Exhibit 2.3
INDEMNIFICATION AGREEMENT
Indemnification Agreement, dated as of March 29, 2000, by and among VERITAS
Software Corporation, a Delaware corporation ("Veritas"), Seagate Technology,
Inc., a Delaware corporation ("Seagate"), Suez Acquisition Company (Cayman)
Limited, a limited company organized under the laws of the Cayman Islands
("SAC"), and each Person who executes a Joinder Agreement (as defined below)
pursuant to Section 4(f) hereof.
WHEREAS, Seagate has determined to sell to SAC (the "Stock Purchase") all
of the outstanding shares of capital stock of the Sold Subsidiaries (as defined
below) pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement")
between Seagate and SAC, dated as of the date hereof;
WHEREAS, Seagate, Veritas and Victory Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Veritas ("Victory Sub"), have
previously entered into an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") dated as of the date hereof, providing for the merger of
Victory Sub with and into Seagate (the "Merger");
WHEREAS, consummation of the Stock Purchase is a condition precedent to the
consummation of the Merger;
WHEREAS, it is a condition precedent to the consummation of the Stock
Purchase and the Merger that this Indemnification Agreement shall be in full
force and effect; and
WHEREAS, the parties to this Agreement have determined that it is necessary
and desirable to set forth certain agreements that will govern various tax
matters, indemnity matters and other matters that may arise in connection with
the Stock Purchase and the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
SECTION 1. Definitions. Capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Stock Purchase Agreement. The
following terms shall have the following definitions:
"Financing Agreements" means the documents, instruments and agreements
evidencing the Financing as the same may be amended, refinanced, replaced,
modified or supplemented from time to time.
"Loss" or "Losses" means any losses, claims, damages, deficiencies,
liabilities, costs obligations, fines, penalties and expenses of any nature
whatsoever (including reasonable expenses of investigation and reasonable
attorney's fees and disbursements).
"Material Adverse Effect" means a material adverse change in or effect
with respect to the business, results of operations, properties, financial
condition or prospects of SAC and its Subsidiaries, taken as a whole.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association or other business entity.
1
"Pre-Purchase Tax Period" means any Tax Period ending on or before the
end of the date of the Stock Purchase.
"Pre-Purchase Taxes" shall mean (i) all liability for Taxes of Seagate
and the Retained Subsidiaries for Pre-Purchase Tax Periods and (ii) all
liability of Seagate and the Retained Subsidiaries for the Pre-Purchase
portion of Taxes of such companies attributable to any Straddle Period as
determined in accordance with Section 6(b) hereof, provided, however, that
Taxes in respect of any transactions as of the date hereof undertaken at
the written direction of Veritas shall be excluded.
"Retained Subsidiary" means any Subsidiary of Seagate that is not a
Sold Subsidiary.
"SAC Indemnitor" means SAC and each Person who executes a Joinder
Agreement pursuant to Section 4(f) hereof.
"Stock Purchase Date" shall mean the date of the Stock Purchase.
"Straddle Period" shall mean a taxable period of Seagate or a Retained
Subsidiary that begins before the Stock Purchase Date and ends after the
Stock Purchase Date.
"Tax" or "Taxes" means (i) any tax, governmental fee or other like
assessment or charge of any kind whatsoever (including, without limitation,
withholding on amounts paid to or by any Person), together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority (a "Taxing Authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) liability for the
payment of any amounts of the type described in clause (i) above as a
result of Seagate or any of its Subsidiaries, including the Sold
Subsidiaries, being a member prior to the Stock Purchase Date of an
affiliated, consolidated, combined or unitary group, or being a party to
any agreement or arrangement entered into prior to the Stock Purchase Date
as a result of which liability of Seagate or any of its Subsidiaries,
including the Sold Subsidiaries, to a Taxing Authority is determined or
taken into account with reference to the liability of any other person,
(iii) liability of Seagate or any of its Subsidiaries, including the Sold
Subsidiaries, for the payment of any amount as a result of being party to
any tax sharing agreement or arrangement entered into prior to the Stock
Purchase Date, or with respect to the payment of any amount of the type
described in clause (i) or (ii) above as a result of any express or implied
obligation arising prior to the Stock Purchase Date to indemnify any other
Person and (iv) liability of Seagate or any of its Subsidiaries, including
the Sold Subsidiaries, as a result of any express or implied obligation
arising prior to the Stock Purchase Date to pay any Taxes of any Person or
to "gross up" any Person for income received or deemed received as a result
of any other Person paying Tax Liabilities of such Person.
SECTION 2. Representations and Warranties of the SAC Indemnitors. The SAC
Indemnitors jointly and severally represent and warrant to Veritas as of the
date hereof, as of the Closing Date and as of the date of each Joinder Agreement
as follows, each of which such representations and warranties shall survive the
Closing Date:
(a) Organization and Authority of the SAC Indemnitors. Each of the SAC
Indemnitors is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
necessary corporate power and authority to enter into this Agreement, the
Stock Purchase Agreement and
2
each Joinder Agreement to which it is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Stock Purchase Agreement by SAC and each Joinder Agreement by each Person
who executes such Agreement, the performance by the SAC Indemnitors of
their respective obligations hereunder and thereunder and the consummation
by the SAC Indemnitors of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action on the part of
the SAC Indemnitors. This Agreement and the Stock Purchase Agreement have
been, and each Joinder Agreement will be, duly executed and delivered by
the SAC Indemnitor party thereto, and (assuming due authorization,
execution and delivery by each of the other respective parties thereto)
each of this Agreement, the Stock Purchase Agreement and each Joinder
Agreement constitutes or, when executed and delivered in accordance with
the terms hereof, will constitute a legal, valid and binding obligation of
the SAC Indemnitor Party thereto enforceable against the SAC Indemnitor
party thereto in accordance with its terms.
(b) No Conflict. The execution, delivery and performance of this
Agreement and the Stock Purchase Agreement by SAC and each Joinder
Agreement by each Person who executes such Agreement does not and will not
after giving effect to the transactions contemplated by the Stock Purchase
Agreement and the Financing (i) violate, conflict with or result in the
breach of any provision of the charter or by-laws (or similar
organizational documents) of any SAC Indemnitor, (ii) violate or conflict
with any provision of law, or any order, judgment or decree of any court or
other governmental or other regulatory authority applicable to any SAC
Indemnitor or (iii) violate, conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of
time, or both, would constitute a default) under any material contract,
lease, loan agreement, mortgage, security agreement, trust indenture or
other agreement or instrument to which any SAC Indemnitor is a party or by
which any SAC Indemnitor is bound or to which any SAC Indemnitor's
properties or assets is subject or (iv) result in the creation of any lien,
charge or encumbrance of any kind whatsoever on any of the properties or
assets of any SAC Indemnitor.
(c) Consents and Approvals. The execution, delivery and performance of
this Agreement and the Stock Purchase Agreement by SAC and each Joinder
Agreement by each Person who executes such Agreement does not and will not
require any material consent, approval, authorization, waiver or other
order of, action by, filing with or notification to any governmental or
regulatory authority, domestic or foreign, except as will be made or
obtained prior to Closing by the SAC Indemnitor party thereto and remains
in full force and effect.
SECTION 3. Representations and Warranties of Veritas. Veritas represents
and warrants to SAC as of the date hereof and as of the Closing Date as follows,
each of which such representations and warranties shall survive the Closing
Date:
(a) Organization and Authority of Veritas. Veritas is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to enter into this Agreement and the Merger Agreement, to carry
out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Merger Agreement by Veritas, the performance by
Veritas of its obligations hereunder and thereunder and the
3
consummation by Veritas of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action on the part of
Veritas. This Agreement and the Merger Agreement have been duly executed
and delivered by Veritas, and (assuming due authorization, execution and
delivery by each of the other respective parties hereto and thereto) this
Agreement and the Merger Agreement constitute legal, valid and binding
obligations of Veritas enforceable against Veritas in accordance with their
terms.
(b) No Conflict. The execution, delivery and performance of this
Agreement and the Merger Agreement by Veritas does not and will not (i)
violate, conflict with or result in the breach of any provision of the
charter or by-laws of Veritas, (ii) violate or conflict with any provision
of law, or any order, judgment or decree of any court or other governmental
or other regulatory authority applicable to Veritas or (iii) violate,
conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would constitute
a default) under any material contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to
which Veritas is a party or by which Veritas is bound or to which any of
Veritas properties or assets is subject or (iv) result in the creation of
any lien, charge or encumbrance of any kind whatsoever on any of the
properties or assets of Veritas.
(c) Consents and Approvals. The execution, delivery and performance of
this Agreement and the Merger Agreement by Veritas does not and will not
require any material consent, approval, authorization, waiver or other
order of, action by, filing with or notification to any governmental or
regulatory authority, domestic or foreign, except as has been made or
obtained prior to Closing by Veritas and remains in full force and effect.
SECTION 4. Certain Covenants.
(a) Access to Books and Records of SAC; Financial Statements and
Reports. Upon the request of Veritas, SAC shall provide to representatives of
Veritas and its Affiliates reasonable access to its books and records and shall
cause its auditors to provide to the auditors of Veritas and its Affiliates
reasonable access to SAC's auditors' work papers. For as long as SAC is required
to do so, SAC shall provide Veritas with copies of any annual or quarterly
financial statements and reports that it is required to deliver to the lenders
providing senior financing in the Financing, and any requests for waivers of any
term or provisions in the Financing Documents, in each case, at the same times
provided for in the Financing Agreements. The provisions contained in this
Section 4(a) shall terminate and be of no further effect from and after the
fifth anniversary of the Stock Purchase Date.
(b) Retention of Documents. Subject to Section 6(f) hereof, each of the SAC
Indemnitors agrees that it will preserve all documentation relating to the
transactions contemplated by the Stock Purchase Agreement or this Agreement and
each of Veritas and Seagate agrees that it will preserve all documentation
relating to (i) Seagate, the Sold Subsidiaries, and the Retained Subsidiaries
for any Pre-Purchase Tax Period and any Straddle Period, and (ii) the Merger
Agreement, Designated Assets and Designated Liabilities (other than
documentation transferred to SAC pursuant to the terms of the Stock Purchase
Agreement), in each case to the extent required by applicable law or by such
party's document retention policies, whichever is longer, as in effect from time
to time. The provisions contained in this Section 4(b) shall terminate and be of
no further effect from and after the eighth anniversary of the Stock Purchase
Date.
4
(c) Notice of Certain Events. SAC shall promptly, but in no event more than
five business days after receiving notification or obtaining knowledge thereof,
provide written notice to Veritas of any event which would have a Material
Adverse Effect or materially impair the ability of any SAC Indemnitor to perform
fully its obligations hereunder.
(d) Conduct of Business. Upon and after the Closing Date, SAC will
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business.
(e) Financing Agreements. Prior to the Closing, SAC shall furnish to
Veritas true and complete copies of the Financing Agreements and, promptly
following any amendments thereto, true and complete copies of such amendments.
The provisions contained in this Section 4(e) shall terminate and be of no
further effect from and after the fifth anniversary of the Stock Purchase Date.
(f) Joinder Agreements. On the Closing Date, SAC shall cause each of the
Sold Subsidiaries to execute and deliver to Veritas a Joinder Agreement in the
form of Annex I hereto (a "Joinder Agreement"). Thereafter, SAC shall cause any
Person that becomes a Subsidiary of SAC to, on the date such Person becomes a
Subsidiary of SAC, execute and deliver to Veritas a Joinder Agreement. Any
Person executing a Joinder Agreement shall, upon executing the same, deliver to
Veritas a certified copy of the charter and by-laws, or similar organizational
documents, of such Person together with resolutions of the Board of Directors
(or comparable governing body) of such Person approving the execution and
delivery of the Joinder Agreement.
SECTION 5. Indemnification. In addition to the obligations of the parties
contained in Section 6 hereof, from and after the Closing Date:
(a) Each of the SAC Indemnitors jointly and severally agrees to
indemnify, defend and hold harmless Veritas and Seagate and their
respective Affiliates including the Retained Subsidiaries (the "Veritas
Indemnitees") from and against any and all Losses as they are incurred or
suffered by any Veritas Indemnitee arising out of or in connection with or
related to (but only to the extent arising out of or in connection with or
related to):
(i) all Liabilities (other than Designated Liabilities and other
than in respect of Taxes, which are the subject of Section 6 hereof)
arising out of or related to (A) the ownership, operations or conduct by
Seagate and its predecessors or Affiliates (other than Veritas and its
Subsidiaries) of their respective businesses, properties, assets or
liabilities on or prior to the Closing Date, or (B) the ownership,
operations or conduct by SAC or any of its Subsidiaries of their
respective businesses, properties, assets or liabilities from and after
the Closing Date;
(ii) the enforcement by the Veritas Indemnitees of their respective
rights under this Agreement;
(iii) any breach by SAC of any agreement, obligation, covenant,
representation or warranty contained in this Agreement, the Stock
Purchase Agreement or any agreement or document entered into in
connection therewith or delivered pursuant thereto to which SAC is a
party.
(b) Veritas and Seagate agree to indemnify, defend and hold harmless
SAC and each of its Subsidiaries from and against any and all Losses, as
they are incurred or
5
suffered by SAC or its Subsidiaries, arising out of or in connection with
or related to (but only to the extent arising out of or in connection with
or related to):
(i) all Designated Liabilities;
(ii) all Liabilities of or related to the ownership, operations or
conduct by Seagate or the Retained Subsidiaries of their respective
businesses, properties, assets or liabilities subsequent to the Closing
Date;
(iii) the enforcement by SAC and its Subsidiaries of their
respective rights under this Agreement; and
(iv) any breach by Veritas of any agreement, obligation, covenant,
representation or warranty contained in this Agreement, the Merger
Agreement or any agreement or document entered into in connection
therewith or delivered pursuant thereto to which Veritas is a party.
SECTION 6. Taxes.
From and after the Closing Date:
(a) Each of the SAC Indemnitors jointly and severally agrees to
indemnify and hold the Veritas Indemnitees harmless from all Losses (other
than Designated Liabilities) attributable to (i) Pre-Purchase Taxes of
Seagate and the Retained Subsidiaries, and (ii) Taxes, whenever arising, of
the Sold Subsidiaries or attributable to assets transferred to the Sold
Subsidiaries in connection with the Stock Purchase and the Merger;
provided, however, that the SAC Indemnitors shall not be obligated to
indemnify the Veritas Indemnitees for any Taxes attributable to, or arising
from, the transactions contemplated by the OD Documents (as defined in the
Stock Purchase Agreement), other than the Split and the sale of shares of
the capital stock of the Sold Subsidiaries (including any gain from any
Section 338(h)(10) election made with respect to such sale).
(b) For purposes of determining whether Taxes are Pre-Purchase Taxes
described in clause 6(a)(i) above, in the case of a Straddle Period of
Seagate or a Retained Subsidiary, the SAC Indemnitors shall be solely
responsible for all Taxes attributable to the portion of the period ending
on, and which includes, the Stock Purchase Date, and Veritas shall be
solely responsible for all Taxes attributable to the portion of the period
which begins after the Stock Purchase Date. For purposes hereof, the
portion of any Tax that is attributable to the portion of a Straddle Period
up to and including the Stock Purchase Date shall be (i) in the case of a
Tax that is not based on net income, gross income, sales or gross receipts
(including real property taxes), the total amount of such Tax for the
period in question multiplied by a fraction, the numerator of which is the
number of days in the Straddle Period up to and including the Stock
Purchase Date, and the denominator of which is the total number of days in
such Straddle Period, and (ii) in the case of a Tax that is based on any of
net income, gross income, sales or gross receipts, the Tax that would be
due with respect to the portion of the Straddle Period through and
including the Stock Purchase Date, if such portion of the Straddle Period
were a separate taxable period, except that exemptions, allowances,
deductions or credits that are calculated on an annual basis (such as the
deduction for depreciation or capital allowances) shall be apportioned on a
per diem basis.
The Veritas Indemnitees shall indemnify and hold harmless the SAC
Indemnitors from and against (i) any Taxes of Seagate for which the SAC
Indemnitors are
6
not obligated to indemnify the Veritas Indemnitees under Section 6(a), and
(ii) any Taxes arising out of or attributable to the breach of any
representation or covenant contained in this Indemnification Agreement by
the Veritas Indemnitees.
With regard to any Loss for which indemnification is payable
hereunder, such payment shall be treated for federal, state, local and
foreign tax purposes as an adjustment to the Purchase Price in the Stock
Purchase Agreement, unless otherwise required under applicable law. The
amount of any such payment shall be net of any Tax on the Indemnified Party
arising from such payment and shall be adjusted to take into account any
net Tax benefit or net Tax detriment realized by the Indemnified Party that
arises from the occurrence of the Loss for which such payment was made;
provided that no payment shall be made by the SAC Indemnitors in respect of
any Taxes payable by any Veritas Indemnitee in respect of an
indemnification payment hereunder (the "Gross-Up Amount") except if and to
the extent that the aggregate cumulative taxable income of the Veritas
Indemnitees that would otherwise give rise to Gross-Up Amounts exceeds the
Available Loss Amount (as reduced from time to time to the extent used to
reduce Pre-Purchase Taxes). The "Available Loss Amount" shall mean an
amount determined by the Closing Date or as soon as practicable thereafter
by a Big Five accounting firm mutually selected by SAC and Veritas as being
equal to the best available estimate as of the date of determination of the
excess of (x) the aggregate losses of Seagate and its consolidated group
arising on or before the Stock Purchase Date or arising from the
transactions contemplated by the Stock Purchase Agreement or Merger
Agreement (but not taking into account any gain or income recognized in
respect of the Designated Assets in Parts A, B and C of Schedule II of the
Merger Agreement), including the exercise of options in connection with the
Merger or the Stock Purchase Agreement, over (y) the amount of such losses
as are estimated will be taken into account in determining the TRA Amount.
(c)(i) A draft of all Tax Returns relating to Seagate and the Retained
Subsidiaries which are to be filed after the Stock Purchase Date, but which
relate to a Pre-Purchase Tax Period or Straddle Period, including the
federal consolidated income Tax Return of the affiliated group of which
Seagate is the common parent for the period ending with the Merger, shall
be prepared by Ernst & Young or any other Big Five accounting firm (the
"Tax Return Preparer") chosen by SAC. Any such Tax Return shall be prepared
in a manner consistent with past practice and without a change of any
election or any accounting method. A copy of such draft shall be furnished
to Veritas at least 30 days prior to the due date for each such Tax Return
for review and comment. Veritas shall be entitled to suggest such revisions
to each such Tax Return as it, in its good faith belief, considers
appropriate to minimize the risk of an audit adjustment to such Tax Return,
which suggestions shall be considered in good faith by SAC. If Veritas
reasonably objects to any position taken in such draft Tax Return, Seagate
shall amend such draft Tax Return to reflect an alternative position
suggested by Veritas, unless Seagate provides Veritas with an opinion from
the Tax Return Preparer that there is substantial authority (within the
meaning of Section 6662 of the Code and applicable Treasury regulations) to
support the initial position. All other decisions regarding Tax Returns
shall be made by SAC. Veritas shall execute and file such Tax Returns as so
revised on a timely basis and shall pay the Taxes shown due on such Tax
Return. SAC will pay over to Veritas the amount of Taxes shown due at least
five days prior to the date such Tax Return is to be filed. SAC agrees that
it shall be responsible for the preparation and filing of all Tax Returns
of the Sold Subsidiaries and pay the Tax shown due thereon.
7
(ii) The parties shall cooperate with each other in the preparation of
any Tax Return and the conduct of any audit or other proceeding, judicial
or administrative (collectively, a "Tax Proceeding"), involving Taxes of
Seagate, the Sold Subsidiaries and the Retained Subsidiaries. Veritas and
SAC, without charge, shall provide the requesting party with such
assistance and documents as may be reasonably requested by such party in
connection with the preparation of any return or the conduct of any audit
or other Tax Proceeding. Veritas and SAC agree to keep each other fully
informed of all matters relating to any Tax Return, or Tax Proceeding,
including without limitation any settlement negotiations in the event that
such Tax Proceeding may involve Taxes for which an indemnity obligation may
arise under this Section 6.
Notwithstanding anything else to the contrary in this Section 6, the
obligations of the SAC Indemnitors pursuant to this Section 6 shall be
calculated by assuming no election has been made pursuant to Section
172(b)(3) of the Code, Treasury Regulation section 1.1502-21(b)(3), or any
similar or successor provision, to waive the carryback of losses arising
from the exercise of options in connection to the Merger or the Stock
Purchase or any losses arising on or before the Stock Purchase Date and by
assuming that all losses, credits and other tax attributes are used in the
order provided under the applicable provisions of the Code and Treasury
Regulations.
(d)(i) If a claim in respect of Taxes (a "Tax Claim") is made or
threatened by any Taxing Authority that, if successful, could result in an
indemnity obligation under Section 6, Veritas shall promptly notify SAC,
stating the nature and basis of such claim and the amount thereof, to the
extent known. Failure to give such notice shall not relieve the SAC
Indemnitors from any liability that they may have on account of this
indemnification or otherwise, except to the extent that the SAC Indemnitors
are materially prejudiced in the defense of such claim thereby. SAC will
have the right, at its option, upon timely notice to Veritas, to assume at
its own expense control of any audit or other defense of such Tax Claim
with its own counsel, and by assuming such control will be deemed to have
acknowledged its indemnification liability for such claim. SAC's right to
control such a Tax Claim will be limited to issues in respect of which
amounts in dispute would be paid by the SAC Indemnitors or for which the
SAC Indemnitors would be liable pursuant to Section 6. Costs of such Tax
Claims are to be borne by the SAC Indemnitors unless the Tax Claim relates
to a Straddle Period.
(ii) In the case of any Tax Proceeding involving liability for Tax of
Seagate, a Retained Subsidiary or any Sold Subsidiary for which Seagate or
a Retained Subsidiary could be liable if such Tax were unpaid (without
regard to any indemnity obligation of SAC), (A) Veritas at its expense and
through counsel of its choosing, shall have the right to observe all
hearings, trials and other proceedings, attend all settlement and other
conferences and receive copies of all material briefs and submissions and
(B) notwithstanding the control rights granted to SAC in clause (i) above,
Veritas shall have the right to control the Tax Proceeding and make all
decisions in respect thereof in the case of any Tax proceeding involving
the liability for Tax of Seagate or the Retained Subsidiaries if Veritas
waives its right to obtain indemnity under this Section 6.
(e) If the parties disagree as to the amount of any payment to be made
under or on any other matter arising under this Section 6, the parties
shall attempt in good faith to resolve such dispute, and any agreed-upon
amount shall be paid to the appropriate party. If such dispute is not
resolved within 15 days following written
8
notice from any party hereto to an other party hereto that a dispute
subject to this subsection (f) exists, then the parties shall jointly
retain an independent accounting firm to resolve the dispute. If and to the
extent that a dispute presents legal issues, the independent accounting
firm shall have authority to consult an independent law firm. The fees of
the independent accounting firm and the independent law firm shall be borne
by the party that does not substantially prevail in the dispute; the
independent accounting firm shall make a determination regarding liability
for expenses. The decision of such independent accounting firm and/or the
independent law firm shall be rendered within ten (10) days following final
submissions by the parties to such firm and shall be final and binding on
all parties; provided, however, that if there is a subsequent adjudication
or other determination of a fact or matter assumed, but not decided in the
decision of such accounting firm or law firm, the decision of such
accounting firm or law firm shall be appropriately adjusted and the parties
shall adjust the payments made accordingly. Following the decision of the
independent accounting firm and/or the independent law firm, the parties
shall each take or cause to be taken any action that is necessary or
appropriate to implement such decision of the independent accounting firm
and/or the independent law firm.
(f) Notwithstanding any other provision of this Agreement, Veritas, on
the one hand, and SAC, on the other hand, shall retain all Tax Returns,
schedules and workpapers, and all material records or other documents
relating thereto, until the later of (i) sixty (60) days following the
expiration of the statute of limitations (including extensions, waivers and
mitigations thereof) of the taxable years to which such Tax Returns and
other documents relate or (ii) one hundred twenty (120) days after the
delivery of notice to the other party to the effect that it shall dispose
of such Tax Returns or other documents, unless it is requested by such
party within one hundred twenty (120) days of delivery of such notice (with
which request it shall comply within thirty (30) days of receipt) that it
transfer such Tax Returns or other documents to such other party. Any
information obtained under this Section 6 shall be kept confidential,
except as may be otherwise necessary in connection with the filing of Tax
Returns or claims for refund or in conducting any audit or other
proceeding.
SECTION 7. Termination of Tax Sharing Agreement. All tax sharing or similar
agreements (if any) between Seagate and its Affiliates, on the one hand, and the
Sold Subsidiaries, on the other, are terminated as of the Closing Date without
any further liability to any party thereto and shall be of no further force and
effect. All claims for indemnification for Taxes between the parties shall be
made and resolved in accordance with the terms of this Agreement.
SECTION 8. [Reserved]
SECTION 9. Indemnification Procedure.
(a) Except as may be otherwise provided pursuant to Section 6 hereof, any
party entitled to indemnification hereunder (each, an "Indemnified Party")
shall, with respect to claims asserted against any such Indemnified Party by any
third party (a "Third-Party Claim"), give written notice to the party against
whom indemnification is sought (the "Indemnifying Party") of any liability which
might give rise to a claim for indemnity hereunder within thirty (30) days of
the receipt of any written claim or notice from any such third party, but no
later than twenty (20) days prior to the date any answer, responsive pleading or
other response may be due with respect thereto, and with respect to any other
matter for which any Indemnified Party may seek indemnification hereunder, the
9
Indemnified Party shall give prompt written notice to the Indemnifying Party of
any liability which might give rise to a claim for indemnity; provided, however
that any failure to give such notice will not release the Indemnifying Party
from its obligations hereunder except to the extent that the rights of the
Indemnifying Party are materially prejudiced thereby.
(b) Except with respect to claims governed by Section 6 hereof which shall
be governed by the provisions thereof, the Indemnifying Party, upon receipt of
such notice, shall be entitled to participate in or, at the Indemnifying Party's
option, assume at its own expense the defense, appeal or settlement of such
Third-Party Claim with respect to which such indemnity has been invoked with
counsel of its own choosing (who shall be reasonably satisfactory to the
Indemnified Party); provided, however, that if the Indemnifying Party assumes
the defense, appeal or settlement of such Third-Party Claim, (i) the Indemnified
Party shall be entitled to employ one counsel to represent itself if an actual
conflict of interest exists in the opinion of counsel to the Indemnified Party
between the Indemnifying Party and the Indemnified Party in respect of such
Third-Party Claim and in that event and only in that event the reasonable fees
and expenses of such counsel shall be paid by the Indemnifying Party (it being
understood that all Indemnified Parties may employ not more than one counsel to
represent them at the expense of the Indemnifying Party) and (ii) the
Indemnified Party shall nevertheless be entitled to participate in (but not
direct) the defense thereof with counsel of its own choice and, subject to
clause (i) above, at its own expense. Any Indemnified Party is hereby authorized
prior to the date on which it receives written notice from the Indemnifying
Party that it intends to assume the defense, appeal or settlement of such
Third-Party Claim, to file any motion, answer or other pleading and take such
other action which it shall reasonably deem necessary to protect its interest or
that of the Indemnifying Party until the date on which the Indemnified Party
receives such notice from the Indemnifying Party.
(c) No claim or demand may be settled by the Indemnified Party without the
consent of the Indemnifying Party, which consent shall not be unreasonably
delayed or withheld. Unless the claim or demand seeks only dollar damages (all
of which are to be paid by the Indemnifying Party), no such claim or demand may
be settled by the Indemnifying Party without the consent of the Indemnified
Party, which consent shall not be unreasonably delayed or withheld.
(d) The parties agree to cooperate in defending such Third-Party Claims and
the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party may reasonably request
with respect to any matter for which indemnification is sought hereunder, and
the parties hereto agree to cooperate with each other in order to insure the
proper and adequate defense thereof.
(e) With regard to Third-Party Claims for which indemnification is payable
hereunder, indemnification shall be paid by the Indemnifying Party within five
(5) business days following the earlier to occur of:
(i) entry of a final non-appealable judgment by a court of competent
jurisdiction or arbitration panel against an Indemnified Party which has
not been stayed pending appeal; or
(ii) a settlement of the claim, in accordance with the terms of such
settlement.
With regard to any claim for Taxes subject to Section 6 hereof,
indemnification shall be paid by the SAC Indemnitees within five (5) business
days following receipt by SAC
10
of written notice from Veritas stating that any amount subject to
indemnification under such Section 6 has been paid by Veritas and the amount
thereof and the indemnity payment requested.
With regard to any other claim for which indemnification is payable
hereunder, indemnification shall be paid promptly by the Indemnifying Party upon
demand by the Indemnified Party but in any event within thirty (30) business
days following any such demand, provided that any such demand shall include a
reasonably detailed description of the claims giving rise to such demand.
(f) The Indemnifying Parties agree to reimburse the Indemnified Parties for
any indemnifiable Losses under the provisions of this Agreement as such Losses
are incurred, provided, however, that if it is finally determined that any
Indemnified Party was not entitled to any amount paid as indemnity with respect
to such Losses, such Indemnified Party shall promptly refund all amounts to
which such Indemnified Party was not entitled to the Indemnifying Parties that
paid such amounts.
SECTION 10. No Contribution. The Indemnifying Parties shall not be entitled
to seek or obtain any contribution, reimbursement or other participation, direct
or indirect, from any Indemnified Party in respect of any payment made or to be
made by any Indemnifying Party hereunder or arising out of this Agreement,
notwithstanding the fact that the Loss for which any Indemnifying Party is
liable results from or is contributed to by any breach by any Indemnified Party
or any misrepresentation by any Indemnified Party contained in the Merger
Agreement, the Stock Purchase Agreement, this Agreement or any agreement,
document, instrument or schedule referred to herein or therein or contemplated
hereby or thereby.
SECTION 11. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect;
provided, however that if any mutual covenant contained herein is declared
invalid or unenforceable with respect to Veritas and its Affiliates (including
Seagate and any Retained Subsidiary following the Closing), on the one hand, or
SAC and its Affiliates, on the other hand, by any court of competent
jurisdiction or governmental authority, such mutual covenant shall become
invalid or unenforceable with respect to the opposite group to such covenant and
provided further, that this Section 11 shall not be construed to affect any
other rights of any party hereto under applicable principles of contract law,
including without limitation the principles of failure of consideration and
mutual dependency.
SECTION 12. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by verified telecopy, by expedited delivery
service (such as Federal Express) or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
(i) if to Veritas (and, after Closing, Seagate), to:
VERITAS Software Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
11
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to Seagate (prior to Closing), to:
Seagate Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Professional Corporation
One Market Street
Spear Tower, Suite 3300
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(iii) if to SAC, to:
Suez Acquisition Company (Cayman) Limited
c/o Silver Lake Partners, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Facsimile: 650-2338125
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
12
and to:
TPG Partners III, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: 212-225-3999
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Such notice shall be effective on the day following receipt of delivery in
person, by verified telecopy or by expedited delivery service and shall be
effective four days after mailing in accordance with the foregoing. The person
to whom notice is to be given, and any address, may be changed from time to time
in the manner set forth above (provided that any such change shall be effective
only upon receipt thereof).
SECTION 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Venue for any legal action under this Agreement shall be in the
federal or state courts located in the State and County of New York, All parties
hereunder hereto hereby submit themselves to the jurisdiction of such courts for
the purpose of this Agreement and hereby waive trial by jury in any action,
counterclaim or proceeding of any kind arising under or out of or in connection
with this Agreement, the negotiations leading thereto, the inducements to the
parties to enter into this Agreement and to the transactions it contemplates.
SECTION 14. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 15. Parties-in-Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 16. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same agreement, provided that at least one
counterpart is executed by each party herein named.
SECTION 17. Successors. All agreements of the parties in this Agreement
shall bind their respective successors, provided that upon written request by
SAC following the sale of any of its Subsidiaries to an unaffiliated third
party, Veritas shall execute and deliver a release of such Subsidiary of its
obligations hereunder.
SECTION 18. Assignment. This Agreement is not assignable by either party
hereto without the prior written consent of the other party hereto.
13
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above mentioned.
VERITAS SOFTWARE CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Its: CEO and Chairman of the Board
SEAGATE TECHNOLOGY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
Its: President, Chief Administrative
Officer and Secretary
SUEZ ACQUISITION COMPANY (CAYMAN)
LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: CEO and President
14