EXHIBIT "2.1"
SEPARATION AND DISTRIBUTION AGREEMENT
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THIS AGREEMENT is made and entered into this 1st day of March, 1997,
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by and between ODETICS, INC., a Delaware corporation ("Odetics"), and ATL
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PRODUCTS, INC., a Delaware corporation ("ATL").
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PRELIMINARY STATEMENT
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Odetics is the sole stockholder of ATL.
Odetics, through ATL and ATL's wholly owned subsidiary, ATL Products
Limited, a United Kingdom private limited liability company, is engaged in the
manufacture and sale of automated tape libraries, and related services (the "ATL
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Business").
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Odetics' Board of Directors has determined that Odetics will cause ATL
to make an initial public offering of up to 1,897,500 shares of its Class A
Common Stock (the "IPO"), and subsequent to the IPO and subject to certain
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conditions, distribute to Odetics' stockholders all of the outstanding stock of
ATL owned by Odetics through a spinoff (the "Distribution"). The IPO and the
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Distribution are together referred to herein as the "Separation" and will result
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in the total and complete separation of the Business and ATL from Odetics at the
time of the Distribution (the "Separation Date"); provided, however, that
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Odetics may continue to provide services to ATL pursuant to services agreements
after the Separation Date.
The parties hereto have determined that it is necessary and desirable
to set forth in this Agreement and in a services agreement (the "Services
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Agreement"), a Promissory Note and a Tax Allocation Agreement (the "Tax
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Allocation Agreement") between ATL and Odetics (the Services Agreement and the
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Tax Allocation Agreement are collectively referred to herein as the "Ancillary
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Agreements"), the principal corporate transactions determined by Odetics and ATL
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to be appropriate to effect the Separation and to set forth other agreements and
undertakings by and between Odetics and ATL that will govern certain other
matters between the date hereof and the Distribution and following the
Distribution.
Simultaneously with the execution of this Agreement, Odetics and ATL
are entering into the Ancillary Agreements.
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, the parties do hereby agree as
follows:
ARTICLE I.
THE TRANSFER
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A. Transfer of Assets. On the terms and subject to the conditions
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set forth in this Agreement, and the other agreements and instruments of
conveyance contemplated hereunder, simultaneously with the execution and
delivery of this Agreement, Odetics has heretofore transferred, assigned and
conveyed to ATL all of Odetics' right, title, and interest in and to all of the
assets, tangible and intangible, related to the Business (the "ATL Assets") for
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a purchase price equal to the book value thereof, as calculated in accordance
with generally accepted accounting principles. The parties hereto believe that
such purchase price constitutes fair market value of the ATL Assets.
B. Payment of Purchase Price. The purchase price of the ATL Assets
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will be included in the principal amount of a Promissory Note (the "Note") in
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substantially the form attached hereto as Exhibit A, which will be completed at
the consummation of the IPO, and executed and delivered in connection therewith,
and such purchase price shall be payable in accordance with the terms of the
Note.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF ODETICS
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Odetics represents and warrants to ATL as follows:
A. Power and Authority; Effect of Agreement. Odetics is a
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corporation duly organized, validly existing and in good standing under the laws
of Delaware, has requisite corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by it of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Odetics. This
Agreement has been duly and validly executed and delivered by Odetics and
constitutes its legal, valid and binding obligation. enforceable against it in
accordance with its terms, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally. The execution, delivery and
performance by it of this Agreement and the consummation by Odetics of the
transactions contemplated by the Transfer does not, and will not, with or
without the giving of notice or the lapse of time, or both: (i) violate any
provision of law, rule or regulation to which it is subject; (ii) violate any
order, judgment or decree applicable to it; (iii) conflict with, or result in a
breach or default under, its Certificate of Incorporation or its Bylaws; or (iv)
conflict with, or result in a breach or default under, any contract to which it
is a party; except, in each case, for violations, conflicts, breaches or
defaults which in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby or have a material adverse
effect on the Business.
B. Stock of Transferred Subsidiaries. Odetics is the owner,
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beneficially and of record of all of the issued and outstanding stock of the
assets referred to in Section 1.1 hereof, free and clear of all liens,
encumbrances, security agreements, options, claims, charges and restrictions.
C. Government Consents. No consent, approval or authorization of,
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or exemption from, or filing with. any governmental or regulatory authority is
required in connection with the execution, delivery or performance by Odetics of
the terms of this Article II or the taking by it of any other action required to
effectuate the Transfer.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ATL
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ATL represents and warrants to Odetics as follows:
A. ATL's Power and Authority. ATL is a corporation duly organized
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validly existing and in good standing under the laws of Delaware, and has all
requisite corporate power and authority to carry on the Business as it is now
being conducted and as proposed to be conducted.
B. Due Authorization, Execution and Delivery; Effect of Agreement.
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ATL has all requisite corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by ATL of this Agreement and the
consummation by ATL of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of ATL. This Agreement
has been duly and validly executed and delivered by ATL and constitutes the
legal, valid and binding obligation of ATL, enforceable against ATL in
accordance with its
terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally. The execution, delivery and
performance by ATL of this Agreement and the consummation by ATL of the
transactions contemplated by the Transfer does not, and will not, with or
without the giving of notice or the lapse of time, or both: (i) violate any
provision of law, rule or regulation to which ATL is subject; (ii) violate any
order, judgment or decree applicable to ATL; (iii) conflict with, or result in a
breach or default under, the Certificate of Incorporation or Bylaws of ATL; or
(iv) conflict with, or result in a breach or default under, any contract to
which it is a party; except, in each case, for violations, conflicts, breaches
or defaults which in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby or have a material adverse
effect on the Business.
C. Consents. No consent, approval or authorization of, or exemption
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from, or filing with, any governmental or regulatory authority or any other
third party is required in connection with the execution, delivery or
performance by ATL of this Agreement or the taking by of any other action
required to effectuate the Transfer.
ARTICLE IV.
COVENANTS OF ODETICS
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A. Books and Records; Personnel. For a period of six years after
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the Separation Date (or such longer period as maybe required by any law or
regulation, any governmental agency, any ongoing litigation or class of
connection with any administrative proceeding):
a. Odetics shall not dispose of or destroy any of the business
records and files of the Business retained by it or any of its subsidiaries (the
"Retained Records"). If Odetics wishes to dispose of or destroy such records
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and files after such six year period, it shall use reasonable efforts to first
give 30 days' prior written notice to ATL and ATL shall have the right, at its
option and expense, upon prior written notice to Odetics within such 30 day
period, to take possession of the Retained Records within 60 days after the date
of ATL's notice to Odetics.
b. Odetics shall allow ATL and its representatives reasonable
access to all Retained Records during regular business hours and upon reasonable
notice. Odetics shall maintain the Retained Records in a manner and at
locations that reasonably facilitates retrieval and review by ATL. ATL shall
have the right, at its own expense, to make copies of any such records and files
and Odetics shall provide convenient duplication facilities for such purpose,
provided, however, that any such access or copying shall be had or done in such
manner so as not to unreasonably interfere with the normal conduct of Odetics'
business or operations; and
c. Odetics shall make reasonably available to ATL, upon written
request and at ATL's expense: (i) personnel to assist in locating and obtaining
records and files maintained by it (including those created after the date
hereof, to the extent necessary and appropriate in connection with pending and
future claims against ATL relating to the Business) and (ii) any of its
personnel whose assistance or participation (including as a witness during
depositions or at trial) is reasonably required by ATL in anticipation of, or
preparation for or during, existing or future litigation or other matters in
which ATL or any of its affiliates is involved and which is related to the
Business.
B. Supply Agreements. For a period of three years from the
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consummation of the IPO, Odetics shall not unilaterally terminate or assign its
guarantee obligation with respect to any supply agreement pursuant to which it
has guaranteed the performance by ATL of ATL's obligations, unless such
suppliers have consented to the termination or assignment of such guarantee.
C. Cooperation. Odetics agrees to cooperate with ATL, both before
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and after the Separation Date, to enable both parties to implement the
Separation, including but not limited to performing the obligations undertaken
by the parties hereunder. Such cooperation will include but not be limited to
preparing and submitting required financial reports after the Separation Date,
which may relate to periods before or after
the Separation Date, and executing such documents and doing such other acts and
things as may be necessary to carry out the intent of this Agreement as it
relates to the Separation.
ARTICLE V.
COVENANTS OF ATL
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A. Cooperation. ATL agrees to cooperate with Odetics, both before
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and after the Separation Date, to enable both parties to implement the
Separation, including but not limited to performing the obligations undertaken
by the parties hereunder. Such cooperation will include but not be limited to
preparing and submitting required financial reports after the Separation Date,
which may relate to periods before or after the Separation Date, and executing
such documents and doing such other acts and things as may be necessary to carry
out the intent of this Agreement as it relates to the Separation.
B. Books and Records; Personnel. For a period of six years after
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the Separation Date (or such longer period as may be required by any law or
regulation, any governmental agency, any ongoing litigation or class of
litigation, or in connection with any administrative proceeding):
a. ATL shall not dispose of or destroy the business records and
files of the Business that are transferred to it or any of its subsidiaries in
carrying out the transactions contemplated hereby (the "Transferred Records").
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If ATL wishes to dispose of or destroy such records and files after that time,
it shall use reasonable efforts to first give 30 days' prior written notice to
Odetics and Odetics shall have the right. at its option and expense, upon prior
written notice to ATL within such 30 day period, to take possession of the
Transferred Records within 60 days after the date of Odetics' notice to ATL;
b. ATL shall allow Odetics and its representatives reasonable
access to all Transferred Records during regular business hours and upon
reasonable notice. ATL shall maintain the Transferred Records in a manner and at
locations that reasonably facilitates retrieval and review by Odetics. Odetics
shall have the right. at its own expense, to make copies of any such records and
files and ATL shall provide convenient duplication facilities for such purposes
provided, however, that any such access or copying shall be had or done in such
a manner so as not to unreasonably interfere with the normal conduct of ATL's
business or operations; and
c. ATL shall make reasonably available to Odetics upon written
request and at Odetics' expense: (1) ATL's personnel to assist in locating and
obtaining records and files maintained by it (including those created after the
date hereof, to the extent necessary and appropriate in connection with pending
and future claims against Odetics relating to the Business), and (ii) any of its
personnel whose assistance or participation (including as a witness during
depositions or at trial) is reasonably required by Odetics in anticipation of,
or preparation for or during, existing or future litigation or other matters in
which Odetics or any of its affiliates is involved.
ARTICLE VI.
THE IPO AND ACTIONS PENDING THE IPO
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A. Transactions Prior to the IPO.
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a. Subject to the conditions specified in Section 6.3 hereof,
Odetics and ATL shall use their reasonable best efforts to consummate the IPO.
Such actions shall include, but shall not necessarily be limited to, those
specified in this Section 6.1
b. ATL shall file the IPO Registration Statement, and such
amendments or supplements thereto, as may be necessary in order to cause the
same to become and remain effective as required by law or by the Underwriters,
including, but not limited to, filing such amendments to ATL's Registration
Statement on Form S-1 as may be required by the Underwriting Agreement, the
Commission or federal, state or foreign securities laws. Odetics and ATL shall
also cooperate in preparing, filing with the Securities and Exchange Commission
(the "Commission") and causing to become effective a registration statement
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registering the ATL Common Stock under the Exchange Act, and any registration
statements or amendments thereof which are required to reflect the establishment
of, or amendments to, any employee benefit and other plans necessary or
appropriate in connection with the IPO, the Separation, the Distribution or the
other transactions contemplated by this Agreement and the Ancillary Agreements.
c. ATL and Odetics shall enter into the Underwriting Agreement,
in form and substance reasonably satisfactory to ATL and Odetics, and shall
comply with their respective obligations thereunder.
d. Odetics and ATL shall consult with each other and the
Underwriters regarding the timing, pricing and other material matters with
respect to the IPO.
e. ATL shall use its reasonable best efforts to take all such
action as may be necessary or appropriate under state securities laws of the
United States (and any comparable laws under any foreign jurisdictions) in
connection with the IPO.
f. ATL shall prepare, file and use reasonable best efforts to
seek to make effective, an application for listing of the Class A Common Stock
of ATL (the "ATL Common Stock") issued in the IPO on the Nasdaq National Market,
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subject to official notice of issuance.
g. ATL and Odetics shall participate in the preparation of
materials and presentations as the Underwriters shall deem necessary or
desirable.
h. ATL shall pay all third party costs, fees and expenses
relating to the IPO, all of the reimbursable expenses of the Underwriters
pursuant to the Underwriting Agreement, all of the costs of producing, printing,
mailing and otherwise distributing the Prospectus, as well as the Underwriters'
discount as provided in the Underwriting Agreement.
B. Proceeds of the IPO. The IPO will be a primary offering of ATL
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Common Stock and the net proceeds of the IPO will be retained by ATL, subject to
its obligation to pay certain amounts to Odetics pursuant to the Note.
C. Conditions Precedent to Consummation of the IPO. As soon as
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practicable after the date of this Agreement, the parties hereto shall use their
reasonable best efforts to satisfy the following conditions to the consummation
of the IPO. The obligations of the parties to consummate the IPO shall be
conditioned on the satisfaction, or waiver by Odetics, of the following
conditions:
a. The IPO Registration Statement shall have been declared
effective by the Commission, and there shall be no stop-order in effect with
respect thereto.
b. The actions and filings with regard to state securities laws
of the United States (and any comparable laws under any foreign jurisdictions)
described in Section 6.1 shall have been taken and, where applicable, have
become effective or been accepted.
c. The ATL Common Stock to be issued in the IPO shall have been
accepted for listing on the Nasdaq National Market, on official notice of
issuance.
d. ATL shall have entered into the Underwriting Agreement and
all conditions to the obligations of ATL and the Underwriters shall have been
satisfied or waived.
e. Odetics shall be satisfied in its sole discretion that it
will own at least 80.0% of the outstanding ATL voting stock following the IPO,
and all other conditions to permit the Distribution to qualify as a tax free
distribution to Odetics' stockholders shall, to the extent applicable as of the
time of the IPO, be satisfied and there shall be no event or condition that is
likely to cause any of such conditions not to be satisfied as of the time of the
Distribution or thereafter.
f. No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Separation or the IPO or any of the other transactions
contemplated by this Agreement or any Ancillary Agreement shall be in effect.
g. Such other actions as the parties hereto may, based upon the
advice of counsel, reasonably request to be taken prior to the Separation and
the IPO in order to assure the successful completion of the Separation and the
IPO and the other transactions contemplated by this Agreement shall have been
taken.
h. This Agreement shall not have been terminated.
i. A pricing committee of Odetics directors designated by the
Board of Directors of Odetics shall have determined that the terms of the IPO
are acceptable to Odetics.
ARTICLE VII.
THE DISTRIBUTION
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A. The Distribution.
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a. Subject to the conditions specified in Section 7.3 hereof,
on or prior to the Distribution Date, Odetics will deliver to First National
Bank of Boston (the "Agent") for the benefit of holders of record of Odetics'
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Class A Common Stock and Class B Common Stock on the record date established by
the Board of Directors of Odetics, a single stock certificate, endorsed by
Odetics in blank, representing all of the outstanding shares of ATL Common Stock
then owned by Odetics, and shall cause the transfer agent for the shares of
Odetics Common Stock to instruct the Agent to distribute on the Distribution
Date the appropriate number of such shares of ATL Common Stock to each such
holder or designated transferee or transferees of such holder.
b. Subject to Section 7.4, each holder of Odetics Common Stock
on the Record Date (or such holder's designated transferee or transferees) will
be entitled to receive in the Distribution a number of shares of ATL Common
Stock equal to the number of shares of Odetics Common Stock held by such holder
on the Record Date multiplied by a fraction the numerator of which is the number
of shares of ATL Common Stock beneficially owned by Odetics on the Record Date
and the denominator of which is the number of shares of Odetics Common Stock
outstanding on the Record Date.
c. ATL and Odetics, as the case may be, will provide to the
Agent all share certificates and any information required in order to complete
the Distribution on the basis specified above.
B. Actions Prior to the Distribution.
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a. Odetics and ATL shall prepare and mail, prior to the
Distribution Date, to the holders of Odetics Common Stock, such information
concerning ATL, its business, operations and management, the Distribution and
such other matters as Odetics and ATL shall reasonably determine and as may be
required by law. Odetics and ATL will prepare, and ATL will, to the extent
required under applicable law, file with the Commission any such documentation
and any requisite no action letters which Odetics determines are necessary or
desirable to effectuate the Distribution and Odetics and ATL shall each use its
reasonable best efforts to obtain all necessary approvals from the Commission
with respect thereto as soon as practicable.
b. Odetics and ATL shall take all such action as may be
necessary or appropriate under the state securities laws of the United States
(and any comparable laws under any foreign jurisdiction) in connection with the
Distribution.
c. Odetics and ATL shall take all reasonable steps necessary
and appropriate to cause the conditions set forth in Section 7.3(d) (subject to
Sections 7.3(d)) to be satisfied and to effect the Distribution on the
Distribution Date.
d. ATL shall prepare and file, and shall use its reasonable
best efforts to have approved, an application for the listing of the ATL Common
Stock to be distributed in the Distribution on the Nasdaq National Market,
subject to official notice of distribution.
C. Conditions to Distribution. The Odetics Board currently intends
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to effect the Distribution by December 31, 1997. Subject to any restrictions
contained in the Underwriting Agreement, the Odetics Board shall have the sole
discretion to determine the date of consummation of the Distribution at any time
after the Closing Date and on or prior to December 31, 1997. Odetics shall be
obligated to consummate the Distribution no later than December 31, 1997,
subject to the satisfaction, or waiver by the Odetics Board in its sole
discretion, of the conditions set forth below. In the event that any such
condition shall not have been satisfied or waived on or before December 31,
1997, Odetics shall consummate the Distribution as promptly as practicable
following the satisfaction or waiver of all such conditions.
a. a private letter ruling from the Internal Revenue Service
shall have been obtained, and shall continue in effect, to the effect that,
among other things, the Distribution will qualify as a tax free distribution for
federal income tax purposes under Section 355 of the Code and will not result in
the recognition of any gain to Odetics or Odetics' stockholders, and such ruling
shall be in form and substance satisfactory to Odetics in its sole discretion;
b. any material governmental approvals and consents necessary
to consummate the Distribution shall have been obtained and be in full force and
effect;
c. no order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Distribution shall be in effect and no other event outside
the control of Odetics shall have occurred or failed to occur that prevents the
consummation of the Distribution; and
d. no other events or developments shall have occurred
subsequent to the date hereof that, in the judgment of the Board of Directors
of Odetics, would result in the Distribution having a material adverse effect
on Odetics or on the stockholders of Odetics.
The foregoing conditions are for the sole benefit of Odetics and shall not give
rise to or create any duty on the part of Odetics or the Odetics Board of
Directors to waive or not waive any such condition.
D. Fractional Shares. As soon as practicable after the Distribution
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Date, Odetics shall direct the Agent to determine the number of whole shares and
fractional shares of ATL Common Stock allocable to each holder of record or
beneficial owner of Odetics Common Stock as of the Record Date, to aggregate all
such fractional shares and sell the whole shares obtained thereby at the
direction of Odetics either to Odetics, in open market transactions or
otherwise, in each case at then prevailing trading prices, and to cause to be
distributed to each such holder or for the benefit of each such beneficial
owner, in lieu of any fractional share, such holder's or owner's ratable share
of the proceeds of such sale, after making appropriate deductions of any amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes attributed
to such sale. Odetics and the Agent shall use their reasonable best efforts to
aggregate the shares of Odetics Common Stock that may be held by any beneficial
owner thereof through more than one account in determining the fractional share
allocable to such beneficial owner.
E. The ATL Board of Directors. Odetics and ATL shall each take all
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actions which may be required to elect or otherwise appoint as directors of ATL,
on or prior to the Distribution Date, persons to be designated by a nominating
committee of ATL's Board of Directors as additional or substitute members of the
Board of Directors of ATL on the Distribution Date.
ARTICLE VIII.
MUTUAL RELEASES; INDEMNIFICATION
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A. Release of Pre-closing Claims.
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a. Except as provided in Section 8.1(c), effective as of the
date of consummation of the IPO (the "Closing Date"), ATL does hereby, for
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itself and each of its affiliates, successors and assigns, and all persons who
at any time prior to the Closing Date have been stockholders, directors,
officers, agents or employees of ATL (in each case, in their respective
capacities as such), remise, release and forever discharge each of Odetics and
its affiliates, successors and assigns, and all persons who at any time prior to
the Closing Date have been stockholders, directors, officers, agents or
employees of Odetics (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all losses, claims, actions, damages, expenses or liabilities whatsoever
(collectively, the "Liabilities"), whether at law or in equity (including any
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right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Closing Date.
b. Except as provided in Section 8.1(c), effective as of the
Closing Date, Odetics does hereby, for itself and its affiliates, successors and
assigns, and all persons who at any time prior to the Closing Date have been
stockholders, directors, officers, agents or employees of Odetics (in each case,
in their respective capacities as such), remise, release and forever discharge
ATL, and its affiliates, successors and assigns, and all persons who at any time
prior to the Closing Date have been stockholders, directors, officers, agents or
employees of ATL (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Closing Date, including in connection with the transactions and all other
activities to implement any of the Separation, the IPO and the Distribution.
c. Nothing contained in Section 8.1(a) or (b) shall impair any
right of any person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified
herein or in the Schedules and Exhibits hereto not to terminate as of the
Closing Date, in each case in accordance with its terms. Nothing contained in
Section 8.1(a) or (b) shall release any person from:
(1) any liability provided in or resulting from any
agreement between Odetics and ATL that is specified herein or the Schedules and
Exhibits hereto as not to terminate as of the Closing Date, or any other
liability specified as not to terminate as of the Closing Date;
(2) any liability, contingent or otherwise, assumed,
transferred, assigned or allocated to such person;
(3) any liability that the parties may have with respect
to indemnification or contribution pursuant to this Agreement for claims brought
against the parties by third Persons, which liability shall be governed by this
Article VIII and, if applicable, the appropriate provisions of the Ancillary
Agreements.
d. ATL shall not make any claim or demand or commence any
action asserting any claim or demand, including any claim of contribution or any
indemnification, against Odetics or any other person released pursuant to
Section 8.1(a), with respect to any liabilities released pursuant to Section
8.1(a). Odetics shall not make any claim or demand, or commence any action
asserting any claim or demand, including any claim of contribution or any
indemnification, against ATL or any other person released pursuant to Section
8.1(b), with respect to any liabilities released pursuant to Section 8.1(b).
e. It is the intent of each of Odetics and ATL by virtue of the
provisions of this Section 8.1 to provide for a full and complete release and
discharge of all liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Closing Date, between or among ATL and its affiliates on the one hand, and
Odetics and its affiliates on the other hand (including any contractual
agreements or arrangements existing or alleged to exist between or among any
such persons on or before the Closing Date), except as expressly set forth in
Section 8.1(c). At any time, at the request of any other party, each party shall
execute and deliver releases reflecting the provisions hereof.
B. Indemnification by ATL. Except as provided in Section 8.4, ATL
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shall indemnify, defend and hold harmless Odetics, and each of its directors,
officers and employees, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "Odetics Indemnitees"), from and
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against any and all Liabilities of the Odetics Indemnitees relating to, arising
out of or resulting from any of the following items (collectively, the ATL
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Liabilities"):
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a. the operation of the ATL Business, as conducted at any time
prior to, on or after the Closing Date (including any Liability relating to,
arising out of or from any act or failure to act by any director, officer,
employee, agent or representative of ATL, whether or not such act or failure to
act is or was within such person's authority); provided however, that ATL shall
not be responsible for and shall not indemnify, defend or hold harmless Odetics
for any tax liability resulting from the reorganization of ATL's international
operations occurring prior to the Closing Date;
1. the ownership, leasing or use of any assets of ATL, including,
without limitation, the ATL Assets, any personal property, real property and
leasehold interests of ATL;
a. the failure of ATL or any other person to pay, perform or
otherwise promptly discharge any liabilities of ATL or any material contract or
agreement of ATL in accordance with their respective terms, whether prior to or
after the Closing Date or the date hereof;
b. any breach by ATL or its affiliates of this Agreement or any
of the Ancillary Agreements; or
c. any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to all information contained in any IPO Registration Statement or
Prospectus made by ATL or any of its directors, officers, employees, agents or
representatives.
C. Indemnification by Odetics. Odetics shall indemnify, defend and
--------------------------
hold harmless ATL, and each of its directors, officers and employees, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "ATL Indemnitees"), from and against any and all Liabilities
---------------
of the ATL Indemnitees relating to, arising out of or resulting from any of the
following items:
a. the operation of the business of Odetics (other than the ATL
Business), as conducted at any time prior to, on or after the Closing Date
(including any Liability relating to, arising out of or from any act or failure
to act by any director, officer, employee, agent or representative of Odetics,
whether or not such act or failure to act is or was within such person's
authority);
1. the ownership, leasing or use of any assets of Odetics, including,
without limitation, any personal property, real property and leasehold interests
of Odetics;
a. the failure of Odetics or any other person to pay, perform
or otherwise promptly discharge any liabilities of Odetics (other than the ATL
Liabilities) or any material contract or agreement of Odetics in accordance with
their respective terms, whether prior to or after the Closing Date or the date
hereof;
b. any breach by Odetics or its affiliates (other than ATL) of
this Agreement or any of the Ancillary Agreements; or
c. any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to all information contained in any IPO Registration Statement or
Prospectus made by Odetics or any of its directors, officers, employees, agents
or representatives.
D. Indemnification Obligations Net of Insurance Proceeds and Other
---------------------------------------------------------------
Amounts.
-------
a. The parties intend that any liability subject to
indemnification or reimbursement pursuant to this Article VIII will be net of
insurance proceeds that actually reduce the amount of the liability.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
------------------
pay to any person entitled to indemnification hereunder (an "Indemnitee") will
----------
be reduced by any insurance proceeds theretofore actually recovered by or on
behalf of the Indemnitee in reduction of the related liability. If an
Indemnitee receives a payment (an "Indemnity Payment") required by this
-----------------
Agreement from an Indemnifying Party in respect of any liability and
subsequently receives insurance proceeds, then the Indemnitee will pay to the
Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the insurance proceeds recovery had been received, realized or recovered before
the Indemnity Payment was made.
b. An insurer who would otherwise be obligated to pay any claim
shall not be relieved of the responsibility with respect thereto or, solely by
virtue of the indemnification provisions hereof, have any subrogation rights
with respect thereto, it being expressly understood and agreed that no insurer
or any other third party shall be entitled to a benefit such insurer or other
third party would not be entitled to receive in the absence of the
indemnification provisions by virtue of the indemnification provisions hereof.
E. Procedures for Indemnification of Third Party Claims.
----------------------------------------------------
a. If an Indemnitee shall receive notice or otherwise learn of
the assertion by any person other than the parties hereto of a claim (a "Third
-----
Party Claim") with respect to which an Indemnifying Party may be obligated to
-----------
provide indemnification to such Indemnitee pursuant to Section 8.2 or 8.3, or
any other Section of this Agreement or any Ancillary Agreement, such Indemnitee
shall give such Indemnifying Party written notice thereof within 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee or other Person to give notice as provided in this
Section 8.5(a) shall not relieve the related Indemnifying Party of its
obligations under this Article VIII, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice.
b. An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 8.5(a), the
Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After notice
from an Indemnifying Party to an Indemnitee of its election to assume the
defense of a Third Party Claim, such Indemnitee shall have the right to employ
separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnitee except as set forth in the next
sentence. In the event that the Indemnifying Party has elected to assume the
defense of the Third Party Claim but has specified, and continues to assert, any
reservations or exceptions in such notice, then,
in any such case, the reasonable fees and expenses of one separate counsel for
all Indemnitees shall be borne by the Indemnifying Party.
c. If an Indemnifying Party elects not to assume responsibility
for defending a Third Party Claim, or fails to notify an Indemnitee of its
election as provided in Section 8.5(b), such Indemnitee may defend such Third
Party Claim at the cost and expense of the Indemnifying Party.
d. Unless the Indemnifying Party has failed to assume the
defense of the Third Party Claim in accordance with the terms of this Agreement,
no Indemnitee may settle or compromise any Third Party Claim without the consent
of the Indemnifying Party.
e. No Indemnifying Party shall consent to entry of any judgment
or enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
f. The provisions of this Section 8.5 shall not apply to Taxes
(which are covered by the Tax Allocation Agreement).
ARTICLE IX.
INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
--------------------------------------------
A. Insurance Matters.
-----------------
a. ATL agrees that it will reimburse Odetics for its
proportionate share of premiums paid or accrued, from the date hereof until the
Distribution Date, in respect of Insurance Policies under which ATL will
continue to have coverage following the date hereof. Odetics and ATL agree to
cooperate in good faith to provide for an orderly transition of insurance
coverage from the date hereof through the Distribution Date and for the
treatment of any Insurance Policies that will remain in effect following the
Closing Date on a mutually agreeable basis. In no event shall Odetics, or any
Odetics Indemnitee have any liability or obligation whatsoever to ATL in the
event that any Insurance Policy or other contract or policy of insurance shall
be terminated or otherwise cease to be in effect for any reason, shall be
unavailable or inadequate to cover any liability of ATL for any reason
whatsoever or shall not be renewed or extended beyond the current expiration
date.
b.(1) Except as otherwise provided in any Ancillary Agreement,
the parties intend by this Agreement that ATL and its affiliates be successor
-in-interest to all rights that any may have as of the Closing Date as a
subsidiary or affiliate of Odetics prior to the Closing Date under any policy of
insurance issued to Odetics by any insurance carrier or under any agreements
related to such policies executed and delivered prior to the Closing Date,
including any rights ATL and its affiliates may have, as an insured or
additional named insured, subsidiary or affiliate to avail itself of any such
policy of insurance or any such agreements related to such policies as in effect
prior to the Closing Date. At the request of ATL, Odetics shall take all
reasonable steps, including the execution and delivery of any instruments, to
effect the foregoing; provided however that Odetics shall not be required to pay
any amounts, waive any rights or incur any liabilities in connection therewith.
(2) Except as otherwise contemplated by any Ancillary
Agreement, after the Closing Date, neither of Odetics or ATL shall, without the
consent of the other, provide any such insurance carrier with a release, or
amend, modify or waive any rights under any such policy or agreement, if such
release, amendment, modification or waiver would adversely affect any rights or
potential rights of the other hereunder; provided, however, that the foregoing
shall not (A) preclude either from presenting any claim or from exhausting any
policy limit, (B) require either to pay any premium or other amount or to incur
any liability, or (C) require either to renew, extend or continue any policy in
force. Each of ATL and Odetics will share such information as
is reasonably necessary in order to permit the other to manage and conduct its
insurance matters in an orderly fashion.
c. This Agreement shall not be considered as an attempted
assignment of any policy of insurance or as a contract of insurance and shall
not be construed to waive any right or remedy of either Odetics or ATL in
respect of any insurance policy or any other contract or policy of insurance.
d. ATL does hereby, for itself and its affiliates, agree that
Odetics or any Odetics Indemnitee shall have any liability whatsoever as a
result of the insurance policies and practices of Odetics and its affiliates as
in effect at any time prior to the Closing Date, including as a result of the
level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy, the adequacy or timeliness of
any notice to any insurance carrier with respect to any claim or potential claim
or otherwise.
ARTICLE X.
MISCELLANEOUS
-------------
A. Counterparts; Entire Agreement; Corporate Power.
-----------------------------------------------
a. This Agreement and each Ancillary Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
b. This Agreement, and the Ancillary Agreements and the
Exhibits, Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter hereof,
supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.
B. Governing Law. This Agreement and, unless expressly provided
-------------
therein, each Ancillary Agreement, shall be governed by and construed and
interpreted in accordance with the laws of the State of California without
regard to principles of conflicts of law.
C. Assignability.
-------------
a. Except as set forth in any Ancillary Agreement, this
Agreement and each Ancillary Agreement shall be binding upon and inure to the
benefit of the parties hereto and thereto, respectively, and their respective
successors and assigns; provided, however, that no party hereto or thereto may
assign its respective rights or delegate its respective obligations under this
Agreement or any Ancillary Agreement without the express prior written consent
of the other parties hereto or thereto.
D. Third Party Beneficiaries. Except for the indemnification rights
-------------------------
under this Agreement of any Odetics Indemnitee or ATL Indemnitee in their
respective capacities as such, (a) the provisions of this Agreement and each
Ancillary Agreement are solely for the benefit of the parties and are not
intended to confer upon any person except the parties any rights or remedies
hereunder, and (b) there are no third party beneficiaries of this Agreement or
any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement
shall provide any third person with any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement or any Ancillary Agreement. No party hereto shall have any right,
remedy or claim with respect to any provision of this Agreement or any Ancillary
Agreement to the extent such provision relates solely to the other two parties
hereto or the members of such other two parties' respective Groups. No party
shall be required to deliver any notice under this Agreement or under any
Ancillary Agreement to any other party with respect to any matter in which such
other party has no right, remedy or claim.
E. Notices. All notices or other communications under this Agreement
-------
or any Ancillary Agreement shall be in writing and shall be deemed to be duly
given when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:
If to Odetics, to: Odetics, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
If to ATL, to: ATL Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D.
Any party may, by notice to the other party, change the address to which such
notices are to be given.
F. Severability. If any provision of this Agreement or any Ancillary
------------
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby or thereby,
as the case may be, is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
G. Force Majeure. No party shall be deemed in default of this
-------------
Agreement or any Ancillary Agreement to the extent that any delay or failure in
the performance of its obligations under this Agreement or any Ancillary
Agreement results from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of civil or military authority,
embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes,
floods, unusually severe weather conditions, labor problems or unavailability of
parts, or, in the case of computer systems, any failure in electrical or air
conditioning equipment. In the event of any such excused delay, the time for
performance shall be extended for a period equal to the time lost by reason of
the delay.
H. Publicity. Prior to the Distribution, each of ATL and Odetics
---------
shall consult with the other prior to issuing any press releases or otherwise
making public statements with respect to the IPO, the Distribution or any of the
other transactions contemplated hereby and prior to making any filings with any
governmental authority with respect thereto.
I. Headings. The article, section and paragraph headings contained
--------
in this Agreement and in the Ancillary Agreements are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement or any Ancillary Agreement.
J. Survival of Covenants and Representations and Warranties. Except
--------------------------------------------------------
as expressly set forth in any Ancillary Agreement, the covenants,
representations and warranties contained in this Agreement and each Ancillary
Agreement, and liability for the breach of any obligations contained herein,
shall survive each of the Separation, the IPO and the Distribution and shall
remain in full force and effect regardless of whether Odetics shall consummate,
delay, modify or abandon the Distribution.
K. Waivers of Default. Waiver by any party of any default by the
------------------
other party of any provision of this Agreement or any Ancillary Agreement shall
not be deemed a waiver by the waiving party of any subsequent or other default,
nor shall it prejudice the rights of the other party.
L. Specific Performance. In the event of any actual or threatened
--------------------
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party or parties who
are or are to be thereby aggrieved shall have the right to specific performance
and injunctive or other equitable relief of its rights under this Agreement or
such Ancillary Agreement, in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be cumulative. The
parties agree that the remedies at law for any breach or threatened breach,
including monetary damages, are inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived. Any requirements for the securing or posting of any bond
with such remedy are waived.
M. Amendments.
----------
a. No provisions of this Agreement or any Ancillary Agreement
shall be deemed waived, amended, supplemented or modified by any party, unless
such waiver, amendment, supplement or modification is in writing and signed by
the authorized representative of the party against whom it is sought to enforce
such waiver, amendment, supplement or modification. Without limiting the
foregoing, the parties agree that any waiver, amendment, supplement or
modification of this Agreement or any Ancillary Agreement that solely relates to
and affects only two of the three parties hereto shall not require the consent
of the third party hereto.
b. Without limiting the foregoing, the parties anticipate that,
prior to the Closing Date, some or all of the Schedules to this Agreement may be
amended or supplemented and, in such event, such amended or supplemented
Schedules shall be attached hereto in lieu of the original Schedules.
IN WITNESS WHEREOF, the parties have caused this Separation and
Distribution Agreement to be executed by their duly authorized representatives.
ODETICS, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
ATL PRODUCTS, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
PROMISSORY NOTE
---------------
$_________ ________________, 1997
Anaheim, California
FOR VALUE RECEIVED, ATL Products, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of Odetics, Inc., a Delaware
corporation (the "Lender"), at Anaheim, California, or at such other place as
the holder of this Note may from time to time designate in writing, the
principal amount of _____________________________ dollars ($_________), with
interest on the principal amount from the date of disbursement of the principal
amount at the rate per annum set forth in this Note, to be paid as set forth in
this Note.
The principal amount of this Note shall bear interest at the rate per
annum equal to Lender's cost of borrowing from the lesser of either of Lender's
primary banks, or Lender's principal bank, as the case may be during the term of
the Note, but shall not exceed the maximum rate of interest permitted by
applicable law.
The Borrower shall pay the principal amount of this Note and interest
in sixteen (16) equal quarterly installments at the end of each calendar quarter
commencing June 30, 1997 and continuing until all principal and interest have
been fully paid. Each payment of principal shall be accompanied by a payment
equal to all interest accrued on the outstanding principal amount of the Note.
The Borrower shall have the right to prepay the principal sum of this
Note, or any part thereof or interest thereon, at any time without penalty or
prepayment charge.
Both principal and interest shall be paid by Borrower in lawful money
of the United States of America in cash or in the form of a cashier's or
certified check.
If the Borrower shall default in the timely making of any payment of
principal and/or interest due hereunder and if the same remains unpaid for
fifteen (15) days following receipt by Borrower of written notice of such
default the Lender may declare the entire remaining indebtedness owing
hereunder, including any accrued interest, to become immediately due and
payable.
Notwithstanding anything to the contrary in this Note, the total
liability of the Borrower for payments in the nature of interest shall not
exceed the limits applicable to this Note, if any, imposed by the usury laws, if
any, of the United States of America or the State of California. If any payment
in the nature of interest made by the Borrower or received by the holder of this
Note is determined to be in excess of any limit applicable to this Note imposed
by such usury laws, then the amount of such excess shall constitute and be
considered a payment of principal, not interest, and such amount shall be
applied to reduce the principal sum so that the total liability of the Borrower
for payments in the nature of interest does not exceed the applicable limits, if
any, imposed by such usury laws. In the event and to the extent such excess
amount of interest exceeds the outstanding unpaid principal balance hereunder,
any such excess amount shall be immediately returned to Borrower by Lender.
No delay or omission on the part of the Lender hereof in exercising
any right hereunder shall operate as a waiver of such right or of any other
right under this Note.
Neither this Note nor any term hereof may be waived, amended,
discharged, modified, changed, or terminated orally, nor shall any waiver of any
provision hereof be effective except by an instrument in writing signed by
Borrower and the Lender thereof.
Whenever used herein, the words "Borrower" and "Lender" shall be
deemed to include their respective heirs, personal representatives, successors
and assigns.
All notices to be given under this Note shall be deemed served upon
receipt by the addressee or, if mailed, upon the expiration of seventy-two (72)
hours after deposit in the United States Postal Service, certified mail, postage
prepaid, addressed to the address of Borrower or Lender as hereinafter set
forth:
Borrower's Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Lender's Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
This Note may from time to time be extended or renewed, with or
without notice to Borrower or any guarantor hereon and any related right may be
waived, exchanged, surrendered or otherwise dealt with, all without affecting
the liability of Borrower or any guarantor hereon.
There are no oral agreements between the Lender and the Borrower
relating to this Note. If any provision of this Note is held to be invalid or
unenforceable, it shall not affect the validity and enforceability of the other
provisions of this Note. This Note has been executed and delivered in the State
of California and is to be governed by and construed according to the laws
thereof.
IN WITNESS WHEREOF, the Borrower has executed this Note as of the date
first hereinabove written.
ATL Products, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇, PH.D.
By:____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D.
Chief Executive Officer