-INFRINGEMENT, AND
TITLE, AND ANY WARRANTIES THAT MAY ARISE FROM COURSE OF DEALING, COURSE OF PERFORMANCE
OR USAGE OF TRADE. |
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7.3 |
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Limitation of Liability. Except as expressly set forth herein, neither Party
shall be liable for any indirect, incidental, consequential, special or punitive
damages arising out of or relating to this Agreement, irrespective of whether such
Party has been advised of the possibility of any such damages. The foregoing
limitation of liability shall not apply with respect to any liability arising out of or
relating to any breach of Section 5 or any infringement, misappropriation or other
violation of any Intellectual Property Rights of a Party. |
All notices and other communications required or permitted hereunder shall be in writing and
shall be mailed by Federal Express or other internationally recognized express carrier, registered
or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to a
Party at the addresses set forth below, or at such other address as a Party may substitute by
written notice provided to the other Party in such manner. Such notices shall be deemed to have
been served when delivered.
If to Hitachi:
[]
If to Company:
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This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the Parties. Nothing in this Agreement shall confer
any rights upon any person other than the Parties and their respective successors and permitted
assigns. Neither Party may assign this Agreement or its rights hereunder to any third party
without the written consent of the other Party; provided, that each Party may assign this Agreement
and its rights hereunder to one or more of its direct or indirect Subsidiaries without the consent
of the other Party so long as the assignee assumes the obligations hereunder of the assigning party
in a writing reasonably acceptable to the other Party. Any attempted assignment of this Agreement
in violation of this Section 9 shall be void and of no effect.
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Entire Agreement. Except for the Purchase Agreement, the License Agreement,
other agreements entered into pursuant to the Purchase Agreement, and, where
applicable, the Inventor Award Integration Agreement dated December 10, 2010 by and
between Hitachi and Viviti, (the IAIA) (a) this Agreement, together with any Project
Agreements, contains the complete agreement between, and contains all of the promises
and undertakings made to each other by, the Parties regarding the subject matter of
this Agreement, and (b) except as set forth in the Transition Services Agreement (as
defined in the Purchase Agreement), any and all prior agreements, representations,
negotiations, and undertakings between the Parties, oral or written, express or
implied, with respect to the subject matter hereof, are hereby superseded and merged by
and into this Agreement, effective as of the Closing Date. This Agreement may not be
revised or modified without the mutual written consent of the Parties. |
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10.2 |
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Application of IAIA. Notwithstanding anything to the contrary set forth in the
IAIA: |
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all Patents claiming inventions that constitute Developed IP
will be deemed New ERA Patents for purposes of the IAIA (despite the fact
that such Patents do not arise out of research pursuant to the ERA); |
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any employee or agent of Hitachi who is named as an inventor in
any such Patent shall be deemed a Hitachi Inventor with respect to such
Patent for purposes of the IAIA; |
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Section 4 of the IAIA shall apply to (i) the incentive payments
made by Hitachi to such employee or agent of Hitachi with respect to such
Patent (with such payments deemed HGST Base Awards, despite the fact that
such payments are not being made to an employee of the Company), and (ii)
Companys reimbursement of Hitachi for such payments, as if all
applicable references in the IAIA to HGST were references to Company;
provided, however, that the Parties recognize and agree that (1) the larger
size of Companys business relative to the business of Viviti prior to the
Closing Date may require the incentive payments made to such employees and
agents of Hitachi to be higher than those contemplated by the IAIA and (2)
the Parties will discuss and agree in good faith as to the specific amounts
of such incentive payments no later than thirty (30) days after the Closing
Date, with such amounts expected by the Parties to be no less than the
amounts set forth in the IAIA and no greater than twice the amounts set
forth in the IAIA. |
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10.3 |
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Severability. If any paragraph, provision or clause of this Agreement shall be
found or held to be invalid or unenforceable by a court or other decision-making body
of competent jurisdiction, in a judgment from which no further appeal can be taken, the
remainder of this Agreement shall remain valid and enforceable, and to the extent
required in the pursuit of this Agreement, the Parties shall negotiate in good faith a
substitute, valid and enforceable provision that reflects the Parties intent in
entering this Agreement. |
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ADR Provision. The Parties agree that, in the event of a dispute arising under
this Agreement, the Parties shall agree to attend a non-binding mediation prior to
bringing any action in a court of law. The mediation shall be facilitated by a neutral
third-party, selected by the Parties. A representative from each Party with authority
to settle on behalf of that party shall attend the mediation in person. The purpose of
the mediation is to resolve the disputed issue(s) without the need for formal legal
proceedings. |
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10.5 |
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Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware as applied to contracts entered into and fully
performed in such state. |
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10.6 |
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Jurisdiction. The Parties agree that the Delaware Court of Chancery (and if
jurisdiction in the Delaware Court of Chancery shall be unavailable, any Delaware State
court and the Federal court of the United States of America sitting in the State of
Delaware) shall have exclusive jurisdiction of interpreting or enforcing this
Agreement, provided, however, that, notwithstanding the foregoing, either Party may (i)
seek injunctive or other preliminary relief, (ii) enforce its Intellectual Property
Rights, and (iii) seek recognition and enforcement of any order or judgment, in any
court of competent jurisdiction. The parties expressly waive their right to a trial by
jury. |
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10.7 |
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Counterparts. This Agreement may be executed in identical counterparts, each of
which shall constitute an original and all of which shall constitute one and the same
agreement. |
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10.8 |
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Further Assurances. Each Party hereto shall execute and cause to be delivered
to each other Party hereto such instruments and other documents, and shall take
such other actions, as such other Party may reasonably request, to effect, evidence,
record or perfect any of the licenses and other rights set forth in this Agreement.
The requesting Party shall reimburse the other Party for its reasonable
out-of-pocket costs in responding to a request under this Section. |
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10.9 |
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Export Compliance. Company understands and acknowledges that Hitachi is
subject to regulation by agencies of the U.S. government, including the U.S. Department
of Commerce, and similar regulations in other jurisdictions, which prohibit export or
diversion of certain products and technology to certain countries. Company understands
and acknowledges that the Deliverables and other Developed IP are subject in all
respects to such United States and other jurisdictions laws and regulations as shall
from time to time govern the license and delivery of technology and products abroad by
persons subject to the jurisdiction of the United States, including the Export
Administration Act of 1979, as amended, any successor legislation, and the Export
Administration Regulations (EAR) issued by the Department of Commerce, International
Trade Administration, Bureau of Industry and Security (BIS). Company warrants that
it will comply in all respects with the export and re-export restrictions applicable to
the Deliverables and other Developed IP and further agrees that it will not export,
re-export or transship, directly or indirectly, any Deliverables and other Developed IP
without the proper authorization from BIS under the EAR, or proper authorization from
competent authorities in other jurisdictions, explicitly permitting the export,
re-export or transshipment. |
[Remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to execute this
Agreement on the dates indicated below.
For and on behalf of
Hitachi, Ltd.
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For and on behalf of |
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[Signature Page for R&D Services Agreement]
12
EXHIBIT
F
Form of
BRANDING AGREEMENT
This Branding Agreement (Branding Agreement) effective as of the Closing Date (as defined
below), is entered into by and between Viviti Technologies Ltd., a company incorporated under the
laws of the Republic of Singapore with its principal place of business at [_____] (Company) and
Hitachi, Ltd., a Japanese company with its principal place of business at 6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8280, Japan (Hitachi). Each of the signatories to this Branding Agreement
is referred to as a Party, and jointly as the Parties.
RECITALS
WHEREAS, Western Digital Corporation, a Delaware company with its principal place of business
at [______], (Buyer Parent), Western Digital Ireland, Ltd., a corporation organized under the laws
of the Cayman Islands and an indirect wholly-owned subsidiary of the Buyer Parent (Buyer),
Hitachi, and Company have entered into that certain Stock Purchase Agreement dated as of March 7,
2011 (the Purchase Agreement);
WHEREAS, Company and Hitachi desire that Company may, on a transitional basis and under
Hitachis authorization, continue to use certain branding of Hitachi with respect to Companys
products in accordance with the terms and conditions set forth below in order to provide for an
orderly transition to new branding;
NOW, THEREFORE, in consideration of the mutual promises and covenants set out herein, the
Parties agree as follows:
TERMS OF AGREEMENT
1.1 Any capitalized term used but not defined herein, including without limitation the
following terms, has the meaning set forth in the Transaction Documents:
(a) Closing Date
(b) External Drive
(c) HDD
(d) HDD Components
(e) HDD Products
(f) Losses
(g) RAID
(h) SSD
(i) Storage Software Products.
1.2 Company Current Products means those Products of Company or its Subsidiaries in active
production as of the Closing Date.
1.3 Company Inventory Units means any units of Products produced, packaged, or in inventory
as of the Closing Date (regardless of whether such Products may be Company Current Products as of
the Closing Date) provided that any such units of Products are branded with the Licensed Hitachi
Marks as of the Closing Date.
1.4 Company Non-Current Products means Products previously manufactured and sold by Company
or its Subsidiaries under the Licensed Hitachi Marks and that are not in active production by
Company or its Subsidiaries at the Closing Date.
1.5 Company Product(s) means Company Current Products, Company Non-Current Products, and
Remanufactured Products and Repair Parts.
1.6 Company Reseller means an organization or person that is authorized by Company directly,
or indirectly through another Company Reseller, to sell or lease Company Products.
1.7 Electronic Label means any label, sticker, decal or the like affixed to an Internal
Product bearing a machine-readable code which identifies with specificity an Internal Product, and
which may include other information regarding the Internal Product.
1.8 EOL or End-of-Life means, with respect to a particular Product, the date on which
Company, in its sole discretion, chooses to no longer offer such Product for sale on a general
commercial basis.
1.9 Hitachi Marks has the meaning set forth in Section 5.1.
1.10 Internal Product means an HDD Product sold for use in an HDD Included Products or SSD
product sold for use in an SSD Included Product.
1.11 In-Warranty Products has the meaning set forth in Section 2.1(b).
1.12 Licensed Articles has the meaning set forth in Section 2.1(a).
1.13 Licensed Hitachi Marks shall mean the Hitachi trademarks and/or service marks set forth
in Schedule 2.1
1.14 Licensed Hitachi Trade Dress has the meaning set forth in Section 2.2.
1.15 Licensed Marks means the Licensed Hitachi Marks and Licensed Hitachi Trade Dress.
2
1.16 Licensed Materials means packaging; labels; sales, instruction and service materials;
marketing materials; product documentation regardless of form or media in which presented, and
installation software.
1.17 Licensed Products means the Licensed Current Products, Warranty Licensed Products,
Remanufactured Products, and internal components as more fully described in Sections 2.1(a) through
(e), and the Licensed Trade Dress Products.
1.18 Licensed Trade Dress Products has the meaning set forth in Section 2.2.
1.19 Material Quality Breach has the meaning set forth in Section 4.4.
1.20 New Trademark means any mark developed by Company for any product developed,
manufactured, or produced by Company subsequent to the Closing Date that is not part of or
encompassed by Company Products.
1.21 Products means HDD Products, SSD products, RAID products, External Drive products, and
Storage Software Products.
1.22 Qualification means technical evaluation or testing by an OEM customer which must be
passed by a supplier with respect to a particular product in order to qualify the product for
purchasing by such customer for use in an HDD Included Product or SSD Included Product. As used in
this Branding Agreement, the term Qualification includes evaluation and testing with respect to
technical and engineering requirements and excludes any marketing, promotion, advertising or retail
display requirements.
1.23 Remanufactured Products means Company Non-Current Products and Company Current Products
sold under or that bear the Licensed Hitachi Marks, whether produced or sold before or after
Closing, that are remanufactured or repaired by Company after the Closing Date.
1.24 Repair Parts means (a) replacement products for (i) Company Non-Current Products or
(ii) Company Current Products; and (b) replacement parts which, to the extent available prior to
the Closing Date, bore the Licensed Hitachi Marks prior to the Closing Date and which are used for
the repair or remanufacture of Company Non-Current Products or Company Current Products.
1.25 SSD Included Product means products that include an SSD among their components but are
a combination of such SSD with at least one other device distinct from such SSD and provide a
material function that is not provided by a single SSD. Examples of SSD Included Products are
storage systems (including RAID), External Drives, JBODs, enterprise systems, servers, server
blades, desktop computers, portable computers (including notebook and handheld computers), personal
digital assistants, digital video recorders, digital cameras, game consoles, mobile phones and
global positioning systems that include an SSD among their components.
1.26 Subsidiary of either Party means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities
or other interests having ordinary voting power for the election of directors or other
governing body are at the time beneficially owned, directly, or indirectly, by such party. For the
purposes of this Agreement, Company and its Subsidiaries are not Subsidiaries of Hitachi.
1.27 Terminated Products has the meaning set forth in Section 8.2(b).
3
2. |
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GRANT OF LICENSES AND CONSENTS |
2.1 Hitachi hereby grants to Company and Company hereby accepts non-exclusive, royalty free
licenses to use the Licensed Hitachi Marks under the following terms and conditions:
(a) on or in connection with Company Current Products, Company Inventory Units, and Licensed
Materials relating thereto (Licensed Articles), Company may use the Licensed Hitachi Marks for a
period of one hundred eighty (180) days after the Closing Date (Cut-Over Date) (subject to
Section 6.2), provided the Licensed Articles, subsequent to the Closing Date, are manufactured by
or for Company pursuant to the quality control requirements set forth in Section 4 and are marketed
by Company itself or through Company Resellers;
(b) on or in connection with Repair Parts for Company Current Products or Company Non-Current
Products under warranty after the Closing Date (In-Warranty Products) and Licensed Materials
relating thereto (collectively, Warranty Licensed Products), Company may use the Licensed Hitachi
Marks for a period of time equal to and coterminous with the warranty period for such In-Warranty
Products provided that the Licensed Hitachi Marks were used in connection with such Repair Parts
prior to the Closing Date (to the extent such Repair Parts were available before the Closing Date);
(c) on or in connection with Remanufactured Products used to replace particular Products and
Licensed Materials relating thereto, Company may use the Licensed Hitachi Marks until the seven (7)
year anniversary of the EOL of the particular Product or until such Product is no longer supported
by Company or until the seven (7) year anniversary of the Cut-Over Date, whichever occurs first,
provided such products are manufactured by or for Company pursuant to the quality control
requirements set forth in Article 4 and are marketed by Company itself or through Company
Resellers;
(d) notwithstanding Section 2.1(a) above, in any Electronic Label used to identify any Company
Current Product that is an Internal Product, Remanufactured Product that is an Internal Product or
Repair Part for an Internal Product for so long as continued use of the applicable Licensed Hitachi
Mark(s) in such Electronic Label is necessary in order to avoid triggering a Qualification
requirement (as dictated by the applicable agreement with the customer of such Company Product)
that would not arise if the applicable Hitachi Mark(s) were retained in the Electronic Label, but
only until the Company alters such Company Current Product, Remanufactured Product or Repair Part
identified by the Label in a manner that triggers a Qualification requirement, provided that the
Licensed Hitachi Marks are not more visible to individuals than are the Labels used in units of
Company Current Products manufactured prior to the Closing Date;
4
(e) on or in connection with internal components of any Company Current Product that is an
Internal Product, including but not limited to HDD heads and mask works used
in the making of HDD Components, for so long as continued use of the applicable Licensed
Hitachi Mark(s) on or in connection with such internal components is necessary in order to avoid
triggering a Qualification requirement (as dictated by the applicable agreement with the customer
of such Company Current Product) that would not arise if use of the applicable Hitachi Mark(s) were
retained on or in connection with such internal components, but only until the Company alters the
internal components, or the Company Current Product in which such internal components are used, in
a manner that triggers a Qualification requirement, provided that the Licensed Hitachi Marks are
not generally visible other than to those individuals installing, administering, or maintaining the
any Company Current Product.
2.2 Hitachi hereby grants to Company and Company hereby accepts a non-exclusive, royalty free
license to use the Hitachi trade dress as depicted in Schedule 2.2 (the Licensed Hitachi
Trade Dress) on or in connection with consumer boxes, commercial packaging, labeling, product
information provided on diskettes and/or CDs, and installation software (collectively Packaging)
for any Company Products sold with Packaging bearing the Licensed Hitachi Trade Dress as of the
Closing Date (collectively, the Licensed Trade Dress Products) for one hundred eighty (180) days
after the Closing Date, provided that the Licensed Trade Dress Products are manufactured by or for
Company, or, with respect to such software, Company has a right to distribute such software, and
are marketed by Company itself or through Company Resellers.
2.3 The licenses granted in this Article 2 shall not apply to any services (including but not
limited to repair or maintenance services) offered by or under authorization of Company.
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COMPANYS USE OF THE LICENSED MARKS |
3.1 The grant of licenses set forth in Article 2 hereof shall include and incorporate as if
fully set forth therein the following terms and conditions which shall control and define the use
of the Licensed Marks on or in connection with the Licensed Products:
(a) All use of the Licensed Marks by Company shall be limited to the specific Licensed
Products set forth in the license grant and shall meet all quality control requirements of Hitachi
as specified in Article 4.
(b) Company shall use the Licensed Marks only in the form and manner and with such proprietary
legends and notices as used by Company or its Subsidiaries prior to the Closing Date for the
Licensed Products.
(c) Subject to Section 2.1(d) and (e), Company shall place the symbols Ô, tm, or ®,
as is appropriate according to the laws in each applicable country or territory next to the
Licensed Hitachi Marks. In the case of Licensed Materials, such symbols must appear in connection
with the Licensed Hitachi Marks at least once on or in each separate piece of Licensed Material.
(d) Subject to Section 2.1(d) and (e), Company shall use the following legend at least once in
each separate piece of Licensed Material on which any of the Licensed Hitachi
Marks appear: [Licensed Hitachi Mark] is a [registered] trademark of Hitachi, Ltd. and is
used under license.
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(e) Subject to Section 2.1(d) and (e), on all Licensed Trade Dress Products bearing the
Licensed Hitachi Trade Dress, Company shall include the © symbol and the legend © Hitachi, Ltd.
(f) Except as authorized pursuant to this Branding Agreement, Company shall not at any time
use, or authorize the use of, any Hitachi Mark, or any trademark, trade name, service mark, domain
name or corporate name consisting of or incorporating any Hitachi Mark, or any mark phonetically
equivalent or confusingly similar to any Hitachi Mark.
(g) Company shall not adopt or use on or in connection with any product or service it
produces, manufactures, advertises, distributes, sells, or offers for sale, a New Trademark, or any
service mark, trade name, domain name or other designation, that is a phonetic equivalent or a
colorable imitation of any of the Licensed Hitachi Marks or that is otherwise confusingly similar
to any of the Licensed Hitachi Marks, nor shall Company adopt or use any trade dress that copies or
is a colorable imitation of the Licensed Hitachi Trade Dress or that is otherwise confusingly
similar to the Licensed Hitachi Trade Dress. If any application for registration of a mark or
other designation is filed by or on behalf of Company after the Closing Date and such mark is
confusingly similar or disparaging to or dilutes any of the Licensed Hitachi Marks anywhere in the
world, Company shall abandon all use of such mark and any application to register or registration
thereof.
(h) With respect to its use of the Licensed Marks, Company shall comply with all applicable
laws and regulations pertaining to the use and designation of trademarks and trade dress in the
each country or territory in which the Licensed Marks may be used by Company.
3.2 Company shall not pledge or otherwise encumber any of the Licensed Marks and shall not use
any of the Licensed Marks as security or collateral for any loans or indebtedness.
4.1 Company agrees that the nature and quality of the Licensed Products when such products are
sold or distributed in connection with the Licensed Marks shall be commensurate with standards
previously achieved and maintained by Company for the identical goods or for comparable products
manufactured or distributed by Company during calendar year 2010. Company shall provide to Hitachi
monthly consolidated quality reports with respect to each Licensed Product marked with the Licensed
Marks and for which shipments are being made during the term of the applicable license granted
pursuant to Article 2.
4.2 Company agrees that all uses of the Licensed Hitachi Trade Dress as permitted by this
Branding Agreement shall conform to and are subject to the guidelines established by Hitachi for
such trade dress, which guidelines are attached as Schedule 4.2.
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4.3 Except for units of Products produced, packaged, or in inventory as of the Closing Date,
and Licensed Materials developed by Company or its Subsidiaries prior to Closing or varying in no
significant respect from Licensed Materials developed by Company or its
Subsidiaries prior to Closing, Company shall, upon Hitachis request, (a) provide to Hitachi
or, at Hitachis request, demonstrate to Hitachi, samples of Licensed Products that bear, or are
marketed or sold using any of the Licensed Marks, and (b) provide to Hitachi samples of Licensed
Materials that bear any of the Licensed Marks. Any such requests shall be with reasonable notice
and at reasonable intervals.
4.4 Any modifications by Company after the Closing to a Licensed Product marked with any
Licensed Mark, including, but not limited to changes in manufacturing processes thereof or parts
vendor selection by Company, that result in adverse changes of the annual quality return rate for
such product in each of two (2) consecutive thirty (30) day periods greater than three percent (3%)
shall be noticed to Hitachi within five (5) Business Days. Any such modifications shall, upon
resulting in such changes, be deemed Material Quality Breaches. Company shall provide to Hitachi
samples of such Licensed Products.
4.5 Except for Licensed Materials developed by Hitachi or its Subsidiaries prior to Closing or
varying in no significant respect from Licensed Materials developed by Hitachi or its Subsidiaries
prior to Closing, Company shall submit to Hitachi all new Licensed Materials developed by Company
after Closing on and in which the Licensed Marks appear prior to their commercial use. Within
fifteen (15) Business Days of receipt of any submission by Company, Hitachi shall inform Company in
writing whether the submission meets the applicable standards for quality or usage. If Hitachi
does not respond to Company within fifteen (15) Business Days, Company may assume without penalty
or prejudice that its submission has been approved, provided that Company produces a written
receipt evidencing that the submission was sent to and received by Hitachi.
4.6 If Hitachi determines that any Licensed Products or Licensed Materials using the Licensed
Marks materially do not meet the requirements set forth in this Branding Agreement, Hitachi may
notify Company, providing Company with a description of the deficiencies. Company shall submit to
Hitachi a report describing Companys plan for investigation of the causes of and for remediation
of such deficiencies and the time frame for such actions within thirty (30) Business Days after
receipt of the notice. If Hitachi considers the actions or time frame described in such report to
be inconsistent with applicable industry standards, the Parties shall promptly meet and confer with
respect to the report. If the Parties are unable through such meeting to mutually agree on
appropriate actions and time frames, Hitachi shall have the right, effective on notice to Company,
to suspend use of the Licensed Marks on or in connection with the materially deficient Licensed
Products or Licensed Materials until such deficiencies are cured. To the extent Company has in
inventory during a proper suspension of use of the Licensed Marks pursuant to this Section 4.6 any
Licensed Products or Licensed Materials that: (i) were produced, manufactured, or remanufactured
after the Closing Date, (ii) materially do not meet the requirements set forth in this Branding
Agreement, and (iii) are subject to such proper suspension (Suspended Products); then Company
shall not be authorized under the suspended license or consent to ship any such Suspended Products
until the Licensed Marks have been removed or obliterated (for example, by covering such Licensed
Marks with a sticker) or such material deficiencies have been cured.
7
4.7 For as long as Company is licensed to use the Licensed Marks for any of the Licensed
Products, Company shall provide to Hitachi on an as-needed basis but no less than once
during the term of the license grants set forth in Sections 2.1(a) and 2.2 and once per year
during the term of the license grants set forth in Sections 2.1(b), 2.1(c), 2.1(d) and 2.1(e) the
following information: (a) a list of all recalls of any Licensed Products on which the Licensed
Marks appear, the reason for each recall and the action taken to remedy the problem; and (b) the
number of warranty claims submitted for each Licensed Product on which the Licensed Marks appear,
broken down for each product. Hitachi shall have the right to require that Company produce to
Hitachi any written complaints or actual documents from which the information provided by Company
under the terms of this provision were created or obtained.
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DOMAIN NAME TRANSITION |
5.1 Within ninety (90) days after the Closing Date, Company shall assign to Hitachi all
registrations anywhere in the world of any domain names held by Company that include any trademark
or service mark owned by Hitachi or any of its Subsidiaries (such trademarks and service marks, the
Hitachi Marks and such domain names, the Transferred Domain Names).
5.2 During the twelve (12)-month period following the Closing Date, Hitachi shall maintain at
the landing page for each Transferred Domain Name a hyperlink that connects the user to a
designated Company URL, as notified by Company to Hitachi.
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CESSATION OF USE OF SELLER MARKS |
6.1 To the extent that as of the Closing Date Company or any of its Subsidiaries own any
registered trademarks or service marks anywhere in the world that contain any Hitachi Mark, Company
shall, and shall cause its Subsidiaries to: (a) not renew or maintain (including not filing any
affidavits of use or paying any registration fees) such registrations, in order to allow such
registrations to expire upon the expiration of their then-current terms and (b) use such trademarks
or service marks only to the extent expressly permitted by this Branding Agreement.
6.2 Company agrees that, notwithstanding anything to the contrary set forth herein, it shall,
and shall cause each of its Subsidiaries to:
(a) as soon as practicable after the Closing Date and in any event within thirty (30) days
following the Closing Date, change its and their corporate names to names that do not include any
Hitachi Mark (or any word confusingly similar thereto) and make any necessary legal filings with
the appropriate Governmental Entities to effect such change;
(b) as soon as practicable after the Closing Date and in any event within forty-five (45) days
following the Closing Date, cease use of all stationary, business forms and business cards bearing
any Hitachi Marks;
(c) as soon as practicable after the Closing Date and in any event within sixty (60) days
following the Closing Date (or such longer period as may be required to obtain any needed approvals
of any Governmental Entity), remove, strike over or otherwise obliterate all Hitachi Marks from all
facilities, vehicles, physical signage, badges and uniforms of the Company and each of its
Subsidiaries; and
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(d) as soon as practicable after the Closing Date and in any event within ninety (90) days
following the Closing Date, cease (i) reproducing any product manuals, collateral materials,
promotional materials and packaging materials bearing any of the Hitachi Marks, except for those
that are Licensed Articles (which shall be subject to Section 2.1(a)), (ii) replicating any
software displaying any of the Hitachi Marks, except for software which is a Licensed Article
(which shall be subject to Section 2.1(a)), and (iii) publishing any websites bearing any of the
Hitachi Marks.
7. |
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RIGHT TO SUBLICENSE AND ASSIGN AGREEMENT |
7.1 None of the rights provided under this Branding Agreement relating to use of the Licensed
Marks may be assigned, pledged, encumbered, or otherwise transferred by Company and shall not inure
to the benefit of any trustee in bankruptcy, receiver or other successor of Company, whether by
operation of law or otherwise, without the prior written consent of Hitachi, which shall not be
unreasonably withheld, and any attempted or actual assignment or transfer without such consent
shall be null and void.
7.2 Other than to its Subsidiaries, Company shall not sublicense this Branding Agreement or
any rights of Company hereunder to any third party including to any affiliate of Company or, other
than Subsidiaries and as provided in Section 7.4, otherwise authorize any third party, including
any affiliate, to use any of the Licensed Marks.
7.3 Company shall not have the right to transfer or assign the rights granted herein to any
third party including any party that has any ownership interest in or that exercises any control
over Company, even as part of a transfer of all of the business of Company without the prior
written consent of Hitachi, which shall not be unreasonably withheld. This Branding Agreement
shall be fully and freely assignable by Hitachi.
7.4 Notwithstanding anything in this Branding Agreement to the contrary, Company may transfer
its rights under this Branding Agreement between itself and its Subsidiaries and any of its legal
successors-in-interest formed pursuant to a reorganization or other corporate restructuring of
Company, provided that after such reorganization or corporate restructuring, such
successor-in-interest agrees in writing to be bound by the terms of this Branding Agreement and
Company and its Subsidiaries have substantially the same assets as Company and its Subsidiaries had
immediately prior to such reorganization or corporate restructuring.
8.1 Hitachi may terminate this Agreement by giving written notice of termination to Company at
any time upon or after:
(a) the filing by Company of a petition in bankruptcy or insolvency which petition or
proceeding is not dismissed within sixty (60) days;
(b) any adjudication that Company is bankrupt or insolvent;
9
(c) the filing by Company of any petition or answer seeking reorganization, readjustment or
arrangement of its business under any law relating to bankruptcy or insolvency which petition or
proceeding is not dismissed within sixty (60) days;
(d) the appointment of a receiver for all or substantially all of the property of Company;
(e) the institution of any proceeding for the liquidation winding up of Companys business
which petition or proceeding is not dismissed within sixty (60) days.
8.2 The licenses granted in Article 2 may also be terminated in accordance with the following:
(a) Company shall be deemed in material breach of this Branding Agreement if there is a
Material Quality Breach as to any of the Licensed Products marked with the Licensed Marks by
Company.
(b) If Company materially breaches this Branding Agreement, Hitachi shall provide written
notice to Company, advising that Company has committed a material breach, describing the material
breach, the specific license grant(s) in Article 2 to which the material breach relates, and, in
the case of a Material Quality Breach, the specific Licensed Products giving rise to the material
breach, and providing Company with thirty (30) Business Days to cure. Should Company not cure the
material breach within such thirty (30)-Business Day period, the specific license grant(s)
identified by Hitachi, for the specific Licensed Product identified by Hitachi in the case of a
Material Quality Breach, shall immediately terminate, and Company shall (i) cease all further use
of the Licensed Marks on the goods that were subject to the terminated license grant(s) (the
Terminated Products); (ii) cease all further shipment, distribution and sale of the Terminated
Products bearing the Licensed Marks; and (iii) cease all further advertising, marketing and
promotion of the Terminated Products using the Licensed Marks.
8.3 All rights and licensed granted to any Subsidiary of Company, including without limitation
via sublicense from Company, shall automatically terminate if such Subsidiary ceases to meet the
definition of Subsidiary, as defined in this Branding Agreement.
8.4 Upon the termination or suspension of any of the licenses granted in Article 2 either
pursuant to this Article 8 or as a result of the expiration of the license, Company shall
immediately (i) cease shipping or distributing the products covered by such license grant that bear
the Licensed Marks; and (ii) cease all further use of the Licensed Marks for such products.
Company shall have no obligation to recall or stop the shipment or sales by its dealers or
customers of any products covered by the terminated or suspended license and that bear the Licensed
Marks shipped by Company prior to the termination or expiration or suspension of any license.
Company may continue after any termination or expiration or suspension of any license to ship goods
from which the Licensed Marks have been removed or obliterated (for example, by covering the
Licensed Marks with a sticker).
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8.5 To the extent that upon termination or expiration of any of the license grants in Section
2.1 or Section 2.2, Company has in inventory any Licensed Products or Repair Parts
bearing any Licensed Marks, or Company Products that incorporate or use Electronic Labels,
which were manufactured or remanufactured: (i) prior to Closing; or (ii) pursuant to and in
compliance with this Branding Agreement and that have not been determined to have been the basis of
a Material Quality Breach and were not Suspended Products at the termination or expiration of the
license grants and their material deficiencies have not been cured, Company shall be entitled to
sell and distribute its inventory of such products provided it uses the same channels of trade and
distribution that were used by Company prior to the Closing or that Company uses for comparable
products distributed under Companys own marks.
8.6 Notwithstanding anything to the contrary in this Agreement, Sections 1, 3.1(f), 3.1(g),
10, 11, 12.2, 12.3, 14, 15 and this Section 8 shall, to the extent applicable, survive any
expiration or termination of this Branding Agreement or of any licenses granted herein.
8.7 Except as set forth in Section 12.3, the Parties acknowledge that each shall have
available to it all remedies at law or in equity (including specific performance) for breach of
this Branding Agreement in addition to or as a substitute for all remedies that they may have under
this Branding Agreement.
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UNAUTHORIZED USE BY OTHERS |
9.1 During the term of the licenses granted in Article 2, Company shall notify Hitachi in
writing of any unauthorized use of the Licensed Marks by others promptly as such unauthorized use
comes to its attention. Upon notification Hitachi may, at its discretion, choose to take action
including but not limited to bringing, prosecuting or settling any claim involving the Licensed
Marks. Should Hitachi decide to take such action, Hitachi shall bear all costs and expenses in
connection therewith and shall retain exclusively any damage awards or settlement amounts
recovered. If Hitachi believes that Company should be joined as a party to such action, Hitachi
and Company will discuss in good faith Companys cooperation and cost recovery for its
participation in any such action.
9.2 Upon obtaining written confirmation from Company that a Company Reseller no longer
distributes any Hitachi-branded Product, Hitachi shall have the right to contact such Company
Reseller and advise it that it must cease all use of the Licensed Hitachi Marks and any other
indicia suggesting an affiliation or association with Hitachi (except as may be separately
authorized under any agreement directly between Hitachi and such Company Reseller). Hitachi may
advise such resellers that failure to comply with Hitachis demands violates Hitachis rights.
Should such resellers continue to use the Licensed Hitachi Marks or other prohibited indicia,
Hitachi may pursue all legal action against such resellers that Hitachi in its sole discretion
deems appropriate and necessary. Company agrees to reasonably cooperate with Hitachi with respect
to such actions, which may include providing the names and addresses of particular resellers of
Company Products.
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ACKNOWLEDGMENTS AND COVENANTS |
10.1 Company understands, acknowledges and agrees that, as between Company and Hitachi, all
rights in the Licensed Marks (including all registrations thereof) throughout the world are the
sole and exclusive property of Hitachi, free and clear from any claim or retention
of rights thereto on Companys part and that Hitachi reserves all rights in the Licensed
Marks, other than those expressly granted herein. Company shall do nothing inconsistent with such
ownership, and it shall forbear from attacking the validity of the Licensed Marks, or any
registrations thereof, or Hitachis title thereto. Company acknowledges that nothing in this
Branding Agreement shall give Company any right, title or interest in the Licensed Marks at any
time other than the right of Company to use the Licensed Marks in accordance with the licenses
granted in Article 2 and the rights granted in Section 8.5.
10.2 Company shall not knowingly take or omit to take, or authorize the taking or omission of,
any action that could reasonably be expected to dilute or adversely affect Hitachis claims to
ownership of the Licensed Marks or the validity, enforceability, registration, or application for
registration of the Licensed Marks.
10.3 All use of the Licensed Marks by Company shall inure to the benefit of Hitachi. During
the term of this Branding Agreement and thereafter, Company shall not apply to register the
Licensed Marks, any phonetic equivalent thereof, or any mark or term confusingly similar thereto
as, or as part of, a trademark, service mark, trade name, business name, domain name or other
indication of source or origin in any jurisdiction worldwide.
10.4 Company shall ensure that its Subsidiaries do not take any action that Company is
prohibited from taking as specified in this Branding Agreement and Company shall not authorize any
third party to take any action that Company is expressly prohibited from taking under the terms of
this Branding Agreement.
10.5 Nothing herein shall restrict or otherwise affect the right of Hitachi to obtain relief
against Company or any third party for any acts of trademark infringement, unfair competition or
dilution.
11.1 Company shall pay, indemnify, reimburse and hold harmless Hitachi and its Subsidiaries
(for purposes of this Article 11, Hitachi Protected Parties), from and against any and all Losses
to the extent incurred by any of them, as a result of, arising from or with respect to: (a) the
sale, distribution, promotion or marketing of the Licensed Products under the Licensed Marks by
Company, or by Companys Resellers other than to any Hitachi Protected Party; (ii) any actions or
omissions by Company with respect thereto; and (iii) the use by Company of the Licensed Marks in a
manner prohibited by this Branding Agreement; provided, however, that Companys obligations under
this Section 11.2 shall not include Losses to the extent arising out of any breaches by Hitachi of
any Transaction Document with respect to which Hitachi is obligated to indemnify Buyer or Buyer
Parent under any Transaction Document.
11.2 The provisions of Sections 9.4 and 9.6 of the Purchase Agreement are incorporated,
mutatis mutandis, into this Article 11 by reference, with respect to indemnification rights and
obligations of the Parties arising under Section 11.1 of this Branding Agreement.
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REPRESENTATIONS AND WARRANTIES; LIMITATIONS OF LIABILITY |
12.1 Each Party represents and warrants that it has the corporate power and authority to enter
this Branding Agreement, and to carry out the terms and obligations set forth in this Branding
Agreement, and that the persons executing this Branding Agreement on its behalf have the authority
to act for and bind the Party.
12.2 EXCEPT AS SPECIFICALLY PROVIDED IN THIS ARTICLE 12, NEITHER PARTY MAKES ANY OTHER
WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO ANY OTHER MATTER WHATSOEVER, AND EACH PARTY HEREBY
EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE,
ACCURACY, NON-INFRINGEMENT, AND TITLE, AND ANY WARRANTIES THAT MAY ARISE FROM COURSE OF DEALING,
COURSE OF PERFORMANCE OR USAGE OF TRADE.
12.3 Except as expressly set forth herein, neither Party shall be liable for any indirect,
incidental, consequential, special or punitive damages arising out of or relating to this Branding
Agreement, irrespective of whether such Party has been advised of the possibility of any such
damages. The foregoing limitation of liability shall not apply with respect to any liability
arising under, out of or in connection with Section 11 or any infringement, misappropriation or
other violation of any Intellectual Property Rights of a Party.
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NOTICES AND OTHER COMMUNICATIONS |
All notices and other communications required or permitted hereunder shall be in writing and shall
be mailed by Federal Express or other internationally recognized express carrier, registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to a
Party at the addresses set forth below, or at such other address as a Party may substitute by
written notice provided to the other Party in such manner. Such notices shall be deemed to have
been served when delivered.
If to Hitachi:
[]
If to Company:
[]
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ADR, GOVERNING LAW AND JURISDICTION |
14.1 The Parties agree that, in the event of a dispute arising under this Branding Agreement,
the Parties shall agree to attend a non-binding mediation prior to bringing any action in a court
of law. The mediation shall be facilitated by a neutral third-party, selected by the Parties. A
representative from each Party with authority to settle on behalf of that party shall attend the
mediation in person. The purpose of the mediation is to resolve the disputed issue(s) without the
need for formal legal proceedings.
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14.2 This Branding Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware as applied to contracts entered into and fully performed in such state.
14.3 The Parties agree that the Delaware Court of Chancery (and if jurisdiction in the
Delaware Court of Chancery shall be unavailable, any Delaware State court and the Federal court of
the United States of America sitting in the State of Delaware) shall have exclusive jurisdiction of
interpreting or enforcing this Branding Agreement, provided, however, that, notwithstanding the
foregoing, either Party may (i) seek injunctive or other preliminary relief, (ii) enforce its
Intellectual Property Rights, and (iii) seek recognition and enforcement of any order or judgment,
in any court of competent jurisdiction. The parties expressly waive their right to a trial by jury.
15.1 Nothing contained in this Branding Agreement shall be construed as conferring any right
to use in advertising, publicity or other promotional activities any name, trade name, trademark,
or other designation of either Party hereto (including any contraction, abbreviation, or simulation
of any of the foregoing) except as specifically provided herein; and each Party hereto agrees not
to use the existence of this Branding Agreement or any provision thereof in any advertising or
sales promotional activity, without the express written approval of the other Party.
15.2 The Parties acknowledge that this Branding Agreement is not and does not purport to be a
full recitation of Hitachis rights in and to the Licensed Marks, which rights may not be limited
to the terms of this Branding Agreement.
15.3 Except for the Purchase Agreement and other Transaction Documents, (a) this Branding
Agreement contains the complete agreement between, and contains all of the promises and
undertakings made to each other by, the Parties regarding the subject matter of this Agreement, and
(b) any and all prior agreements, representations, negotiations, and undertakings between the
Parties, oral or written, express or implied, with respect to the subject matter hereof, are hereby
superseded and merged by and into this Branding Agreement, effective as of the Closing Date. This
Agreement may not be revised or modified without the mutual written consent of the Parties.
15.4 If any paragraph, provision or clause of this Branding Agreement shall be found or held
to be invalid or unenforceable by a court or other decision-making body of competent jurisdiction,
in a judgment from which no further appeal can be taken, the remainder of this Branding Agreement
shall remain valid and enforceable, and to the extent required in the pursuit of this Branding
Agreement, the Parties shall negotiate in good faith a substitute, valid and enforceable provision
that reflects the Parties intent in entering this Branding Agreement.
15.5 This Branding Agreement may be executed in identical counterparts, each of which shall
constitute an original and all of which shall constitute one and the same agreement.
[Remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to execute this
Agreement on the dates indicated below.
For and on behalf of
Hitachi, Ltd.
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[Signature page for Brand License Agreement]
SCHEDULE 2.1
Licensed Hitachi Marks
SCHEDULE 2.2
Licensed Hitachi Trade Dress
SCHEDULE 4.2
Trade Dress Guidelines
Exhibit G
Form of
SECONDMENT AGREEMENT
This SECONDMENT AGREEMENT (this Agreement) is made and entered into as of
[_____], by
and between [_____], a company incorporated under the laws of Japan (the Seconding
Entity), and [_____], a company incorporated under the laws of Japan (the Receiving
Entity and together with [_____] and the Seconding Entity, the Parties and each a
Party).
RECITALS
A. The [_____] and the [_____] are parties to that certain Stock Purchase Agreement dated as of
March 7, 2011 (the Stock Purchase Agreement), pursuant to which, inter alia, [_____] has
acquired all of the outstanding shares in the capital of the [_____] as of the date hereof.
B. The Stock Purchase Agreement contemplates the secondment of certain employees of the
Seconding Entity to the Receiving Entity.
AGREEMENT
Now, therefore, the Parties agree as follows:
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Definitions; Interpretation |
1.1 Definitions. Capitalized terms used in this Agreement are defined or referenced
in Annex A attached hereto.
2.1 Secondees and Secondment Period.
(a) Secondment. On the date hereof, the Seconding Entity shall use its commercially
reasonable efforts to second to the Receiving Entity the employees referred to on Schedule
2.1 (each such employee, a Secondee and, collectively, the Secondees).
(b) Secondment Period.
(i) The initial period of secondment for each Secondee shall be two years commencing on the
date hereof and thereafter shall, subject to the Secondees consent, automatically renew for
successive two-year periods (the initial and any renewal terms, collectively, the Secondment
Period)[, except that either Party may elect not to renew the Secondment Period by giving
written notice of non-renewal no later than three months prior to
the end of the then-current two-year period (whether an initial or renewal
period).]1; provided, that the Parties may agree otherwise with respect to any Secondee.
(ii) At any time during the Secondment Period, the Receiving Entity may terminate the
secondment of any Secondee (A) by written agreement of the Seconding Entity and the Receiving
Entity, and (B) upon written notice from the Receiving Entity to the Seconding Entity that such
Secondee has done or omitted to do anything which would entitle the Receiving Entity to terminate
such Secondees employment (chokai kaiko) pursuant to the employment rules, regulations and
policies of the Receiving Party if such Secondee were a direct employee of the Receiving Party.
Upon written notice from (X) the Seconding Entity to the Receiving Entity stating that such
Secondee has voluntarily or involuntarily retired or resigned, or (Y) the Receiving Entity to the
Seconding Entity that such Secondee has done or omitted to do such things as described in clause
(B) of this paragraph, the secondment of such Secondee hereunder shall terminate upon the
effectiveness of such retirement, resignation, or receipt of the notice that such Secondee has so
acted or omitted to act, as applicable.
2.2 Secondment Principles. During the Secondment Period, each Secondee shall remain
an employee of the Seconding Entity but shall (a) be made available on a full-time basis to the
Receiving Entity, (b) be managed by the Receiving Entity, (c) be subject to the employment rules,
regulations and policies of the Receiving Entity with respect to working hours, break time and any
holidays, (d) perform such duties and provide such services at such times and at such places as the
Receiving Entity may require, and (e) act in accordance with and subject to the instructions of the
Receiving Entity. The Parties acknowledge and agree that no Secondee shall be under the control or
supervision of the Seconding Entity during the Secondment Period and agree that the Seconding
Entity shall not be responsible to the Receiving Entity for the quality, nature or sufficiency of
the services performed by its Secondees during such period; provided, however, that the Receiving
Entity shall neither relocate any Secondee nor materially change any Secondees duties, working
hours or any other term or condition of his or her service without obtaining the Seconding Entitys
written approval with respect to any relocation or material change, which approval shall not be
unreasonably withheld.
2.3 Working Terms and Conditions.
(a) Secondment Costs and Expenses. During the Secondment Period, the Receiving Entity
shall pay to the Seconding Entity all cost and expenses related to the performance of services by
the Secondees on the same terms and conditions of such secondments as were in effect immediately
prior to the secondment contemplated hereby. The Seconding Entity shall pay compensation directly
to the Secondees unless otherwise agreed by the Parties.
(b) Receiving Entity Non-Disclosure Rules. Each Secondee shall be bound by any and
all confidentiality rules, policies, agreements or arrangements (the Confidentiality
Rules) of the Receiving Entity. With respect to each Secondee, the Seconding Entity hereby
waives its rights under any and all Confidentiality Rules of the Seconding Entity to the extent
such Confidentiality Rules of the Seconding Entity are inconsistent with the Confidentiality
Rules of the Receiving Entity.
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The bracketed language shall only apply to the secondment of Non-R&D/R&D Related Secondees described
in Section 6.12(e)(ii) of the Stock Purchase Agreement. |
2
(c) Employee Intellectual Property Rules.
(i) Without limiting the generality of Section 2.2, the Seconding Entity acknowledges
that ownership of any and all intellectual property rights in any inventions, trade secrets, or
work product generated by such Secondee in the course of and in connection with such Secondees
duties during the Secondment Period (the Employee IPR) shall be treated in accordance
with the rules, policies, agreements or arrangements for ownership of Employee IPR (the IPR
Rules) of the Receiving Entity.
(ii) The Seconding Entity waives and shall not exercise any rights, (A) to require any
Secondee to assign or transfer any Employee IPR to any person or entity, or (B) to apply for the
registration thereof, in each case, under the Seconding Entitys IPR Rules, in manner that would be
inconsistent with the Receiving Entitys IPR Rules. Notwithstanding the preceding sentence, if the
Seconding Entity acquires any ownership interest in any Employee IPR, then, pursuant to the
Receiving Partys IPR Rules that such Employee IPR should be owned by the Receiving Party, the
Seconding Entity shall promptly assign such Seconding Entitys interest in the Employee IPR to the
Receiving Entity.
(iii) [Any compensation with respect to the assignment or transfer of any interest in patents
included in or arising out of any Employee IPR shall be made mutatis mutandis with the terms and
conditions set forth in that certain Inventor Award Integration Agreement, dated as of December 10,
2010, by and between Hitachi Global Storage Technologies Netherlands B.V. and Hitachi,
Ltd.]2
(d) Changes to the Seconding Entitys Working Terms and Conditions. Notwithstanding
anything in this Agreement to the contrary, the Seconding Entity and its Affiliates shall, in their
sole discretion, have the right to terminate or modify any of its rules, regulations and policies,
from time to time, including, without limitation, those relating to or otherwise governing the
Secondees and the right to adopt compensation or bonus plans or policies from time to time,
including, any Benefit Arrangements with its sponsors. For the avoidance of doubt and
notwithstanding anything herein to the contrary, the ability of any Secondee to participate in any
Benefit Arrangements shall be contingent upon such Secondee satisfying all of the eligibility
requirements for such Benefit Arrangements that may be in effect from time to time, consistently
applied to similarly situated employees who participate in such plans and arrangements.
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For secondment of the R&D Secondees. Subject to review
by relevant IP departments, as applicable. |
3
2.4 [Reimbursement. All costs and expenses and other amounts incurred by the
Seconding Entity with respect to any Secondee shall accrue on a calendar month basis (except as
provided in Section 4.2) and shall be reimbursed by the Receiving Entity. The Receiving
Entity shall make such reimbursement to the Seconding Entity by wire transfer of immediately
available funds by the end of each calendar month in which it receives an invoice from the
Seconding Entity on or before the tenth (10th) day of such calendar month. In the event that the
Receiving Entity receives an invoice from the Seconding Entity after the tenth (10th) day of
any calendar month, the Receiving Entity shall make such reimbursement to the Seconding Entity by
the end of the following calendar month. All invoices shall be denominated in Japanese yen and
shall be accompanied by reasonable documentation evidencing the basis for such invoiced amounts in
reasonable detail. If the Secondment Period with respect to any Secondee starts or ends on a day
other than on the first or last day (respectively) of a calendar month, the amount of any costs and
expenses to be reimbursed by the Receiving Entity shall be prorated based on the actual number of
calendar days worked in such month. For the avoidance of doubt, reimbursable amounts hereunder
shall include, without limitation, actual payroll and other administrative costs and expenses
incurred by the Seconding Entity in connection with making available or administering Benefit
Arrangements to Secondees. The Receiving Entity shall pay the gross amount of any present or
future sales, use, excise, value-added, ad valorem or any other tax applicable to the furnishing by
the Seconding Entity of benefits to the Secondees (other than income taxes), or the Seconding
Entity shall be provided with a tax exemption certificate acceptable to applicable governmental
authorities.]3
2.5 Relocation Expenses. If the Receiving Entity determines that a Secondee is
required to relocate in order to perform his or her duties for the Receiving Entity, the Receiving
Entity shall pay all costs and expenses associated with the relocation in accordance with the
Receiving Entitys rules, regulations and policies.
2.6 Permanent Transfer. During the Secondment Period, [_____] and [_____] may discuss
and negotiate the permanent transfer of employment of any Secondee to the Receiving Entity or any
of its affiliates.
2.7 Unions; Employees. The secondment of Secondees to the Receiving Entity shall be
made in accordance with any agreement between the Seconding Entity and its labor union. The
Parties shall use commercially reasonable efforts to obtain the consent or approval, to the extent
necessary or requred, from any union with respect to the secondment of any Secondees to the
Receiving Party.
During the Secondment Period, the Seconding Entity shall notify the Receiving Entity promptly
on becoming aware of (a) any threatened labor strike, walkout, slowdown, stoppage, picketing, or
other material dispute with respect to Secondees, (b) any threatened proceeding arising out of or
under any agreement between the Seconding Entity, on the one hand, and a labor union that
represents any Secondee, on the other hand, (c) any notice from a Secondee to the Seconding Entity
of an election to terminate employment, or (d) any allegation by a Secondee of any unfair labor
practices, discrimination, or breach of contract by the Seconding Entity.
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Subject to final review by relevant accounting and
payroll departments, as applicable. |
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(a) Continued Participation. Each Secondee shall continue as a participating member
of the Benefit Arrangements of Seconding Entity except for occupational injury insurance (rosai hoken) which shall be provided by the Receiving Entity, and the Secondees
shall accrue benefits in accordance with the terms of the applicable rules, regulations and
policies of the Seconding Entity.
(b) Allocation/Limitation of Pension Contribution Obligations. During the Secondment
Period, the Receiving Entity shall be fully responsible for reimbursing the Seconding Entity for
the pension premiums or other payments for any benefits accrued by each Secondee. Such premiums
shall be calculated by the Seconding Entity on a basis consistent with the calculation of the
premiums payable to other similarly situated employees of commensurate, rank, title and duties
participating in the Seconding Entitys Benefit Arrangements during the Secondment Period.
4.2 Retirement Benefits. In the event that a Secondee retires (whether voluntarily or
involuntarily) from the Seconding Entity during his or her Secondment Period, such Secondees
retirement benefits under applicable Benefit Arrangements shall be calculated based on such
Secondees service years with the Seconding Entity and the Receiving Entity through the effective
date of retirement, determined in accordance with the rules, regulations and policies of the
Seconding Entity. All retirement benefit costs and expenses incurred by the Seconding Entity, with
respect to any Secondee during his or her Secondment Period, shall be reimbursed to the Seconding
Entity by the Receiving Entity [once every six months]4. Any lump-sum retirement
benefit payments to be made to such Secondee shall be borne on a pro rata basis by the Seconding
Entity and the Receiving Entity, based on such Secondees periods of service with the Seconding
Entity and the Receiving Entity (with his or her Secondment Period counted as time with the
Receiving Entity); provided, however, any retirement benefit costs and expenses
already reimbursed to the Seconding Entity by the Receiving Entity, if any, shall be deducted from
any lump-sum retirement benefit payment borne by the Receiving Entity.
4.3 Pre-Secondment Period Accrued Benefits. Any and all liabilities relating to any
benefits calculated with respect to any time period ending prior to the commencement of the
Secondment Period under any Benefit Arrangements maintained or contributed to, or required to be
maintained or contributed to, by the Seconding Entity for the benefit of any Secondee, shall be for
the account of and borne by the Seconding Entity regardless of whether any such liability is to be
paid to any Secondee at any time after the commencement of the Secondment Period. Without
prejudice to the generality of the foregoing, any benefits to be paid during the Secondment Period
which vary based on length of employment or services shall be calculated giving effect to, and
credit for, time served by the Secondee with the Seconding Entity.
5. |
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Claims And Liabilities |
5.1 Consequential Damages Waiver. EXCEPT WITH RESPECT TO THE PARTIES RESPECTIVE
INDEMNITY OBLIGATIONS UNDER SECTION 7, TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY UNDER ANY LEGAL THEORY FOR
ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR ANY DAMAGES FOR LOSS OF
PROFITS, REVENUE OR BUSINESS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. FOR
PURPOSES OF THIS SECTION 5.1, PARTIES AND PARTY SHALL INCLUDE ANY AFFILIATES.
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Subject to final review by relevant accounting and
payroll departments, as applicable. |
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5.2 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY MAKES (AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS) ANY REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE, AND ANY WARRANTIES THAT MAY ARISE FROM COURSE OF PERFORMANCE, COURSE OF DEALING
OR USAGE OF TRADE. FOR PURPOSES OF THIS SECTION 5.2, PARTIES AND PARTY SHALL INCLUDE
ANY AFFILIATES.
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Confidential Information |
6.1 Confidential Information means all information disclosed by a Party (the
Discloser) in writing, orally or in any other form concerning the businesses, affairs,
properties, employees, finances, products, technologies and operations of the Discloser to the
other Party (the Recipient) and any notes, analyses, compilations, studies, forecasts,
interpretations or other documents that are derived from, contain, reflect or are based upon any
such information. Confidential Information does not include information or material that (a) is
now, or hereafter becomes, through no act or failure to act on the part of the Recipient, generally
known or available; (b) is or was known by the Recipient at or before the time such information or
material was received from the Discloser; (c) is furnished to the Recipient by a third party that
is not under an obligation of confidentiality to the Discloser with respect to such information or
material; or (d) is independently developed by the Recipient.
6.2 The Recipient shall hold all Confidential Information in confidence and shall not disclose
to third parties or use such information for any purpose whatsoever other than as necessary in
order to fulfill its obligations or exercise its rights under this Agreement. The Recipient shall
take all reasonable measures to protect the confidentiality of the Disclosers Confidential
Information in a manner that is at least protective as the measures it uses to maintain the
confidentiality of its own Confidential Information of similar importance. Notwithstanding the
foregoing, the Recipient may disclose the Disclosers Confidential Information (a) to employees and
consultants that have a need to know such information, provided that each such employee and
consultant is under a duty of nondisclosure that is substantially comparable with the
confidentiality and nondisclosure provisions herein, and (b) to the extent the Recipient is legally
compelled to disclose such Confidential Information, provided that if permitted by applicable law
and regulations the Recipient shall give advance notice of such compelled disclosure to the
Discloser, and shall cooperate with the Discloser in connection with any efforts to prevent or
limit the scope of such disclosure and use of the Confidential Information.
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7.1 Indemnification.
(a) Indemnification by the Receiving Entity. The Receiving Entity shall indemnify,
defend and hold harmless the Seconding Entity and its officers, directors and employees from and
against any and all claims related to (a) the actions or omissions of any Secondee in the course
and scope of his or her services to the Receiving Entity during his or her Secondment Period, and
(b) any breach by the Receiving Entity of this Agreement.
(b) Indemnification by the Seconding Entity. The Seconding Entity shall indemnify,
defend and hold harmless the Receiving Entity and its officers, directors and employees from and
against any and all claims related to (a) the actions or omissions of the Seconding Entity with
respect to any Secondee, and (b) any breach by the Seconding Entity of this Agreement.
7.2 Indemnification Procedures. If an indemnified party (an Indemnified
Party) becomes aware of a claim for which indemnification may be sought hereunder, then such
Indemnified Party shall give notice thereof (a Claim Notice) to the indemnifying party
(an Indemnifying Party) as promptly as practicable. The failure of an Indemnified Party
to give a timely Claim Notice hereunder shall not affect its rights to indemnification hereunder.
If the Indemnifying Party acknowledges in writing to the Indemnified Party that the Indemnifying
Party is obligated under the terms of its indemnity hereunder in connection with the claim set
forth in a Claim Notice, then the Indemnifying Party shall be entitled, at its own cost, risk and
expense, to compromise or settle such claim, which compromise or settlement shall be made only with
the prior written consent of the Indemnified Party (such consent not to be unreasonably withheld),
unless such compromise or settlement relates solely to the payment of cash by the Indemnifying
Party. The Parties shall cooperate with each other in any notifications to insurers. If the
Indemnifying Party fails to assume the defense of such claim after receipt of the Claim Notice,
then the Indemnified Party shall (upon delivering notice to such effect to the Indemnifying Party)
have the right, but not the obligation, to undertake, at the Indemnifying Partys cost and expense,
the defense, compromise or settlement of such claim on behalf of, and for the account and risk of,
the Indemnifying Party. In the event the Indemnified Party assumes the defense of the claim, the
Indemnified Party will keep the Indemnifying Party timely informed of the progress of any such
defense, compromise or settlement. The Indemnifying Party shall be liable for any settlement of
any claim in accordance with this Section 7.2, and the Indemnifying Party agrees to
indemnify and hold harmless the Indemnified Party from and against any claims by reason of such
settlement.
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8.1 Term. This Agreement shall be effective as of the date hereof, and shall continue
in full force and effect until the expiration of the Secondment Period for all of the Secondees
(the Term).
8.2 Effect of Termination.
(a) Continuing Liability. Termination of this Agreement for any reason shall not (a)
release either Party from any liability, obligation or agreement which has already accrued at the
time of termination, or (b) constitute a waiver or release of, or otherwise be deemed to prejudice
or adversely affect, any rights, remedies or claims, whether for damages or otherwise, which a
Party may have under this Agreement, at law or otherwise, or which may arise out of or in
connection with such termination.
(b) Survival. The provisions of Sections 2.3(a), 2.4, and 4.3
with respect to any payment obligations which accrued prior to, and remain outstanding as of, the
expiration of the Term, and Sections 1.1, 2.3(c), 5, 6, 7
and 9 and this Section (b) shall survive any termination of this Agreement.
9.1 Addresses. Any notice, claim or demand in connection with this Agreement or with
any litigation under this Agreement (each a Notice) shall be sufficiently given if
delivered or sent to the recipient at its fax number or address set out in Schedule 9.1 or
any other fax number or address notified to the sender by the recipient for the purposes of this
Agreement.
9.2 Form. Any Notice shall be deemed to have been received on the next working day in
the place to which it is sent, if sent by fax, or three Business Days from the date deposited with
a courier, if sent by international courier, or five Business Days from the date of posting, if
sent by post.
9.3 Contact Person. The person named by each Party in Schedule 9.1 shall be
the primary point of contact at that Party for all matters relating to this Agreement. Each Party
agrees that it will exercise its rights and send and receive all notices under this Agreement
through such person or to any alternative person specified by a Party by giving not less than five
Business Days written notice to the other Party.
10.1 Whole Agreement. This Agreement contains the whole agreement between the Parties
relating to the subject matter of this Agreement at the Effective Date to the exclusion of any
terms implied by applicable law which may be excluded by contract and supersedes any previous
written or oral agreement between the Parties in relation to the matters dealt with in this
Agreement except as otherwise set forth in the Stock Purchase Agreement.
10.2 No Partnership. Nothing in this Agreement shall be deemed to constitute a
partnership between the Parties and no Party shall be deemed to be the agent of the other Party for
any purpose.
10.3 Waiver. No failure of a Party to exercise, and no delay by it in exercising, any
right, power or remedy in connection with this Agreement (each, a Right) shall operate as
a waiver of that Right, nor shall any single or partial exercise of any Right preclude any other or
further exercise of such Right or the exercise of any other Right. Any express waiver of any
breach of this Agreement shall not be deemed to be a waiver of any subsequent breach.
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10.4 Variation. No variation of this Agreement shall be effective unless in writing
and signed by or on behalf of each of the Parties.
10.5 Assignment. This Agreement shall be binding on and inure to the benefit of the
Parties and their successors and permitted assigns. Except as otherwise provided in this
Agreement, the Parties may not assign or transfer all or any part of their rights or obligations
under this Agreement or any benefit arising under or out of this Agreement.
10.6 Further Assurances. At any time after the date hereof, each Party shall, at its
own cost, execute such documents and do such acts and things for the purpose of giving to the other
Party the full benefit of the provisions of this Agreement.
10.7 Invalidity. If any provision in this Agreement shall be held to be illegal,
invalid or unenforceable, in whole or in part, under any enactment or rule of law, such provision
or part shall to that extent be deemed not to form part of this Agreement but the legality,
validity and enforceability of the remainder of this Agreement shall not be affected.
10.8 Counterparts. This Agreement may be entered into in any number of counterparts,
each of which shall be deemed an original, and all of which taken together shall constitute one and
the same instrument.
10.9 Costs. Each Party shall bear all costs incurred by it in connection with the
preparation, negotiation and entry into this Agreement and the documents to be entered into
pursuant to it.
10.10 Language. This Agreement shall be in the English language, and any translation
of this Agreement into any other language other than Japanese by either Party shall be for
convenience purposes only. In the event of any conflict between this Agreement and a convenience
translation, this Japanese version shall prevail.5
10.11 Governing Law. This Agreement and the legal relations among the Parties shall
be governed by and construed in accordance with the laws of Japan without giving effect to any law
or rule that would cause the laws of any jurisdiction other than Japan to be applied.
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Negotiation Procedures; Consent to Jurisdiction, Service of Process and Venue |
11.1 Negotiation Procedure.
(a) Good Faith Discussions. The Parties intend that all disputes, controversies or
differences between the Parties arising out of or in relation to or in connection with this
Agreement shall be settled by the Parties amicably through good faith discussions upon the written
request of either Party.
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The original of this agreement will be in the Japanese
language. |
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(b) Negotiation Procedures. Prior to filing suit, instituting a judicial or
administrative proceeding, or seeking other judicial or governmental resolution (each, a
Proceeding) in connection with any dispute between the Parties or any of their
subsidiaries arising out of or in relation to or in connection with this Agreement, the Parties
will attempt to resolve such dispute by good faith negotiations. Such negotiations shall proceed as
follows:
(i) Any Party may send a written notice to another Party requesting such negotiations.
Promptly following receipt of such notice by the receiving Party, each Party shall cause the
individual designated by it as having general responsibility for this Agreement to meet in person
with the individual so designated by the other Party to discuss the dispute.
(ii) If the dispute is not resolved within thirty (30) days after the first meeting between
such individuals (or, if earlier, within forty five (45) days of the notice referred to in clause
(a) above), then, upon the written request of any Party, each Party shall cause the individual
designated by it as having general responsibility for the overall relationship defined by this
Agreement to meet in person with the individual so designated by the other Party to discuss the
dispute.
(iii) If the dispute is not resolved within fifteen (15) days after the first meeting between
such individuals (or, if earlier, within thirty (30) days of the notice referred to in clause (b)
above), then, upon the written request of either Party, each Party shall nominate one corporate
officer, which corporate officers shall meet in person and attempt in good faith to negotiate a
resolution to the dispute.
Except and only to the limited extent provided in Section (c), neither Party shall file
suit, institute a Proceeding or seek other judicial or governmental resolution of the dispute until
at least thirty (30) days after the first meeting between the corporate officers described in
clause (iii) above (or if earlier forty five (45) days after the notice referred to in such clause
(iii)) but after the expiration of such periods, either Party may file suit, institute a Proceeding
or seek other judicial or governmental resolution. For purposes of this Agreement, the procedures
set forth in this Section (b) shall be referred to as the Negotiation
Procedures.6
(c) Institution of Proceedings. Notwithstanding the provisions of Section
(b), any Party may institute a Proceeding at any time seeking a preliminary injunction,
temporary restraining order, or other equitable relief, if necessary in the sole judgment of that
Party to avoid material harm to its property, rights or other interests, before commencing, or at
any time during the course of, the dispute procedure described in Section (b). In
addition, any Party may file an action prior to the commencement of or at any time during or after
the dispute resolution procedures in Section (b) if in the sole judgment of that Party it
is necessary to prevent the expiration of a statute of limitations or filing period or the loss of
any other substantive or procedural right.
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Negotiation Process proposal under further review. |
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11.2 Consent to Jurisdiction, Service of Process and Venue. Each of the Parties
irrevocably and unconditionally submits to the exclusive jurisdiction of the Tokyo District Courts
for the purposes of any action, suit, proceeding, hearing, order, charge or complaint (each,
an Action) or other proceeding arising out of or in relation to or in connection
with this Agreement (and agrees that no such Action or proceeding arising out of or in relation to
or in connection with this Agreement shall be brought by it or any of the subsidiaries except in
such courts).
[Remainder of page intentionally blank.]
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IN WITNESS WHEREOF, each Party has caused its duly authorized representative to
execute this Secondment Agreement as of the date first written above.
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[Signature Page to Secondment Agreement]
ANNEX A
DEFINITIONS
Action has the meaning specified in Section 11.2.
Agreement has the meaning set forth in the preamble.
Affiliate means any person or entity now or hereafter controlling, controlled by or
under common control with another person or entity.
Benefit Arrangements means any plan, program, policy, practice or arrangement
relating to insurance, bonuses, vacation, profit-sharing, stock options, disability, pension,
retirement, allowances, welfare, healthcare, unemployment or any other benefits to employees or
former employees, their beneficiaries or dependents.
Business Day means a day, other than Saturday, Sunday or public holidays in Japan.
Claim Notice has the meaning specified in Section 7.2.
Confidential Information has the meaning specified in Section 6.
Confidentiality Rules has the meaning specified in Section 2.3(b).
Discloser has the meaning specified in Section 6.1.
Employee IPR has the meaning specified in Section 2.3(c)(ii).
Secondment Period has the meaning specified in Section 2.1(b).
Indemnified Party has the meaning specified in Section 7.2.
Indemnifying Party has the meaning specified in Section 7.2.
IPR Rules has the meaning specified in Section 2.3(c)(ii).
Negotiation Procedures has the meaning specified in Section 11.1(b).
Notice has the meaning specified in Section 9.1.
Parties or Party has the meaning set forth in the preamble.
Proceeding has the meaning specified in Section 11.1(b).
Receiving Entity has the meaning set forth in the preamble.
A - 1
Recipient has the meaning specified in Section 6.1.
Right has the meaning specified in Section 10.3.
Secondee has the meaning specified in Section 2.1(a).
Seconding Entity has the meaning set forth in the preamble.
Secondment Period has the meaning specified in Section 2.1(b)(ii).
Stock Purchase Agreement has the meaning specified in the Recitals.
Term has the meaning specified in Section 8.1.
A - 2
SCHEDULE 2.1
SECONDEES
2.1 - 1
SCHEDULE 9.1
ADDRESS FOR NOTICES
9.1 - 1
SCHEDULE 6.6
Antitrust Governmental Entities
After review of applicable Antitrust Laws, the Parties have determined that the list of
jurisdictions set forth on Schedule 6.6 should be the following:
1. China
2. Mexico
3. Turkey
4. Brazil
Schedule
6.6
SCHEDULE 7.2
Antitrust Jurisdictions
After review of applicable Antitrust Laws, the Parties have determined that the list of
jurisdictions set forth on Schedule 7.2 should be the following:
1. European Union (EU Merger Regulation)
2. China
3. Japan
4. Mexico
5. South Korea
6. Taiwan
7. Turkey
8. United States of America
9. Brazil
Schedule
7.2