EXHIBIT 10.53
DATED THIS 24TH DAY OF JANUARY 1996
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MICROPOLIS CORPORATION
and
ST CHATSWORTH PTE LTD
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ASSET PURCHASE AGREEMENT
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BIH LI & ▇▇▇
Advocates & Solicitors
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C O N T E N T S
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SECTION HEADING PAGE
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1. AGREEMENT TO BUY AND SELL ASSETS 1
1.1 Purchase of Assets by ST 1
1.2 Option over Purchased Companies 5
1.3 Option over US Real Property 6
1.4 Excluded Assets 6
1.5 Assumption of Certain Obligations by ST 6
1.6 Excluded Liabilities 7
1.7 Discharge of Excluded Liabilities 9
2. CLOSING AND PAYMENT OF THE PURCHASE PRICE 9
2.1 Closing 9
2.2 Purchase Price 9
2.3 Payment of Initial Payment 10
2.4 Payment of Second Payment 11
2.5 Payment of Final Payment 11
2.6 Allocation of Purchase Price 11
2.7 Transfer of Acquired Assets 12
2.8 Transfer by Delivery 12
2.9 Operative Agreements 12
2.10 Closing in relation to Sale of Shares
in Micropolis Thailand 13
2.11 Closing in relation to Sale of Shares
in the Purchased Companies 14
2.12 Prorations 15
3. DETERMINATION OF NET WORTH
AND CLOSING DATE BALANCE SHEET 15
3.1 Determination of Preliminary Closing
Date Balance Sheet 15
3.2 Supply of Information and Documents 15
3.3 Confirmation of Disk Drive Final Net Worth 16
3.4 Definition of Closing Date Balance Sheet 17
3.5 Application of Accounting Principles 17
4. REPRESENTATIONS AND WARRANTIES OF MCUS 17
4.1 Information and Corporate Capacity 18
(A) Information 18
(B) Organisation and Qualification
of MC 18
C O N T E N T S
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(C) Authority of MCUS 18
(D) Assets 19
4.2 Real Property 20
(A) Environmental Matters 20
(B) Violation of Applicable Laws 22
(C) Title 23
(D) Planning 24
(E) State and Condition of the Real Property 25
(F) Leasehold Properties 25
4.3 General Environmental Matters 26
4.4 Conduct of the Business 27
4.5 Permits and Licences 27
4.6 Financial Statements and Undisclosed Liabilities 27
4.7 Compliance with Laws 28
4.8 Patents and Patent Applications 28
4.9 Insolvency 29
4.10 Affiliate Transactions 30
4.11 Litigation 30
4.12 Absence of Changes 31
4.13 Employee Benefit Plans 32
4.14 Governmental and Other Approvals 33
4.15 Brokerage 33
4.16 Labour Relations 33
4.17 Warranties in Respect of Micropolis Thailand 33
(A) Debts to, contracts with,
connected persons 34
(B) Accounts receivable 34
(C) Insurance 35
(D) Title to assets 35
(E) Books and records 35
(F) Options on capital 36
(G) Subsidiaries and associated companies 36
(H) Statutory and other requirements,
consents and licenses 36
(I) The Audited Accounts 37
(J) Taxation 38
(K) Contributions 39
(L) Tax returns 39
C O N T E N T S
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SECTION HEADING PAGE
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4.18 Warranties in Respect of Purchased Companies 40
4.19 Trade Payables 40
4.20 Disclosure 41
5. REPRESENTATIONS AND WARRANTIES OF ST 41
5.1 Organisation and Qualification of ST 41
5.2 Authority 41
6. COVENANTS OF MCUS PRIOR TO CLOSING 42
6.1 Restrictions 42
6.2 Matters Pending Closing 43
6.3 Notice of Breach 45
6.4 Access 45
6.5 Authorisation from Others 45
6.6 HSR Filings 46
6.7 Consummation of Agreement 46
6.8 Relationships with Customers and Suppliers 47
6.9 Defective Disk Drives 47
6.10 Stock Verification 47
6.11 Inventory for System Business 47
6.12 Balance Sheet For Disk Drive Business 47
6.13 Financial Statement of Disk Drive Business 47
6.14 List of Acquired Assets 48
6.15 Accounts of Purchased Companies 48
6.16 Inventory for Evaluation 48
6.17 Purchase of Issued Share Capital 48
7. COVENANTS OF ST CHATSWORTH 48
7.1 Regulatory and Other Approvals 48
7.2 HSR Filings 49
7.3 Maintenance of Goodwill 49
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF ST CHATSWORTH TO CLOSE 50
8.1 Representations and Warranties 50
8.2 Performance of Covenants 50
8.3 Orders and Laws 50
8.4 Regulatory Consents and Approvals 51
C O N T E N T S
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SECTION HEADING PAGE
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8.5 Delivery of Certificates and Documents to
ST Chatsworth 51
8.6 Exon-▇▇▇▇▇▇ Amendment 51
8.7 Pledge 51
8.8 Damage or Destruction 52
8.9 Title Insurance 52
8.10 Completion of Due Diligence 52
8.11 Approval of Board of Directors 52
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF MCUS TO
CLOSE 53
9.1 Approval of Board of Directors 53
9.2 Approval of MCUS Stockholders 53
9.3 Delivery of Certificates and Documents to
MCUS 53
9.4 Exon-▇▇▇▇▇▇ Amendment 53
9.5 Orders and Laws 53
9.6 Regulatory Consents and Approvals 54
10. CERTAIN RIGHTS AND OBLIGATIONS SUBSEQUENT TO
CLOSING 54
10.1 Survival of Representations, Warranties,
Agreements, Covenants and Obligations 54
10.2 Further Assurances 54
10.3 Publicity and Disclosures 54
10.4 Further Co-operation of the Parties 55
10.5 Consents of Third Parties 55
10.6 Mail Received after Closing 55
10.7 Employment of Business Employees by ST 56
10.8 Accounts Receivable 57
10.9 Transfer Tax Liabilities 57
10.10 Provisions in Relation to the name
"Micropolis" 58
10.11 Warranty Servicing 58
10.12 Inventory Sent for Evaluation 59
10.13 AMK Leasehold 59
C O N T E N T S
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11. INDEMNIFICATION 59
11.1 General Indemnification by MCUS 59
11.2 Environmental Indemnification by MCUS 60
11.3 Notice and Defence of Claim 61
11.4 No Tax Effect: Insurance 62
12. TERMINATION OF AGREEMENT 63
12.1 Termination 63
12.2 Effects of Termination 63
12.3 Right to Proceed 63
13. MCUS's NON-COMPETITION COVENANTS 64
13.1 Non-Competition of MCUS 64
13.2 Injunctive Relief 65
13.3 Enforcement 65
14. NON-DISCLOSURE COVENANTS 65
14.1 Non-Disclosure of Information by MCUS 65
14.2 Definition of Confidential Information 65
14.3 Injunctive Relief 66
15. MISCELLANEOUS 66
15.1 Expenses 66
15.2 Notices 66
15.3 Waiver 67
15.4 Bulk Sales Act 67
15.5 Section Headings 68
15.6 Exhibits and Schedules 68
15.7 Severability 68
15.8 Entire Understanding 68
15.9 Binding Effect 68
15.10 Governing Law 68
15.11 Choice of Forum and Consent to Jurisdiction 69
15.12 Assignability 69
15.13 Counterparts: Delivery by Facsimile 69
15.14 Certain Definitions 69
15.15 No Rights to Third Parties 72
15.16 Pronouns and Plurals 72
C O N T E N T S
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SECTION HEADING PAGE
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Schedule 1 73
Schedule 2 74
Schedule 3 75
Schedule 4 76
Schedule 5 77
Schedule 6 82
Schedule 7 83
Schedule 8 84
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") entered into this 24th day
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of January 1996, by and between:-
(1) MICROPOLIS CORPORATION, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America (hereinafter called "MCUS"); and
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(2) ST CHATSWORTH PTE LTD of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, #▇▇-▇▇/▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (hereinafter called
"ST Chatsworth").
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WITNESSETH:-
WHEREAS, ST Chatsworth desires to purchase or cause one or more of its
affiliated corporations to purchase the business and certain assets of the disk
drive business of MCUS including the business and the assets used in the
development, manufacturing, sales marketing and distribution of disk drives as
carried on by MCUS and its affiliates (each such affiliate is hereinafter
referred to as a "MC Affiliate") (MCUS and each such MC Affiliate are sometimes
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hereinafter referred to individually and collectively as "MC") excluding the
--
business and assets associated with the systems business (the "Disk Drive
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Business");
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WHEREAS, ST Chatsworth intends to assign all or a portion of its rights
and obligations under this Agreement to one or more of its affiliates (each such
affiliate to which any such rights and obligations are assigned is hereinafter
referred to as a "ST Affiliate") (ST Chatsworth and each such ST Affiliate are
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sometimes hereinafter referred to individually and collectively as "ST"); and
--
WHEREAS, MC desires to sell and cause the MC Affiliates to sell to ST the
business and certain assets of the Disk Drive Business.
NOW, THEREFORE, in consideration of the representations and warranties,
covenants and agreements hereinafter made, the parties hereto do hereby agree as
hereinafter set forth, and each of ST Chatsworth and MCUS hereby agrees to cause
the ST Affiliates and the MC Affiliates respectively to perform their respective
obligations pursuant to this Agreement.
1. AGREEMENT TO BUY AND SELL ASSETS
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1.1 Purchase of Assets by ST
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At the Closing (as defined in Section 2.1), on the terms and subject to
the conditions set forth in this Agreement, MCUS shall and shall procure
the MC Affiliates to sell, convey, transfer, assign and deliver to ST,
and ST shall purchase and acquire from MC, free and clear of all Liens
(as defined in
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Section 15.14) all of MC's right, title and interest in and to the
following assets, properties and business of the Disk Drive Business as
the same may exist on the Closing Date (as defined in Section 2.1),
whether or not in the possession or control of MC:-
(a) (in the event ST Chatsworth exercises the option pursuant to Section
1.3) the real property and all buildings and improvements located
thereon owned by MCUS and located in Chatsworth, California, United
States of America and more fully described in Schedule 1 of the
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Disclosure Schedule annexed hereto (the "Disclosure Schedule")
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(which real property, together with all buildings, structures and
improvements thereon and all rights, easements and appurtenances
pertaining thereto are referred to as the "US Real Property");
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(b) (in the event ST Chatsworth exercises the option pursuant to Section
1.3) the leasehold interest and all buildings and improvements
located thereon leased by MCUS from Northpark Industrial and more
fully described in Schedule 2 of the Disclosure Schedule together
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with all buildings, structures and improvements thereon and all
rights, easements and appurtenances pertaining thereto and together
with any options to purchase the underlying property and leasehold
improvements thereon, and all other rights, subleases, licences,
permits, deposits and profits appurtenant to or related to the lease
(the "US Leasehold");
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(c) an irrevocable licence to use, to the exclusion of Micropolis
Singapore (as defined in Section 15.14), the leasehold interest and
all buildings and improvements located thereon leased by Micropolis
Singapore from Technology Parks Private Limited and more fully
described in Schedule 3 of the Disclosure Schedule subject to
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Section 10.13 for the remaining of the leasehold interest (the "AMK
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Leasehold");
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(d) the leasehold interest and all buildings and Improvements located
thereon leased by Micropolis Singapore from Jurong Town Corporation
and more fully described in Schedule 4 of the Disclosure Schedule
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(the "SN Leasehold"),
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(the SN Leasehold together with all buildings, structures and
improvements thereon and all rights, easements and appurtenances
pertaining thereto and together with any options to purchase the
underlying property and leasehold improvements thereon, and all
other rights, subleases, licences, permits, deposits and profits
appurtenant to or related to the lease and the AMK leasehold are
referred to as the "Singapore Leasehold");
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(e) the total issued share capital of Micropolis Thailand (as defined in
Section 15.14);
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(f) (at the election of ST Chatsworth pursuant to Section 1.2) the total
issued share capital of each or any of the Purchased Companies (as
defined in Section 15.14);
(g) the machinery, plant and equipment, office furniture, fixtures,
vehicles and trailers and other tangible personal property (other
than inventory) held for use in the conduct of the Disk Drive
Business at the locations at which the Disk Drive Business is
conducted or at customers' premises on consignment of MC used or
useful in the Disk Drive Business (the "Machinery and Equipment")
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including, without limitation, the foregoing purchased subject to
any conditional sales or title retention agreement in favour of any
other person other than items disposed of between the date hereof
and the Closing Date in the ordinary course of business consistent
with past practice and on an arm's length basis;
(h) the corporate assets of MCUS located in Chatsworth, California,
United States of America, used in the conduct of the Disk Drive
Business including the MIS computer software and other related
equipment (the "Corporate Assets");
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(i) subject to Section 6.11, the finished goods inventory related to the
Disk Drive Business of MC, the raw materials, supplies, work-in-
progress on hand at MC's facilities at which the Disk Drive Business
is conducted which are used solely in the Disk Drive Business (the
"Inventory");
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(j) the sundry assets and all notes and other evidence of such
indebtedness occurring in the conduct of or related to the Disk
Drive Business (collectively the "Sundry Assets");
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(k) all, but not less than all of the customer lists and related data,
lists of suppliers, sales reports, cost sheets, bills of material,
inventions, technical information, engineering data, production
data, manufacturing process and process control data, blueprints and
specifications, drawings, formulae, laboratory notebooks, all data
regarding product development, processes, trade secrets, know-how
and the Confidential Information (as defined in Section 14.2), and
all files, financial and business information and records of MC
relating to the Disk Drive Business, all of which shall be in
machine readable form to the extent available; provided, that if any
of the foregoing do not relate exclusively to the Disk Drive
Business, MC shall deliver to ST extracts of the foregoing which
relate to the Disk Drive Business provided that (except in relation
to Micropolis Thailand and each or any of the Purchased Companies
where ST Chatsworth has elected to purchase the issued share
capital) MC shall be entitled to retain the original copies of
financial and business information and records which are required
for the filing of tax returns;
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(l) all, but not less than all, patents, trademarks, trade names,
service marks, brand names, business and product names, logos,
copyrights and applications for any of the foregoing of MC, relating
to or used in the conduct of the Disk Drive Business and including
MC's rights, title and interest including goodwill to the word and
name "Micropolis";
(m) subject to Section 10.5 all right, title and interest of MC in and
to:-
(i) the leases for real property (collectively the "Real Property
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Leases") together with any options to purchase the underlying
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property and leasehold improvements thereon, and in each case
all other rights, subleases, licences, permits, deposits and
profits appurtenant to or related to such leases and
subleases of MC listed in Schedule 5 of the Disclosure
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Schedule;
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(ii) the leases or subleases of tangible personal property
described in Schedule 6 of the Disclosure Schedule as to
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which MC is the lessor or sublessor and the leases of
tangible personal property described in Schedule 6 of the
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Disclosure Schedule as to which MC is the lessee or
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sublessee, together with any options to purchase the
underlying property;
(iii) all purchase orders given by MC in the ordinary course of
business consistent with past practice for the purchase of
products, materials, supplies, parts and other items related
to the Disk Drive Business;
(iv) all purchase orders related to the Disk Drive Business
submitted to MC by customers of MC in the ordinary course of
business and consistent with past practice with respect to
which MC has not received full payment thereon on or prior to
the Closing Date; and
(v) all contracts to which MC is a party and which are utilized
in the conduct of the Disk Drive Business, including without
limitation contracts relating to suppliers, sales
representatives, distributors, purchase orders, marketing
arrangements and manufacturing arrangements listed in
Schedule 7 of the Disclosure Schedule,
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(all of such leases, contracts, purchase orders and sales
commitments specified in this Section 1.1(m) are hereinafter
referred to as the "Assumed Contracts");
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(n) all government licences and permits of MC necessary to the conduct
of the Disk Drive Business which are transferable to the extent
permitted under applicable law;
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(o) all prepaid expenses and other assets of MC related to the Disk
Drive Business;
(p) any security deposits deposited by or on behalf of MC as lessee or
sublessee under the Real Property Leases and the SN Leasehold;
(q) the goodwill of MC related to the Disk Drive Business;
(r) subject to Section 10.5, all manufacturers', vendors' and suppliers'
warranties in respect of any asset of the Acquired Assets (as
hereinafter defined);
(s) subject to Section 10.5, all rights, contractual or otherwise, in
favour of MC regarding Confidential Information related to the Disk
Drive Business;
(t) all books and records used or held for use in the conduct of the
Disk Drive Business or otherwise relating to the Acquired Assets
(except in relation to Micropolis Thailand and the Purchased
Companies where ST has elected to purchase the issued share capital)
other than the minute books, stock transfer books and corporate seal
of MC; and
(u) all other assets and properties of MC used or held for use in
connection with the Disk Drive Business except as otherwise provided
in Section 1.4.
Provided that in the case where the assets described above are owned by,
belonging to or to be sold by the Purchased Companies, such assets shall
only be included in the sale and purchase if ST Chatsworth makes the
election pursuant to Section 1.2 to purchase these assets.
All of the assets of MC described above to be acquired by ST are
hereinafter collectively referred to as the "Acquired Assets."
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1.2 Option Over Purchased Companies
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MC irrevocably grant to ST Chatsworth or a ST Affiliate nominated by ST
Chatsworth an option to be exercised in its absolute discretion in
relation to each of the Purchased Companies to either:-
(i) purchase the assets set out in Section 1.1 owned by, belonging to or
to be sold by that Purchased Company; or
(ii) purchase the total issued share capital of that Purchased Company.
The option shall be exercised no later than the date falling 30 days
prior to the Closing Date, by ST Chatsworth giving written notice to MCUS
of the exercise of the option under this Section 1.2.
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1.3 Option Over US Real Property
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MCUS irrevocably grants to ST Chatsworth or a ST Affiliate nominated by
ST Chatsworth an option to purchase the US Real Property and/or the US
Leasehold.
The option may be exercised no later than the date falling 30 days prior
to the Closing Date by ST Chatsworth giving written notice to MCUS of the
exercise of the option.
1.4 Excluded Assets
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Notwithstanding anything in Section 1.1 to the contrary, the following
shall be specifically excluded from the Acquired Assets:-
(a) cash, commercial paper, certificates of deposit and other bank
deposits, treasury bills and other cash equivalents;
(b) life insurance policies of officers and other employees of MC and
all other insurance policies relating to the operation of the Disk
Drive Business;
(c) all refunds or credits, if any, of Taxes (as defined in Section
15.14) due to or from MC which cannot be assigned by law;
(d) any rights (including indemnification) and claims and recoveries
under litigation of MC against third parties arising out of or
relating to events prior to the Closing Date;
(e) the rights of MC in, to and under all contracts of any nature, the
obligations of MC under which expressly are not assumed by ST
pursuant to Section 1.6;
(f) the assets and properties of Tulip Memory System Inc; and
(g) except as provided in Section 1.1(j) in relation to the Sundry
Assets, the accounts receivable related to the Disk Drive Business
of MC.
1.5 Assumption of Certain Obligations by ST
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In addition to the contractual obligations of ST under this Agreement on
and as of the Closing Date, ST shall assume and pay, perform or discharge
when due the following obligations (collectively, the "Assumed
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Liabilities"):-
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(a) the liabilities as of the (Closing Date under the Assumed Contracts
except for any liability under any of the Assumed Contracts arising
out of MC's failure to perform its obligations thereunder to the
extent such performance is due on or prior to the Closing Date;
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(b) the liabilities as of the Closing Date of Micropolis Limited (as
defined in Section 15.14) under the contract in relation to the
design, construction and completion of a proposed 4/part 5-storey
factory building on ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, dated 20 June
1994 between Micropolis Limited, CDC-Construction & Development Pte
Ltd and Design Team Pte Ltd;
(c) the liabilities as of the Closing Date of Micropolis Limited under
the contract in relation to the design, supply, installation and
commissioning into operation of a cleanroom dated 12 September 1995
between Takasago Thermal Engineering Co. Ltd and Micropolis Limited;
(d) the liabilities as of the Closing Date of Micropolis Limited under
the Loan Agreement dated 8 September 1995 between Micropolis Limited
and ST Capital Limited;
(e) the liabilities as of the Closing Date of Micropolis Limited to
Garytech Engineering & Trading pursuant to the letter dated 13
November 1995;
(f) trade payables occurring in the conduct of or related to the Disk
Drive Business not paid prior to the Closing Date (collectively the
"Trade Payables");
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(g) the warranty claims reserve amounting to US$8,000,000; and
(h) any benefits relating to the employment of the Transferred Employees
(as defined in Section 10.7) which are imposed or required by
statutory provisions of the relevant country where the Transferred
Employees are employed but only to the extent reflected dollar for
dollar on the Closing Date Balance Sheet (as defined in Section
3.4).
1.6 Excluded Liabilities
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With the exception of the Assumed Liabilities, ST assumes no liabilities
or other obligations, commercial or otherwise, of MC, known or unknown,
fixed or contingent, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated,
secured or unsecured or otherwise (the "Excluded Liabilities"). Without
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in any way limiting the generality of the foregoing, ST shall not assume
any obligation or liability to any person with respect to the following:-
(a) any liability of MC for Taxes other than Transfer Tax Liabilities
(as set out in Section 10.9);
(b) except as provided in Section 10.11, any liability for defects,
returns or allowances, losses, personal injury, property damage or
other damages of any kind whatsoever, whether suffered or incurred
by a customer of MC or a customer of ST or any other person, arising
out
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of products manufactured or sold by MC or services performed by MC
on or prior to the Closing Date, whether the occurrence giving rise
to such liability occurs before or after the Closing Date, whether
the claim is asserted before or after the Closing Date;
(c) except as provided in Section 1.5(h), any responsibility, liability
or obligation (whether contractual, statutory or otherwise) with
respect to salary, wages, sick pay, vacation pay, severance pay,
redundancy pay, savings plans, deferred compensation, MC's pension,
profit-sharing, retirement and other fringe benefit plans, or other
obligations (whether contractual, governmentally mandated or
otherwise) for the benefit of any employees of MC (including the
Transferred Employees) including accounts payable and accrued
payroll and pension benefits accrued (vested or unvested), or
arising out of their employment through the Closing Date and/or
their termination of employment by MC upon the consummation of the
transactions contemplated hereby;
(d) any liability with respect to the environmental condition of the
Real Property (as defined in Section 4.2(A)(a)) or the clean-up
thereof including, without limitation, the clean-up of any Hazardous
Materials (as defined in Section 4.2(A)(d)) either on the Real
Property or originating on the Real Property;
(e) any liability resulting from the failure of MC to comply with the
requirements of all applicable building, fire, zoning and
Environmental Laws (as defined in Section 4.2(A)(c)), laws relating
to occupational health and safety, anti-trust laws, and other laws
(foreign or domestic) applicable to MC or the conduct of their
business as previously or currently in effect;
(f) any liability under any Assumed Contract to the extent such
liability arises out of MC's failure to perform its obligations
thereunder on or prior to the Closing Date;
(g) any liability of MC arising out of indebtedness for borrowed money;
(h) any obligation or liability under MC's employee health and dental
plans arising out of or relating to, medical or dental services
provided or rendered to employees on or before the Closing Date;
(i) any obligation of MC due and payable under non-competition covenants
or consulting agreements or the like;
(j) any liability arising from or related to tort claims or any
penalties or fines, whether criminal or civil, assessed against MC;
and
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(k) the liability to reinstate the premises in relation to the AMK
Leasehold.
1.7 Discharge of Excluded Liabilities
---------------------------------
MCUS shall and shall procure the MC Affiliates to discharge in a timely
manner or shall make adequate provision for all of the Excluded
Liabilities, provided that MC shall have the ability to contest, in good
faith, any such claim of liability asserted in respect thereof by any
person other than ST and ST Affiliates.
2. CLOSING AND PAYMENT OF THE PURCHASE PRICE
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2.1 Closing
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The closing of the transactions contemplated hereby (the "Closing") shall
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be held at the offices of Messrs Bih Li & ▇▇▇, Singapore counsel to ST
Chatsworth at 4.00 p.m. on 29 March 1996 or at such other time, date or
place as MCUS and ST Chatsworth shall mutually agree (the "Closing
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Date").
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2.2 Purchase Price
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The aggregate consideration to be paid by ST to MCUS for the Acquired
Assets and the non-competition covenant set forth in Section 13 (the
"Purchase Price") shall be the amount equal to the Disk Drive Final Net
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Worth. For the purpose hereof, the term "Disk Drive Final Net Worth"
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shall be the result of the following amounts:-
(a) the purchase price of the goodwill of MC related to the Disk Drive
Business and the name "Micropolis" which shall be US$7,000,000;
(b) the purchase price of the following which shall be the net book
value as of the Closing Date as reflected in the Closing Date
Balance Sheet:-
(i) the Inventory and the Machinery and Equipment;
(ii) the SN Leasehold;
(iii) the Real Property Leases;
(iv) if applicable, the US Real Property; and
(v) the Sundry Assets;
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(c) the purchase price of the total issued share capital of Micropolis
Thailand which shall be the net book value as of the Closing Date
but excluding goodwill, if any, as reflected in the Closing Date
Balance Sheet except that the land (excluding the building and the
improvements) of Micropolis Thailand located at ▇▇▇/▇-▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (the "Thai Land") shall be deemed to
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have a value of US$2,000,000;
(d) if applicable, the purchase price of the total issued share capital
of each of the Purchased Companies which shall be the net book value
as of the Closing Date but excluding goodwill, if any, as reflected
in the Closing Date Balance Sheet; and
(e) the purchase price of the Corporate Assets which shall be the fair
market value, to be determined by an appraiser of international
repute to be agreed between ST Chatsworth and MCUS;
minus
-----
(a) the amount of the net book value of the Assumed Liabilities other
than the warranty claims reserve as of the Closing Date as reflected
in the Closing Date Balance Sheet; and
(b) the warranty claims reserve of US$8,000,000,
Provided that under no circumstances shall the Purchase Price exceed the
mount equal to the Disk Drive Final Net Worth determined as of 29
December 1995 in accordance with the Financial Statements (as defined in
Section 4.6) plus 10 per cent and if the Purchase Price exceeds the said
amount, it shall be reduced by an amount equal to the difference.
For the avoidance of doubt, no other payment will be made by ST for any
other Acquired Assets.
ST Chatsworth shall pay the Purchase Price in the manner hereinafter set
forth by telegraphic transfer of immediately available funds to such
account or accounts as may be specified by MCUS for such purpose.
2.3 Payment of Initial Payment
--------------------------
At the Closing, on the conveyance, transfer, assignment and delivery of
the Acquired Assets, ST shall pay to MCUS for and on behalf of MC the
initial payment (the "Initial Payment") which shall be an amount equal to
---------------
the result of the following amounts:-
(a) 90 per cent of the net book value of the Acquired Assets other than
the Inventory; and
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(b) 50 per cent of the net book value of the Inventory,
minus
-----
(a) the amount of the net book value of the Assumed Liabilities other
than the warranty claims reserve as of the Closing Date; and
(b) the warranty claims reserve of US$8,000,000.
For the purpose of calculating the Initial Payment only, the net book
value as aforesaid shall be as reflected in the Preliminary Closing Date
Balance Sheet as defined in Section 3.1).
2.4 Payment of Second Payment
-------------------------
(a) In the event no ST Disapproval Notice (as defined in Section 3.3(a))
is given by ST Chatsworth within the 21-day period set forth in
Section 3.3(a), within 3 days of the determination of the Closing
Date Balance Sheet, ST Chatsworth shall pay to MCUS for and on
behalf of MC, the balance of the Purchase Price, after subtracting
five (5) per cent from the said balance.
(b) In the event ST Chatsworth gives the ST Disapproval Notice to MCUS
within the 21-day period set forth in Section 3.3(a), within 3 days
of the delivery of the ST Disapproval Notice by ST Chatsworth to
MCUS, ST Chatsworth shall pay to MCUS for and on behalf of MC, the
balance of the Purchase Price in relation to the items not in
dispute, after subtracting five (5) per cent from the said balance.
The balance of the Purchase Price in relation to the disputed items,
after subtracting five (5) per cent from the said balance shall be
paid within 3 days of the resolution of the dispute in accordance
with Section 3.3(a) or (b) as the case may be.
2.5 Payment of Final Payment
------------------------
On or prior to the date falling 6 months from the Closing Date, ST shall
pay to MCUS for and on behalf of MC, the remaining five (5) per cent of
the Purchase Price, after deducting and netting-off any sums owing by MC
or for which MC are liable to ST under this Agreement whether as a result
of any claims for breach of warranty or otherwise.
2.6 Allocation of Purchase Price
----------------------------
ST Chatsworth and MCUS shall negotiate in good faith prior to the Closing
Date and determine the allocation of the consideration paid by ST
Chatsworth for the Acquired Assets. ST and MC shall report the purchase
and sale of the Acquired Assets in accordance with the allocation for all
national, federal, state, provincial and local tax and other purposes.
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2.7 Transfer of Acquired Assets
---------------------------
At the Closing, MCUS shall or shall procure the appropriate MC Affiliate
to deliver to ST Chatsworth or the appropriate ST Affiliate duly executed
deeds, bills of sale, endorsements, assignments and other instruments of
transfer and assignment of the Acquired Assets sufficient to vest in such
party the interests in the Acquired Assets being conveyed in accordance
with the terms of this Agreement in form and substance reasonably
satisfactory to ST.
In the event that local laws, custom and practice require that the
transactions contemplated by this Agreement be the subject of an
instrument or other agreement under applicable local law ("Local
-----
Agreement"), such Local Agreement shall be in form and substance
---------
reasonably satisfactory to ST Chatsworth and MCUS, provided that such
Local Agreement will give full force and effect to the provisions of this
Agreement, and in the event of conflict, the terms of this Agreement
shall prevail. (The deeds, bills of sale, endorsements, assignments,
instruments and agreements and Local Agreements referred to in this
Section 2.7 are hereinafter referred to collectively as the "Ancillary
---------
Documents").
---------
2.8 Transfer by Delivery
--------------------
At the Closing or such other date and time thereafter as may reasonably
be determined by ST, MCUS shall or shall procure the appropriate MC
Affiliate to deliver to ST Chatsworth or the appropriate ST Affiliate:-
(a) such of the Acquired Assets which are capable of transfer by
delivery; and
(b) possession of the Real Property.
2.9 Operative Agreements
--------------------
At the Closing, each of ST Chatsworth and MCUS shall enter into or shall
procure the relevant ST Affiliate or MC Affiliate as the case may be to
enter into the following agreements:-
(a) computer services agreement in relation to the use by MCUS (or such
other person as ST Chatsworth and MCUS may agree) of the MIS
computer system;
(b) patent cross-licensing agreement whereby MCUS shall license to ST
Chatsworth (or such other person as ST Chatsworth and MCUS may
agree) the use of all its patents in relation to the system
application business and ST Chatsworth shall license MCUS (or such
other person as ST Chatsworth and MCUS may agree) the use of all the
patents in relation to the Disk Drive Business to be sold and
transferred herein; and
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(c) a distributorship agreement whereby MCUS shall appoint ST Chatsworth
(or such other person as ST Chatsworth and MCUS may agree) to
distribute its products in relation to the system business in
Europe, for a period of 2 years.
2.10 Closing in Relation to Sale of Shares in Micropolis Thailand
------------------------------------------------------------
(a) At the Closing, MCUS shall deliver to ST Chatsworth:-
(i) duly executed transfers in favour of ST Chatsworth or as it
may direct accompanied by the relative share certificates in
respect of the shares in Micropolis Thailand to be sold by
MCUS to ST Chatsworth;
(ii) the written resignations of all directors from their
directorships in Micropolis Thailand to take effect as ST
Chatsworth may determine with acknowledgements signed by each
of them in the form required by ST Chatsworth to the effect
that he has no claim against Micropolis Thailand for
compensation for loss of office or otherwise howsoever;
(iii) a certified copy of board resolutions of Micropolis Thailand
in the form required by ST Chatsworth:-
(aa) approving the registration of the said share transfers;
(bb) appointing such persons as ST Chatsworth may nominate
as directors of Micropolis Thailand; and
(cc) revoking all existing authorities to bankers in respect
of the operation of its bank accounts and giving
authority in favour of such persons as ST Chatsworth
may nominate to operate such accounts and appointing
such persons as ST Chatsworth may nominate as the
signatories of all the bank accounts of Micropolis
Thailand; and
(iv) MCUS shall deliver to ST Chatsworth a list of all Micropolis
Thailand's bank accounts and banking facilities.
(b) At the Closing, ST Chatsworth shall procure the discharge of all
guarantees given by MCUS to secure the liabilities of Micropolis
Thailand.
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2.11 Closing in Relation to Sale of Shares in the Purchased Companies
----------------------------------------------------------------
In the event ST Chatsworth elects to purchase the total issued share
capital of each or any of the Purchased Companies pursuant to the option
in Section 1.2, at the Closing:-
(a) MCUS shall deliver to ST Chatsworth:-
(i) duly executed transfers in favour of ST Chatsworth or as it
may direct accompanied by the relative share certificates or
other analogous documents in respect of the shares in the
Purchased Companies to be sold by MCUS to ST Chatsworth;
(ii) the written resignations of all directors from their
directorships in the relevant Purchased Companies to take
effect as ST Chatsworth may determine with acknowledgements
signed by each of them in the form required by ST Chatsworth
to the effect that he has no claim against the relevant
company for compensation for loss of office or otherwise
howsoever;
(iii) a certified copy of board resolutions of the Purchased
Companies in the form required by ST Chatsworth:-
(aa) approving the registration of the said share transfers;
(bb) appointing such persons as ST Chatsworth may nominate
as directors of the relevant company; and
(cc) revoking all existing authorities to bankers in respect
of the operation of its bank accounts and giving
authority in favour of such persons as ST Chatsworth
may nominate to operate such accounts and appointing
such persons as ST Chatsworth may nominate as the
signatories of all the bank accounts of the relevant
company; and
(iv) MCUS shall deliver to ST Chatsworth a list of the Purchased
Companies' bank accounts and banking facilities.
(b) At the Closing, ST Chatsworth shall procure the discharge of all
guarantees issued by MCUS to secure the liabilities of the relevant
Purchased Companies.
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2.12 Prorations
----------
The following prorations relating to the Acquired Assets and the
ownership and operation of the Disk Drive Business will be made as of the
Closing Date, with MC liable to the extent such items relate to any time
period prior to the Closing Date and ST liable to the extent such items
relate to periods beginning with and subsequent to the Closing Date:-
(a) real estate taxes on or with respect to the Acquired Assets;
(b) rents, additional rents, taxes and other items payable by MC under
the Real Property Leases and the AMK Leasehold so long as ST
Chatsworth occupies and continues to occupy the AMK Leasehold;
(c) the amount of rents, taxes and charges for sewer, water, telephone,
electricity and other utilities relating to the Real Property and
the Real Property Leases; and
(d) all other items (excluding personal property taxes and other taxes)
normally adjusted in connection with similar transactions.
Except as otherwise agreed by the parties, the net amount or all such
prorations will be settled and paid on the Closing Date. If the Closing
shall occur before a real estate tax rate is fixed, the apportionment of
taxes shall be based upon the tax rate for the preceding year applied to
the latest assessed valuation.
3. DETERMINATION OF NET WORTH AND CLOSING DATE BALANCE SHEET
---------------------------------------------------------
3.1 Determination of Preliminary Closing Date Balance Sheet
-------------------------------------------------------
MCUS shall prepare a combined balance sheet of the Disk Drive Business
(the "Preliminary Closing Date Balance Sheet") as of the Closing Date
--------------------------------------
and shall deliver the Preliminary Closing Date Balance Sheet to ST
Chatsworth or ST's Accountants as promptly as possible and in any event
no later than the date falling 21 days after the Closing Date. The
Preliminary Closing Date Balance Sheet shall be prepared in accordance
with the generally accepted accounting principles applicable in the
United States of America and applied on a consistent basis (collectively,
the "Accounting Principles"). ST and ST's Accountants shall have the
---------------------
obligation to participate in the physical inventory.
3.2 Supply of Information and Documents
-----------------------------------
(a) MCUS agrees to provide ST and ST's Accountants the opportunity to
review the Preliminary Closing Date Balance Sheet delivered by MCUS
and the underlying work papers with a view to confirming the Disk
Drive Final Net Worth.
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(b) As promptly as possible and in any event no later than 28 days after
the Closing Date, MCUS shall give or shall procure for ST's
Accountants all such information and documentation relating to the
Disk Drive Business as ST's Accountants shall require to enable them
to confirm the Disk Drive Final Net Worth.
3.3 Confirmation of Disk Drive Final Net Worth
------------------------------------------
(a) If ST Chatsworth notifies MCUS in writing of its disagreement with
the Preliminary Closing Date Balance Sheet within 21 days after
receipt thereof, specifying the nature of each disagreement and the
basis therefor (the "ST Disapproval Notice"), then ST Chatsworth
---------------------
and MCUS shall attempt to resolve their differences with respect
thereto within fourteen (14) days after MCUS's receipt of the ST
Disapproval Notice, in which case, the Preliminary Closing Date
Balance Sheet, as amended to the extent necessary to reflect
resolution of all such disagreements, shall be the Closing Date
Balance Sheet (as hereinafter defined) and shall be conclusive and
binding on ST and MC.
(b) Any disputes not resolved by ST Chatsworth and MCUS within such 14
day period regarding the Preliminary Closing Date Balance Sheet
shall be submitted by the parties promptly after the expiration of
the applicable 14-day period to an internationally recognized
accounting firm mutually acceptable to both parties, which firm
shall not have had a material relationship with either ST Chatsworth
or MCUS or any of their respective affiliates within the two years
preceding the selection (the "Independent CPA"). Within thirty (30)
---------------
days after its acceptance of its appointment as Independent CPA, the
Independent CPA shall determine, based solely on presentations by ST
Chatsworth and MCUS, and not by independent review, those items in
dispute and shall render a written report as to the resolution of
each dispute and the resulting calculation of the Closing Date
Balance Sheet and the Disk Drive Final Net Worth. Materiality shall
not be a basis for rejection of a disputed item in the calculation
of the Disk Drive Final Net Worth. In resolving any disputed item,
the Independent CPA may not assign a value to such item greater than
the greatest value for such item claimed by either party or less
than the smallest value for such item claimed by either party. The
Independent CPA shall have exclusive jurisdiction over (and resort
to the Independent CPA as provided in this Section 3.3) shall be the
sole recourse and remedy of the parties against one another or any
other person with respect to) any disputes (without prejudice to the
parties' rights to claim a breach of any representation or warranty
or to indemnification under Section 11 hereof) arising out of or
relating to the Preliminary Closing Date Balance Sheet and the
Closing Date Balance Sheet; and the Independent CPA's determination
(without prejudice to the parties' rights to claim a breach of any
representation or warranty or to indemnification under Section 11
hereof) shall be conclusive and
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binding on the parties and shall be enforceable in a court of law.
In the event ST Chatsworth does not deliver the ST Disapproval
Notice within 21 days from ST Chatsworth's receipt of the
Preliminary Closing Date Balance Sheet, ST Chatsworth shall be
deemed to have accepted MCUS's determination and the Preliminary
Closing Date Balance Sheet shall be deemed to be the Closing Date
Balance Sheet and shall be conclusive and binding (without prejudice
to the parties' rights to claim a breach of any representation or
warranty or to indemnification under Section 11 hereof) on ST
Chatsworth and MCUS.
(c) MCUS and ST Chatsworth shall bear the fees and expenses of their
respective accountants and other representatives. The fees and
expenses of the Independent CPA shall be borne equally by MCUS and
ST Chatsworth.
3.4 Definition of Closing Date Balance Sheet
----------------------------------------
As used herein, the term "Closing Date Balance Sheet" shall mean:-
--------------------------
(a) the Preliminary Closing Date Balance Sheet if no ST Disapproval
Notice is given by ST Chatsworth within the 21-day period set forth
in Section 3.3(a); or
(b) if the ST Disapproval Notice is given in accordance with Section
3.3(a) and all of the disputed items are resolved by mutual
agreement of the parties, the Preliminary Closing Date Balance
Sheet, as amended, if necessary, to reflect such resolution of all
disputes; or
(c) if any or all of the disputed items are submitted to the Independent
CPA for resolution, the Preliminary Closing Date Balance Sheet, as
amended, if necessary, to reflect any resolution of any disputes by
mutual agreement of the parties and the resolution of all other
disputes by the Independent CPA.
3.5 Application of Accounting Principles
------------------------------------
ST's Accountants in confirming the Disk Drive Final Net Worth shall apply
the Accounting Principles.
4. REPRESENTATIONS AND WARRANTIES OF MCUS
--------------------------------------
MCUS makes the following representations and warranties to each of ST
Chatsworth and the ST Affiliates (with the intent that the provisions of
this Section 4 shall continue to have full force and effect
notwithstanding Closing):-
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4.1 Information and Corporate Capacity
----------------------------------
(A) Information
-----------
All information in writing which has been given by or on behalf of
MC or their agents to ST or their agents before and during the
negotiations leading to this Agreement was, when given, and remains
to the best of the knowledge of MC true, complete and accurate in
all respects and not misleading and that after making all proper
enquiries MC is not aware of any fact or matter, not in the public
domain, in relation to the Disk Drive Business which would render
any such information untrue, incomplete, inaccurate or misleading or
might reasonably affect the willingness of ST to purchase the Disk
Drive Business or the price at or the terms upon which the purchase
is made.
(B) Organisation and Qualification of MC
------------------------------------
Each of MCUS and the MC Affiliates is duly organised, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation (except in the case where under the laws of a
jurisdiction in which the concept of good standing is inapplicable,
as to which no representation or warranty regarding good standing is
made). Except for the approval by the shareholders of MCUS of the
transactions contemplated hereby, which approval shall be obtained
before the Closing, each of MCUS and the MC Affiliates has full
corporate power and authority to enter into and perform the
transactions contemplated by this Agreement.
(C) Authority of MCUS
-----------------
(i) This Agreement and each of the Ancillary Documents delivered
or to be delivered by MCUS when executed and delivered in
accordance with their respective terms will constitute the
valid and binding obligations of each of MCUS and the MC
Affiliates and shall be enforceable against it in accordance
with their respective terms.
(ii) The execution, delivery and performance of this Agreement and
each of the Ancillary Documents delivered or to be delivered
by MCUS have been, or when delivered will be, duly authorised
by all necessary corporate action of MCUS.
(iii) The execution, delivery and performance by MCUS of this
Agreement or any Ancillary Documents does not and will not
with the passage of time or the giving of notice or both:-
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(aa) result in a breach of or constitute a default by MC or
result in any right of termination or other effect
adverse to MC under any agreement, lease or instrument
pertaining to the Disk Drive Business to which MC is a
party or by which any Acquired Asset is bound or
affected or under any other agreement binding on MC the
effect of which breach or default would hinder, delay,
interfere with or prohibit the transactions
contemplated by this Agreement;
(bb) result in a violation of any law, rule or regulation
now in effect to which MC is subject, or any order,
writ, judgement, injunction, decree, determination or
award, now in effect which is applicable to MC; and
(cc) violate any provisions of the memorandum and articles
of association or equivalent, or bylaws of MC, as
amended.
(D) Assets
------
(i) To the best of the knowledge of MCUS after making due and
careful inquiries, the Machinery and Equipment conforms to
all applicable laws, ordinances and regulations.
(ii) Except as listed in Schedule 8 of the Disclosure Schedule,
-------------------------------------
MC have good and marketable title to the Acquired Assets,
free and clear of all claims, liens, pledges, charges,
mortgages, security interests, encumbrances, equities or
other imperfections of title.
(iii) To the best of the knowledge of MCUS after making due and
careful inquiries, the inventories of MC are of a quality and
quantity saleable or usable in the ordinary course of MC's
business.
(iv) All of the Acquired Assets are located on the premises owned
or leased by MC or on consignment to its customers.
(v) To the best of the knowledge of MCUS after making due and
careful inquiries, the Acquired Assets comprise all assets
now used in the Disk Drive Business and which are necessary
for the continuation of the Disk Drive Business as now
carried on.
(vi) The Machinery and Equipment:-
(aa) are in a proper state of repair and condition and
satisfactory working order;
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(bb) have been regularly and properly maintained; and
(cc) are adequate for and not surplus to the requirements of
the Disk Drive Business.
(vii) The Sundry Assets:-
(aa) arose from bona fide transactions in the ordinary
course of business and are payable on ordinary trade
terms;
(bb) are legal, valid and binding obligations of the
respective debtors enforceable in accordance with their
terms;
(cc) are not subject to any valid set-off or counterclaim;
(dd) are collectible in the ordinary course of business
consistent with past practice in the aggregate recorded
amounts thereof, net of any applicable reserve
reflected in the balance sheet included in the annual
financial statements; and
(ee) are not the subject of any actions or proceedings
brought by or on behalf of MC.
4.2 Real Property
-------------
(A) Environmental Matters
---------------------
(i) The Real Property and the operations thereon and the uses
made thereof, are in compliance with all, and are not in
violation of any Environmental Laws (as hereinafter defined).
(ii) There has been no generation, use, treatment, handling,
storage or disposal of Hazardous Materials on or from the
Real Property by any person (including, without limitation,
MC and the past and present officers, employees and agents of
MC and all past and present owners, operators and lessees of
the Real Property) at any time except in full compliance with
all Environmental Laws.
(iii) The Real Property has not been used at any time by any person
in such a manner as to cause a violation of any Environmental
Law or to potentially give rise to any liability or
obligation for the remediation or restoration of the Real
Property or for the treatment, storage, removal, disposal,
release, arrangement for removal or disposal or
transportation of any Hazardous Materials.
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(iv) None of MCUS or the MC Affiliates has received any notice of,
and no circumstances exist that could form the basis of, an
Environmental Action (as hereinafter defined) arising out of
or relating to the Real Property or the generation, use,
treatment, handling, storage or disposal of Hazardous
Materials thereon, or the release or transportation of
Hazardous Materials thereto or therefrom.
(v) Each of MCUS and the MC Affiliates has obtained all permits,
approvals, licences and other authorisations required under
Environmental Laws, such licenses and permits being in full
force and effect and is complying in all respects therewith.
(vi) No employees of MC or its predecessors or any past owner,
operator or lessee of the Real Property have been exposed to
Hazardous Materials.
(vii) Each of MCUS and the MC Affiliates has delivered to ST true,
complete and correct copies or results of any and all
reports, studies or tests in the possession of or initiated
by it pertaining to the existence of Hazardous Materials and
other environmental concerns on any part of the Real Property
or concerning compliance with or liability under
Environmental Laws in the operation of the business of MC or
as conducted by any prior owner, operator or lessee of the
Real Property.
As used in this Section 4.2 and elsewhere in this Agreement:-
(a) The term "Real Property" shall mean the US Real Property (in
-------------
the event ST Chatsworth exercises the option pursuant to
Section 1.3), the US Leasehold (in the event ST Chatsworth
exercises the option pursuant to Section 1.3), the Singapore
Leasehold and the Thai Land and the Real Property Leases;
(b) "Environmental Action" means any administrative, regulatory
--------------------
or judicial action, suit, demand, demand letter, claim,
notice of non-compliance or violation, investigation,
proceeding, consent order or consent agreement relating in
any way to any Environmental Law, including, without
limitation:-
(aa) any claim by any Governmental or Regulatory Authority
(as defined in Section 15.14) for enforcement, clean-
up, removal, response, remedial or other actions or
damages pursuant to any Environmental Law; and
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(bb) any claim by any third party seeking damages,
contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or
threat of injury to the environment;
(c) "Environmental Laws" and "Environmental Law" mean any
------------------ -----------------
applicable national, federal, provincial, state or local law
of any country or any political subdivision thereof, rule,
regulation, order, writ, judgement, injunction, decree,
determination or award of any jurisdiction relating to the
environment or Hazardous Materials; and
(d) "Hazardous Materials" means:-
-------------------
(aa) petroleum or petroleum products, natural or synthetic
gas and asbestos in any form;
(bb) any substances defined as or included in the definition
of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants" or "pollutants" or
words of any similar import under any Environmental
Law; and
(cc) any other substance exposure to which is regulated
under any Environmental Law.
(B) Violation of Applicable Laws
----------------------------
(i) No notice of violation of any applicable federal, national,
provincial, state or local statute, ordinance, order,
requirement, law, rule, regulation (including, without
limitation, any Environmental Law), or of any covenant,
condition, restriction or easement affecting the Real
Property with respect to the use or occupancy of the Real
Property has been given to MC by any person having
jurisdiction over the Real Property or by any other person
entitled to enforce the same, or by any private citizen or
citizen action group and, to the best knowledge of each of
MCUS and the MC Affiliates, no such notice has been given to
any other person.
(ii) To the best of the knowledge of each of MCUS and the MC
Affiliates, there is not:-
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(aa) any intended or proposed federal, national, provincial,
state, or local statute, ordinance, order, requirement,
law, rule or regulation (including, but not limited to,
zoning changes) which may prevent or hinder ST's
continued use of the Real Property as heretofore used
in the conduct of the Disk Drive Business; or
(bb) any suit, action, claim or legal, administrative,
arbitration or other proceeding or governmental
investigation (other than Environmental Actions)
pending or threatened in writing against or affecting
either the Real Property or the use thereof or that
would prevent or hinder ST's continued use thereof in
the Disk Drive Business.
(C) Title
-----
In relation to each Real Property:-
(i) MCUS or the MC Affiliates as indicated as the owner or lessee
of the Real Property in Schedule 5 is the beneficial owner or
lessee of and is beneficially entitled to the whole of the
proceeds of sale of and has a good and marketable title to
the whole of the Real Property.
(ii) MCUS has in its possession or unconditionally held to its
order all the original documents of title and other documents
and papers relating to the Real Property.
(iii) There are no mortgages, charges or debentures (whether legal
or equitable and whether fixed or floating), rent charges,
liabilities to maintain roadways, liens (whether for costs or
to any unpaid vendor or otherwise), annuities or other
unusual outgoings or trusts (whether for securing money or
otherwise) affecting the Real Property or the proceeds of
sale thereof.
(iv) Except for the lots-tie restriction in relation to the US
Real Property and the US Leasehold, the Real Property is not
subject to any lease, sub-lease, tenancy, concession,
occupancy agreement or similar right, adverse estate, right,
interest, covenant, restriction, stipulation, easement,
option, right of pre-emption, wayleave, profit a prendre,
licence or other right or informal arrangement in favour of
any third party (whether in the nature of a public or private
right or obligation) nor is there any agreement or commitment
to give or create any of the foregoing and where the Real
Property is subject to any such arrangement no breach has
occurred of any of the terms
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thereof and all rights of light, air and support are enjoyed
fully is of right.
(v) The Real Property enjoys access and egress over roads which
prior to the date of this Agreement have been adopted by the
appropriate highway authority and are maintainable at the
public expense. The Real Property drains into a public sewer
and is serviced by water, electricity and gas utilities. The
pipes, sewers, wires, cables, conduits and other conducting
media serving the Real Property connect directly to the mains
without passing through land in the occupation and ownership
of a third party or if they do, the facilities, easements or
rights necessary for the enjoyment and present use of the
Real Property are enjoyed on terms which do not entitle any
person to terminate or curtail the same.
(D) Planning
--------
In relation to each Real Property:-
(i) No development at the Real Property or use of the Real
Property has been undertaken in breach of any planning,
building or construction legislation or any regulations, by-
laws, orders, consents or permissions made or given
thereunder.
(ii) The planning consents and permissions affecting the Real
Property are either unconditional or are subject only to
conditions which are neither unusual, personal nor temporary
and which have been satisfied or fully observed and performed
up to the date of this Agreement.
(iii) There is no resolution, proposal, scheme or order, whether
formally adopted or not, for the compulsory acquisition of
the whole or any part of the Real Property or any access or
egress, or for the alteration, construction or improvement of
any road, sub-way, underpass, footbridge, elevated road, dual
carriageway or flyover upon or adjoining the Real Property or
any access or egress.
(iv) There is no outstanding statutory or informal notice relating
to the Real Property or any business carried on thereat or
the use thereof.
(v) To MC's knowledge, there are no encroachments onto the Real
Property by any improvements on any adjoining property which
would materially and adversely impair the utility of the Real
Property for the uses for which it is currently used in the
Disk Drive Business.
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(vi) To MC's knowledge, there are no material encroachments onto
any adjoining property by any improvements on the Real
Property.
(E) State and Condition of the Real Property
----------------------------------------
In relation to each Real Property:-
(i) The buildings and other structures on the Real Property are
in good and substantial repair and fit for the purposes for
which they are presently used.
(ii) None of the following has in the past affected the Real
Property:-
(aa) structural or other defects in the Real Property or the
building of which the Real Property is part or in any
drains, pipes, wires or services;
(bb) flooding;
(cc) subsidence; and
(dd) rising damp, wet or dry rot or any infestation.
(F) Leasehold Properties
--------------------
Where the interest of MC in any Real Property is a leasehold
interest:-
(i) Any consent necessary for the grant of the lease under which
MC holds its interest in the Real Property (the "Lease") was
-----
duly obtained and a copy of the consent is with the documents
of title and the receipt for the payment of rent which fell
due immediately prior to the date of this Agreement
unqualified.
(ii) There is no material subsisting breach, nor any material non-
observance of any covenant, condition or agreement contained
in the Lease on the part of either the relevant landlord or
MC and no landlord has refused to accept rent or made any
complaint or objection.
(iii) There are no restrictions in the Lease which prevent the Real
Property being used now or in the future for the present or
proposed use.
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(iv) No alterations have been made to the Real Property at the
expense of MC without all necessary consents and approvals
and all such alterations to the Real Property are to be
disregarded on rent reviews and do not have to be reinstated
at the expiry of the term.
(v) All steps in rent reviews have been duly taken and no rent
reviews are or should be currently under negotiation or the
subject of a reference to an expert or arbitrator or the
courts.
(vi) The Lease does not contain any unusual or objectionable
covenants or agreements having regard to the use to which the
Real Property is currently put.
4.3 General Environmental Matters
-----------------------------
(a) MC have obtained all licences which are required under applicable
Environmental Laws in connection with the conduct of the Disk Drive
Business or the Acquired Assets. Each of such licences is in full
force and effect. MC have conducted the Disk Drive Business in
compliance in all material respects with the terms and conditions of
such licences and with any applicable Environmental Law.
(b) No order has been issued, no Environmental Claim (as defined in
Section 15.14) has been filed, no penalty has been assessed and no
investigation or review is pending or, to the knowledge of MC,
threatened by any Governmental or Regulatory Authority with respect
to any alleged failure by MC to have any licence required under
applicable Environmental Laws in connection with the conduct of the
Disk Drive Business or with respect to any generation, treatment,
storage, recycling, transportation, discharge, disposal or release
of any Hazardous Material in connection with the Disk Drive Business
and to the knowledge of MC there are no facts or circumstances in
existence which could reasonably be expected to form the basis for
any such order, Environmental Claim, penalty or investigation.
(c) MC has not transported or arranged for the transportation of any
Hazardous Material in connection with the operation of the Disk
Drive Business to any location that is:-
(i) listed on the NPL (as defined in Section 15.14) under CERCLA
(as defined in Section 15.14);
(ii) listed for possible inclusion on the NPL by the Environmental
Protection Agency in CERCLIS (as defined in Section 15.14) or
on any similar state or local list; or
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(iii) the subject of enforcement actions by federal, state or local
Governmental or Regulatory Authority that may lead to
Environmental Claims against MC or the Disk Drive Business.
(d) No Hazardous Material generated in connection with the operation of
the Disk Drive Business has been recycled, treated, stored, disposed
of or released by MC at any location.
4.4 Conduct of the Business
-----------------------
No supplier, distributor or customer of MC has notified MC that it
intends to discontinue its relationship with MC other than any supplier,
distributor or customer, the loss of which would not have a Material
Adverse Effect (as defined in Section 4.12).
4.5 Permits and Licences
--------------------
(a) MC have obtained all governmental authorisations, licences, permits
and orders necessary for the conduct of the Disk Drive Business as
presently conducted. MC is not required to have any form of security
clearance from any governmental agency in order to conduct the Disk
Drive Business in the manner it is presently conducted.
(b) The execution, delivery and performance by MC of this Agreement and
the Ancillary Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, will not:-
(i) result in or give to any person any right of termination,
cancellation, acceleration or modification in or with respect
to,
(ii) result in or give to any person any additional rights or
entitlement to increased, additional, accelerated or
guaranteed payments under, or
(iii) result in the creation or imposition of any Lien upon MC or
any of the Acquired Assets and under,
any business licence.
4.6 Financial Statements and Undisclosed Liabilities
------------------------------------------------
(a) MCUS will deliver to ST Chatsworth the audited accounts of MC on a
consolidated basis for the twelve months ended 29 December 1995
together with all notes thereto. The foregoing accounts are referred
to herein as the "Financial Statements".
--------------------
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(b) The Financial Statements:-
(i) will present fairly the results of operations of MC as of 29
December 1995 in accordance with the Accounting Principles
applied on a consistent basis; and
(ii) are based on the books and records of MC.
4.7 Compliance with Laws
--------------------
Each of MCUS and the MC Affiliates has been and is, and its business and
operations have been and are being conducted, in compliance with all
requirements of all applicable statutes, laws, ordinances, regulations,
rules, codes or decrees, whether foreign or domestic, federal, national,
provincial, state or local, which are currently in effect and apply to
the Disk Drive Business or the Acquired Assets including, without
limitation, those relating to fair labour practices and standards, equal
employment practices, occupational safety and health, export/import
licences or controls, foreign exchange controls, restraint of trade and
unfair competition, immigration, and federal procurement. MC has not
received any written notice from any person with respect to an alleged,
actual or potential violation and/or failure to comply with any of the
foregoing.
4.8 Patents and Patent Applications
-------------------------------
(a) All patents and patent applications owned by or licensed to or used
by each of MCUS and the MC Affiliates in connection with the Disk
Drive Business have been duly filed in or issued by the United
States Patent and Trademark Office or the corresponding offices of
other countries or other jurisdictions and have been properly
maintained in accordance with all applicable provisions of law and
administrative regulations in the United States and each such
country or other jurisdictions. To the best of the knowledge of
MCUS, after making due and careful inquiries, each of MCUS and the
MC Affiliates' use of the said patent does not require the consent
of any third party. Also the same are freely transferable and are
owned exclusively by MC free and clear of any attachments, liens,
royalties, encumbrances, adverse claims, licences or any other
ownership or other interest of any person whatsoever, including,
without limitation, any ownership or other interest of any other
affiliate of MC. To the best of the knowledge of MCUS, after making
due and careful inquiries, no person has a licence to use any of
such patents or any claim which may arise from the existence of such
patent application and no outstanding order, decree, judgement or
stipulation, and no proceeding charging MC or its affiliates with
infringement of any adversely held patent with respect to the Disk
Drive Business, has been served upon MC or its affiliates at any
time during the 1-year period prior to and ending upon the Closing
Date or, except as disclosed by MCUS's patent counsel in its
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attorney representation letter to ST Chatsworth or its
representatives and to the best of MC's knowledge, is threatened to
be filed; and to the best of the knowledge of MCUS, after making due
and careful inquiries, the continuing conduct of the Disk Drive
Business by ST, as heretofore conducted by MC, will not result in
the infringement of any patents or patent application or other
rights owned by or owed to any third party. To the best knowledge of
MC after a review of the current files of MC and their affiliates,
no person or entity is infringing upon the patents referred to
herein.
(b) To the best of the knowledge of MCUS, after making due and careful
inquiries, each of MCUS and the MC Affiliates owns and has the right
to use, free and clear of any claims or rights of any third party,
including without limitation, any affiliate of MC, all trademarks,
trade names, service marks, brand names, business and product names,
logos, trade secrets, customer lists, secret processes, technology,
know-how and any other Confidential Information required for or used
in the manufacture, sale, distribution or marketing of all products
either being or proposed to be manufactured, sold, distributed or
marketed by MC and included in the Disk Drive Business, including,
without limitation, any products licensed by MC from others in
connection with the Disk Drive Business.
(c) MC is not in any way making any unlawful or wrongful use of any
trade secrets, customer lists, manufacturing processes, secret
processes, technology, know-how or any other confidential
information of any third party, including, without limitation, any
former employer of any present or past employee of MC. The
manufacturing processes, secret processes, know-how and any other
intellectual property and confidential information resulting from
the development activities engaged in by any employees of MC with
respect to the Disk Drive Business is the property of MC.
(d) Neither MC nor any Transferred Employees of MC is a party to any
non-competition agreement or similar agreement with any third party
pertaining to the Disk Drive Business.
(e) MC has not provided to any entities in which MC has a beneficial
equity or ownership interest but which are not affiliates
("Investees") any material know-how or technology with respect to
---------
the Disk Drive Business and to the knowledge of MC, no Investees
have any material know-how or technology with respect to the Disk
Drive Business.
4.9 Insolvency
----------
(a) No order has been made or petition presented or resolution passed
for the winding up of MC or for the appointment of a provisional
liquidator to MC or for an administration order to be made in
respect
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of MC and no meeting has been convened for the purposes of winding
up MC.
(b) No receiver or receiver and manager has been appointed by any person
and no steps have been taken for the appointment of a receiver or a
receiver and manager over the whole or any part of the business or
assets of MC.
(c) There is no unfulfilled or unsatisfied judgement or court order
outstanding against MC.
(d) No judicial management order has been made and no petition for such
an order has been presented in respect of MC.
(e) No distress, charging order, garnishee order, execution or other
process has been levied against MC or the Acquired Assets and no
action has been taken to repossess any of the Acquired Assets.
(f) MC has not made or proposes to make any arrangement or composition
with its creditors or any class of its creditors.
4.10 Affiliate Transactions
----------------------
(a) No officer, director, affiliate or associate of MC or any associate
of any such officer, director or affiliate provides or causes to be
provided any assets, services or facilities used or held for use in
connection with the Disk Drive Business.
(b) The Disk Drive Business does not provide or cause to be provided any
assets, services or facilities to any such officer, director,
affiliate or associate.
4.11 Litigation
----------
(a) There are no actions or proceedings pending or, to the knowledge of
MC, threatened against, relating to or affecting MC with respect to
the Disk Drive Business or any of the Acquired Assets which:-
(i) could reasonably be expected to result in the issuance of an
order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Ancillary
Documents or otherwise result in a material diminution of the
benefits contemplated by this Agreement or any of the
Ancillary Documents to ST; or
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(ii) if determined adversely to MC, could reasonably be expected
to result in any injunction or other equitable relief that
would interfere in any material respect with the Disk Drive
Business.
(b) There are no facts or circumstances known to MC that could
reasonably be expected to give rise to any action or proceeding that
would be required to be disclosed pursuant to Section 4.11(a).
(c) There are no orders outstanding against MC with respect to the Disk
Drive Business.
4.12 Absence of Changes
------------------
Since 29 December 1995, MC has conducted the Disk Drive Business only in
the ordinary course, and MC has not (in connection with or pertaining to
the Disk Drive Business), as of the date hereof and as of the date of the
Closing, either directly or indirectly:-
(a) suffered any change in the financial condition, assets, liabilities
of the Disk Drive Business, whether or not arising in the ordinary
course of business, which change by itself or in conjunction with
any or all other such changes has a Material Adverse Effect (the
term "Material Adverse Effect" shall mean a material adverse effect
-----------------------
on the business or financial condition of the Disk Drive Business,
excluding any general economic, market or industry changes);
(b) incurred any obligation or liability (absolute, accrued, contingent
or otherwise) with respect to the Disk Drive Business other than
liabilities in the ordinary course of business consistent with past
practice;
(c) permitted any Acquired Assets to become subject to any Lien,
mortgage, pledge or encumbrance other than in the ordinary course of
business;
(d) (i) purchased, sold, assigned, transferred, abandoned or
otherwise disposed of any asset of the Disk Drive Business
other than in the ordinary and normal course of its business
consistent with past practice; or
(ii) cancelled any debts or claims of the Disk Drive Business,
other than in the ordinary and normal course of business
consistent with past practice;
(e) entered into any transaction or agreement other than in the ordinary
and normal course of the Disk Drive Business consistent with past
practice;
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(f) entered into any compromise or settlement of any litigation or
governmental investigation relating to the Disk Drive Business or
the Acquired Assets;
(g) suffered any damage, destruction or loss to the Acquired Assets,
whether or not covered by insurance, which has a Material Adverse
Effect;
(h) made or suffered any amendment, modification or termination of any
of the Assumed Contracts which has a Material Adverse Effect;
(i) received notice or acquired knowledge of any labour trouble,
difficulty, dispute or organizing effort involving employees of the
Disk Drive Business;
(j) entered into any lease or sub-lease, pledge or hypothecation of any
Acquired Asset; or
(k) (except where it has given written notice thereof to ST) suffered
any loss of employees, customers or suppliers that has a Material
Adverse Effect on the Disk Drive Business or been advised by any
customer or supplier that such customer or supplier intends to
discontinue its relationship with MC with respect to the Disk Drive
Business.
4.13 Employee Benefit Plans
----------------------
In relation to all employee benefit plans, agreements, policies,
arrangements and understandings (whether or not written) relating to
employee benefits provided to the Business Employees (as defined in
Section 10.7), including, without limitation, all plans, agreements,
arrangements, policies or understandings relating to sick pay, vacation
pay or severance pay, deferred compensation, pensions, profit sharing,
retirement income or other benefits, stock purchase and stock option
plans, bonuses, severance arrangements, health benefits, disability
benefits, insurance benefits and all other employee benefits or fringe
benefits (individually referred to as "a Plan" and collectively referred
------
to as the "Plans").
-----
(a) True, correct and complete copies of each such Plan (or in the case
of any unwritten Plan, a description thereof) have been furnished to
ST.
(b) Each Plan has been administered and operated in accordance with its
terms and applicable law.
(c) Full payment has been made of all amounts which MC was required,
under the terms of any of the Plans, to have paid as contributions
to such Plans on or prior to the date hereof. There are no accrued
liabilities under any Plans, programmes or practices maintained on
behalf of the employees of MC which are not provided for on their
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books or financial statements or which have not been fully provided
for by contributions to such Plans, programmes, or practices.
(d) Other than for claims in the ordinary course for benefits under the
Plans, there are no actions, suits, claims or proceedings, pending
or, to the best of MC's knowledge, threatened, nor, to the best of
MC's knowledge does there exist any basis therefor, which would
result in any liability with respect to any Plan of MC.
(e) MC does not maintain any employee welfare benefit plans which
provide post-retirement benefits to employees.
4.14 Governmental and Other Approvals
--------------------------------
MC is not required to obtain or make any application for any approval,
licence or permit from or take other action or effect any filing with,
any foreign or domestic, federal, national, provincial, state, municipal
or other governmental body, commission, board, department or agency or
third party in order to execute this Agreement and/or consummate the
transactions contemplated hereby in accordance with applicable laws and
regulations.
4.15 Brokerage
---------
MCUS agree to indemnify and hold ST harmless in connection with any
claims for commissions or other compensation made by any broker or finder
claiming to have been employed by or on behalf of MC in connection with
the transactions contemplated herein.
4.16 Labour Relations
----------------
None of the Business Employees is covered by a collective bargaining
agreement between a collective bargaining unit, trade union, works
council, or other employees' association and MC.
4.17 Warranties in Respect of Micropolis Thailand
--------------------------------------------
(a) MCUS hereby makes the representations and warranties contained in
Sections 4.1 to 4.16 in respect of Micropolis Thailand insofar as
the same would be applicable as if the assets, business, undertaking
and liabilities of such company were being acquired by ST.
(b) In respect of Micropolis Thailand, MCUS hereby warrants and
represents to ST that:-
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(A) Debts to, contracts with, connected persons
-------------------------------------------
(i) There are:-
(aa) no loans made by Micropolis Thailand to its
shareholder and/or any director of Micropolis
Thailand;
(bb) no debts owing to Micropolis Thailand by its
shareholder and/or any director of Micropolis
Thailand;
(cc) except in relation to inter-company balances, no
debts owing by Micropolis Thailand other than
debts which have arisen in the ordinary course of
business; and
(dd) no securities for any such loans or debts as
aforesaid.
(ii) There are no existing contracts or engagements to which
Micropolis Thailand is a party and in which any
director of Micropolis Thailand is interested.
(B) Accounts receivable
-------------------
(i) None of the accounts receivable which are included in
the audited accounts (the "Audited Accounts") of
----------------
Micropolis Thailand for the year ended 29 December 1995
(the "Balance Sheet Date") or which have subsequently
------------------
arisen have been outstanding for more than three (3)
months from their due dates for payment and all such
debts have realized or will realize in the normal
course of collection their full value as included in
the Audited Accounts or in the books of Micropolis
Thailand after taking into account the provisions for
bad and doubtful debts in the Audited Accounts.
(ii) No part of the amounts included in the Audited Accounts
or in the books of Micropolis Thailand as due from
debtors has been released on terms that any debtors
pays less than the net book value after any provisions
made in the Audited Accounts as at the Balance Sheet
Date or has been written off or has proved to any
extent to be irrecoverable or is now regarded as being
irrecoverable.
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(C) Insurance
---------
All the assets of Micropolis Thailand which are of an
insurable nature have at all material times been and are as
at the date hereof insured in amounts reasonably regarded as
adequate against fire and other risks normally insured
against by companies carrying on similar businesses or owning
property of a similar nature and Micropolis Thailand has at
all material times been, and is at the date hereof,
adequately covered against accident, third party errors and
omissions and other risks normally covered by insurance by
such companies. The particulars of the insurance of
Micropolis Thailand which have been supplied to ST are true
and correct. In respect of all such insurances:-
(i) all premiums have been duly paid; and
(ii) all the policies are in force and are not voidable on
account of any act, omission or non-disclosure on the
part of the insured party.
(D) Title to assets
---------------
All assets of Micropolis Thailand and all debts due to it
which are included in the Audited Accounts or have otherwise
been represented as being the property of or due to
Micropolis Thailand or at the Balance Sheet Date used or held
for the purposes of its business were at the Balance Sheet
Date the absolute property of Micropolis Thailand and (save
for those subsequently disposed of or realized in the
ordinary course of trading) all such assets and all assets
and debts which have subsequently been acquired or arisen are
as at the date hereof the absolute property of Micropolis
Thailand free from all and any encumbrance of whatever nature
and there are no circumstances under which by operation of
law or otherwise Micropolis Thailand's title, right or
interest in and to such assets may be adversely affected in
any way whatsoever.
(E) Books and records
-----------------
The records, statutory books and books of account of
Micropolis Thailand are duly entered up and maintained in
accordance with all legal requirements applicable thereto and
contain true, full and accurate records of all matters
required to be dealt with therein and all such books and all
records and documents (including documents of title) which
are its property are in its possession or under its control
and all accounts, documents and returns required to be
delivered to or made to
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the relevant authority in Thailand have been duly and
correctly delivered or made.
(F) Options on capital
------------------
(i) MCUS is entitled to sell and transfer to ST the full
legal and beneficial ownership of the total issued
share capital of Micropolis Thailand on the terms of
this Agreement without the consent of any third party.
(ii) No person has the right (whether exercisable now or in
the future and whether contingent or not) to call for
the allotment, issue, sale or transfer of any share or
loan capital of Micropolis Thailand under any option or
other agreement (including conversion rights and rights
of pre-emption) and there are no claims, charges,
liens, equities or encumbrances on the share capital of
Micropolis Thailand.
(G) Subsidiaries and associated companies
-------------------------------------
(i) Micropolis Thailand has no subsidiaries or associated
companies (that is to say a company in which Micropolis
Thailand has not less than 20 per cent of its issued
share capital and in whose commercial and financial
policy decisions Micropolis Thailand participates) and
is not a partner in any partnership.
(ii) Micropolis Thailand does not carry on any business
outside Thailand.
(iii) Micropolis Thailand has not, other than in the ordinary
course of business, made any material investment in, or
material advance of cash to, guarantee of indebtedness
of, or other extension of credit to any company.
(H) Statutory and other requirements, consents and licenses
-------------------------------------------------------
(i) All statutory and other requirements applicable to the
carrying on of the business of Micropolis Thailand as
now carried on, and all conditions applicable to any
licences and consents involved in the carrying on of
such business, have been complied with and MCUS is not
aware (after making due and careful enquiries) of any
breach thereof or of any intended or contemplated
refusal or revocation of any such licence or consent.
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(ii) No notice has been issued and received and, to the
knowledge of MCUS, no investigation or review is
pending or threatened by any governmental or self-
regulatory entity:-
(aa) with respect to any alleged violation by
Micropolis Thailand or, to the best knowledge of
MCUS, any officer, director or employee of
Micropolis Thailand, of any law, ordinance, rule,
regulation, order, policy or guideline of any
governmental or self-regulatory entity, the
sanction for which violation could be reasonably
expected to have a Material Adverse Effect on the
business, assets or prospects or the financial
condition or the results of operations of
Micropolis Thailand; or
(bb) with respect to any alleged failure to have all
permits, certificates, licences, registrations,
approvals and other authorisations required in
connection with the operation of the business of
Micropolis Thailand, the absence of which may
have a Material Adverse Effect on the business,
assets or prospects or the financial condition or
the results of operations of Micropolis Thailand.
(iii) The Promotion Certificate of the Board of Investment
No. 1555 issued to Micropolis Thailand is valid and has
not been revoked and Micropolis Thailand is not in
breach of the Promotion Certificate and has complied
with all the terms and conditions of the Promotion
Certificate.
(I) The Audited Accounts
--------------------
(i) The Audited Accounts have been prepared in accordance
with all applicable laws and on a consistent basis in
accordance with accounting principles, standards and
practices generally accepted at the date hereof in
Thailand so as to give a true and fair view of the
state of affairs of Micropolis Thailand at the Balance
Sheet Date and of the profits or losses for the period
concerned and as at that date make:-
(aa) full provision for all actual liabilities;
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(bb) proper provision (or note in accordance with good
accountancy practice) for all contingent and
disputed liabilities;
(cc) provision reasonably regarded as adequate for all
bad and doubtful debts; and
(dd) due provision for depreciation and amortisation
and any obsolescence of assets.
(ii) Full provision or reserve has been made in the Audited
Accounts for all taxation liable to be assessed on
Micropolis Thailand or for which it is or may become
accountable in respect of:-
(aa) profits, gains or income (as computed for
taxation purposes) arising or accruing or deemed
to arise or accrue on or before the Balance Sheet
Date;
(bb) any transactions effected or deemed to be
effected on or before the Balance Sheet Date or
provided for in the Audited Accounts; and
(cc) distributions made or deemed to be made on or
before the Balance Sheet Date or provided for in
the Audited Accounts.
(iii) Proper provision or reserve for deferred taxation in
accordance with accounting principles and standards
generally accepted at the date hereof in Thailand has
been made in the Audited Accounts.
(iv) The profits of Micropolis Thailand as shown by the
Audited Accounts have not been affected to a material
extent by inconsistencies of accounting practices, by
the inclusion of non-recurring items of income or
expenditure, by transactions entered into otherwise
than on normal commercial terms or by any other factors
rendering such profits exceptionally high or low.
(J) Taxation
--------
There is no liability for Taxes in respect of which a claim
could be made against Micropolis Thailand (other than as
specifically provided for in the Audited Accounts and other
than taxes on income arising from transactions entered into
in the ordinary course of business after the Balance Sheet
Date)
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and there are no circumstances likely to give rise to such a
Liability.
(K) Contributions
-------------
(i) All deductions and payments required to be made by
Micropolis Thailand in respect of contributions
(including employer's contributions) to any relevant
competent authority have been so made.
(ii) Proper records have been maintained in respect of all
such deductions and payments and all regulations
applicable thereto have been complied with.
(L) Tax returns
-----------
(i) Micropolis Thailand has duly made all returns and given
or delivered all notices, accounts and information
which on or before the date hereof ought to have been
made, given or delivered for the purposes of taxation
and all such returns, notices, accounts and information
(and all other information supplied to the inland
revenue or the customs and excise or other fiscal
authority concerned for any such purpose) have been
correct and made on a proper basis and none of such
returns, notices, accounts or information is disputed
in any material respect by the fiscal authority
concerned and there is not in existence any fact which
might be the occasion of any such dispute or of any
claim for taxation in respect of any financial period
down to and including the Balance Sheet Date not
provided for in the Audited Accounts.
(ii) Without limiting the generality of Section
4.17(b)(L)(i), except as disclosed in the audited
accounts for the period ending 29 December 1995, the
tax returns of Micropolis Thailand have at all times
been correct and on a proper basis and no taxes, levies
or duties, including but not limited to goods and
services tax, value added tax, sales tax and property
tax, if any, are the subject of any arrears or other
dispute with the fiscal authorities in Thailand or
elsewhere and there is no liability to taxation in
respect of which a claim could be made against
Micropolis Thailand and there are no circumstances
likely to give rise to such a claim.
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(iii) All documents the enforcement of which Micropolis
Thailand may be interested in and which are subject to
ad valorem stamp duty have been duly stamped and no
document belonging to Micropolis Thailand which is
subject to ad valorem stamp duty is or will be
unstamped or insufficiently stamped; nor has any relief
from such duty been improperly obtained, nor has any
event occurred as a result of which any such duty from
which relief has been obtained will become payable.
(iv) Micropolis Thailand has not received any tax
concession, relief or other special tax treatment,
whether in relation to its assets or the business
carried on by it or otherwise which, if revoked or
otherwise removed, will or may give rise to any
additional liability to taxation and, to the extent
that Micropolis Thailand has received any such tax
concession, relief or other special tax treatment,
there are not in existence any facts or circumstances
which will or may lead to the revocation or removal of
the same.
4.18 Warranties in Respect of Purchased Companies
--------------------------------------------
In the event ST Chatsworth elects to purchase the total issued share
capital of each or any of the Purchased Companies pursuant to the option
in Section 1.2:-
(a) MCUS hereby makes the representations and warranties contained in
Sections 4.1 to 4.16 in respect of the Purchased Company whose share
capital is to be purchased insofar as the same would be applicable
as if the assets, business, undertaking and liabilities of such
companies were being acquired by ST; and
(b) in respect of the Purchased Company whose share capital is to be
purchased, MCUS warrants and represents to ST in the terms of
Section 4.17(b) mutatis mutandis and all references therein to
Micropolis Thailand shall be construed as references to the
Purchased Company whose share capital is to be purchased and all
references therein to Thailand shall be construed as references to
the country of incorporation of the Purchased Company whose share
capital is to be purchased.
4.19 Trade Payables
--------------
The Trade Payables:-
(a) arose from bona fide transactions in the ordinary course of business
and are payable on ordinary trade terms;
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(b) are legal, valid and binding obligations of MC enforceable in
accordance with their terms;
(c) are not subject to any valid set-off or counterclaim; and
(d) will be paid on normal credit terms.
4.20 Disclosure
----------
No representation or warranty in this Section 4 and the Disclosure
Schedule, and no statement contained therein contains or will contain any
untrue statement of a material fact or omits or will omit to state a
material fact or any fact necessary to make the statements contained
herein or therein not misleading in any material respect.
5. REPRESENTATIONS AND WARRANTIES OF ST
------------------------------------
ST Chatsworth hereby makes the following representations and warranties
to MCUS:-
5.1 Organisation and Qualification of ST
------------------------------------
ST Chatsworth is duly organised and validly existing under the laws of
Singapore. ST Chatsworth has full corporate power and authority to enter
into and perform the transactions contemplated by this Agreement.
5.2 Authority
---------
This Agreement and each of the Ancillary Documents delivered or to be
delivered by ST Chatsworth or a ST Affiliate will constitute the valid
and binding obligation of ST Chatsworth or such ST Affiliate, as
appropriate, when executed and delivered in accordance with its terms,
and shall be enforceable against ST Chatsworth or such ST Affiliate in
accordance with their respective terms, except to the extent such
enforceability:-
(a) may be limited by bankruptcy, insolvency, reorganisation, moratorium
or similar laws affecting the enforcement of creditors' rights
generally;
(b) is subject to equitable principles generally.
The execution, delivery and performance of this Agreement and of the
Ancillary Documents delivered or to be delivered by ST Chatsworth or such
ST Affiliate have been, or when delivered will be, duly authorised by all
necessary corporate action of ST Chatsworth or such ST Affiliate. The
execution, delivery and performance by ST Chatsworth or such ST
Affiliate, as the case may be, of this Agreement or any Ancillary
Documents does not and will not with the passage of time or the giving of
notice or both:-
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(a) violate any provisions of the memorandum and articles of association
or equivalent, or bylaws of ST Chatsworth or the ST Affiliate; or
(b) require any approval, consent or waiver of, or filing with, any
entity, private or governmental except such approvals which are
required under Section 8.4.
6. COVENANTS OF MCUS PRIOR TO CLOSING
----------------------------------
MCUS covenants and agrees as follows throughout the period from the date
hereof through and including the Closing:-
6.1 Restrictions
------------
Except as may be otherwise contemplated by this Agreement or except as ST
Chatsworth may otherwise consent to in writing, MCUS shall cause the Disk
Drive Business in all material respects to be conducted in the ordinary
course of business and in substantially the same manner in which such
business and operations have been previously conducted prior to the date
hereof and shall:-
(a) deliver or make, duly and correctly all accounts, documents and
returns required by applicable law to be made to such authorities as
is appropriate;
(b) conduct its business and affairs in all material respects in
accordance with its memorandum and articles of association or
equivalent and all applicable laws and regulations of any country in
which it operates;
(c) keep ST Chatsworth informed and consult with ST Chatsworth on all
material proposals and matters affecting or potentially affecting
the Disk Drive Business;
(d) hold meetings from time to time with the representatives of ST
Chatsworth at such times as may be requested by ST Chatsworth on
reasonable notice in order that ST Chatsworth may be informed as to
the progress of the Disk Drive Business;
(e) use all efforts to:-
(i) preserve intact the present business organisation and
reputation of the Disk Drive Business;
(ii) keep available (subject to dismissals and retirements in the
ordinary course of business consistent with past practice)
the services of the employees;
(iii) maintain the Acquired Assets in good working order and
condition, ordinary wear and tear excepted;
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(iv) maintain the goodwill of customers, suppliers, lenders and
other persons to whom MC sell goods or provide services or
with whom MC otherwise have significant business
relationships in connection with the Disk Drive Business; and
(v) continue all current sales, marketing and promotional
activities relating to the Disk Drive Business; and
(f) except to the extent required by applicable law:-
(i) cause the Disk Drive Business books and records to be
maintained in the usual, regular and ordinary manner, and
(ii) not permit any material change in any pricing, investment,
accounting, financial reporting, inventory, credit, allowance
or tax practice or policy of MC that would adversely affect
the Disk Drive Business, the Acquired Assets and the Assumed
Liabilities.
6.2 Matters Pending Closing
-----------------------
Without limiting the generality of Section 6.1 with respect to the Disk
Drive Business throughout the period from the date hereof through and
including the Closing, MCUS shall not (except with the prior written
consent of ST Chatsworth) cause or permit MC to:-
(a) suffer or permit any event or condition within MC's control which
will have a Material Adverse Effect on the Disk Drive Business or
the Acquired Assets;
(b) effect any dissolution, winding up, liquidation or termination of
MC;
(c) effect any merger or consolidation of MC unless MC is the survivor
thereof;
(d) institute, settle or dismiss any litigation, claim or other
proceeding with respect to the Disk Drive Business or the Acquired
Assets before any court or governmental agency;
(e) make any change in the memorandum and articles of association or
equivalent, or bylaws of MC which would hinder, delay or prohibit
the transactions contemplated by this Agreement;
(f) dispose of or agree to dispose of any interest in the Disk Drive
Business or grant any option or right of pre-emption over, or
mortgage, charge or otherwise encumber the assets of the Disk Drive
Business including the Acquired Assets;
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(g) take any action which is inconsistent with the provisions of this
Agreement or the consummation of the transactions contemplated
hereunder;
(h) enter into any transaction, agreement, contract, commitment or
arrangement:-
(i) which involves or is likely to involve negotiations or
resources on the Disk Drive Business of an unusual or
exceptional nature; or
(ii) which is not in the ordinary course of business and on arm's
length terms;
(i) amending, modifying, terminating (partially or completely), granting
any waiver under or giving any consent with respect to any contract
in relation to the Disk Drive Business;
(j) violating, breaching or defaulting under in any material respect, or
taking or failing to take any action that (with or without notice or
lapse of time or both) would constitute a material violation or
breach of, or default under any term or provision of any contract in
relation to the Disk Drive Business;
(k) fail to take any action required to maintain any of its insurances
in force or knowingly do anything to make any policy of insurance
void or voidable;
(l) make or agree to make any change in the nature or organisation of
the Disk Drive Business;
(m) make any material change to the accounting procedures or principles
by reference to which its accounts are drawn up otherwise than as
required by any accounting standards authorities;
(n) borrow any money or agree to (other than by bank overdraft or
similar facility in the ordinary course of business and within
limits subsisting as at the date of this Agreement);
(o) incurring, purchasing, cancelling, prepaying or otherwise providing
for a complete or partial discharge in advance of a scheduled
payment date with respect to, or waiving any right of MC under, any
liability of or owing to MC in connection with the Disk Drive
Business, other than in the ordinary course of business consistent
with past practice;
(p) make or agree to make any capital commitment, including for this
purpose, the acquisition of any capital asset under a finance lease;
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(q) create, grant or issue, agree to create, grant or issue, any
mortgages, charges (other than liens arising by operation of law),
debentures or other securities or give or agree to give any
guarantees or indemnities; and
(r) engaging in any transaction with respect to the Disk Drive Business
with any officer, director, affiliate or associate of MC, or any
associate of any such officer, director or affiliate or in relation
to the system business, either outside the ordinary course of
business consistent with past practice or other than on an arm's
length basis.
6.3 Notice of Breach
----------------
To the extent MCUS obtains knowledge that any of the representations or
warranties contained in Section 4 would be incorrect in any respect were
those representations or warranties made immediately after such knowledge
was obtained, MCUS shall notify ST Chatsworth in writing promptly of such
fact and MCUS shall or shall procure the MC Affiliates to exercise their
best efforts to remedy the same.
6.4 Access
------
MCUS shall or shall procure the MC Affiliates to provide ST and ST's
solicitors, auditors, environmental consultants and appraisers, officers,
directors, employees, agents, financial advisors, consultants and other
representatives, with such information as ST may from time to time
reasonably request with respect to the Disk Drive Business and the
transactions contemplated by this Agreement, and shall provide ST and
such representatives reasonable access during regular business hours and
upon reasonable notice to the properties, books and records of the Disk
Drive Business as ST may from time to time reasonably request.
6.5 Authorisation from Others
-------------------------
MCUS will or will procure the MC Affiliates to:-
(a) take all commercially reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to
give all notices to Governmental or Regulatory Authority or any
other person required of MC to consummate the transactions
contemplated hereby and by the Ancillary Documents;
(b) provide such other information and communications to such
Governmental or Regulatory Authority or other persons as ST or such
Governmental or Regulatory Authority or other persons may reasonably
request in connection therewith; and
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(c) co-operate with ST as promptly as practicable in obtaining all
consents, approvals or actions of, making all filings with and
giving all notices to Governmental or Regulatory Authority or other
persons required of ST to consummate the transactions contemplated
hereby and by the Ancillary Documents and in connection with the
voluntary notice to CFIUS (as defined in Section 15.14). MCUS will
provide prompt notification to ST when any such consent, approval,
action, filing or notice referred to in Section 6.5(a) is obtained,
taken, made or given, as applicable, and will advise ST of any
communications (and, unless precluded by law, provide copies of any
such communications that are in writing) with any Governmental or
Regulatory Authority or other person regarding any of the
transactions contemplated by this Agreement or any of the Ancillary
Documents.
6.6 HSR Filings
-----------
In addition to and not in limitation of MCUS's covenants contained in
Section 6.5, MCUS will:-
(a) take promptly all actions necessary to make the filings required or
MC under the HSR Act (as defined in Section 15.14);
(b) comply at the earliest practicable date with any request for
additional information received by MC from the Federal Trade
Commission or the Antitrust Division of the Department of Justice
pursuant to the HSR Act; and
(c) co-operate with ST in connection with ST's filing under the HSR Act
and in connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement commenced
by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general and CFIUS under
the Exon-▇▇▇▇▇▇ Amendment (as defined in Section 15.14) of the
transactions contemplated by this Agreement and by the Ancillary
Documents and, in connection therewith, provide CFIUS with such
information concerning the transactions contemplated by this
Agreement and the Ancillary Documents as is reasonably necessary or
desirable.
6.7 Consummation of Agreement
-------------------------
MCUS and ST Chatsworth shall use their reasonable efforts and due
diligence to satisfy all conditions to the Closing to the end that the
transactions contemplated by this Agreement shall be fully carried out.
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6.8 Relationships with Customers and Suppliers
------------------------------------------
MCUS shall and shall procure the MC Affiliates to use their best efforts
to keep available until the Closing its key employees and shall not make
any material variation to the terms and conditions of employment of such
employees and to maintain its relationship with material customers,
distributors and suppliers and other persons having material business
dealings with it such that the Disk Drive Business will not be impaired.
6.9 Defective Disk Drives
---------------------
MCUS shall notify ST Chatsworth on a weekly basis of the number of disk
drives that are returned by customers for after-sales service or to meet
warranty claims or the subject of complaint by customers and a reasonably
detailed description of the reason for the return of the disk drives.
6.10 Stock Verification
------------------
MCUS shall conduct a joint stock verification exercise with ST Chatsworth
of the Machinery and Equipment and Inventory as of the Closing Date.
Provided that the stock verification exercise shall not in any way
relieve or discharge MCUS from any liability for breach of warranty or
otherwise which would have arisen under this Agreement.
6.11 Inventory for System Business
-----------------------------
MCUS shall ensure that at the Closing the finished goods inventory sold
or transferred to or otherwise in the possession or control of its system
business shall not exceed the value of US$4,000,000.
6.12 Balance Sheet For Disk Drive Business
-------------------------------------
MCUS shall at Closing provide ST Chatsworth with a list of the Acquired
Assets owned by, belonging to or to be sold by it and the relevant MC
Affiliate and the country of location of the relevant Acquired Assets.
6.13 Financial Statement of Disk Drive Business
------------------------------------------
MCUS shall at Closing deliver to ST Chatsworth the audited accounts of
MCUS on a consolidated basis for the twelve months ended 29 December 1995
together with all notes thereto and a division of the audited accounts
between the Disk Drive Business and the system business and an analysis
supporting such division.
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6.14 List of Acquired Assets
-----------------------
On or before 1 February 1996, MCUS shall deliver to ST Chatsworth a
detailed list of all the Acquired Assets together with copies of the
relevant contract, agreement or document in relation thereto as ST
Chatsworth may require to identify the Acquired Assets.
6.15 Accounts of Purchased Companies
-------------------------------
MCUS shall on or before 29 February 1996 deliver to ST Chatsworth the
audited accounts of Micropolis Thailand and each of the Purchased
Companies for the year ending 29 December 1995.
6.16 Inventory for Evaluation
------------------------
MCUS shall obtain the written consent of ST Chatsworth prior to sending
any inventory to any customer for evaluation.
6.17 Purchase of Issued Share Capital
--------------------------------
In relation to Micropolis Thailand and each of the Purchased Companies
which ST Chatsworth has elected to purchase the issued share capital,
MCUS shall not and shall ensure that without the prior written consent of
ST Chatsworth:-
(a) no dividend or other distribution will be declared, made or paid to
its members;
(b) no material change will be made in the basis of the emoluments or
other terms of employment of its directors or any of its employees;
and
(c) it has not terminated the lease in relation to any of the premises
where the business of the relevant companies are carried on.
7. COVENANTS OF ST CHATSWORTH
--------------------------
7.1 Regulatory and Other Approvals
------------------------------
ST Chatsworth will:-
(a) take all commercially reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to
give all notices to Governmental or Regulatory Authority or any
other person required of ST Chatsworth to consummate the
transactions contemplated hereby and by the Ancillary Documents;
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(b) provide such other information and communications to such
Governmental or Regulatory Authority or other persons as MCUS or
such Governmental or Regulatory Authority or other persons may
reasonably request in connection therewith; and
(c) co-operate with MCUS as promptly as practicable in obtaining a
consents, approvals or actions of, making all filings with and
giving all notices to Governmental or Regulatory Authority or other
persons required of MCUS to consummate the transactions contemplated
hereby and by the Ancillary Documents. ST Chatsworth will provide
prompt notification to MCUS when any such consent, approval, action,
filing or notice referred to in Section 7.1(a) is obtained, taken,
made or given, as applicable, and will advise MCUS of any
communications (and, unless precluded by law, provide copies of any
such communications that are in writing) with any Governmental or
Regulatory Authority or other person regarding any of the
transactions contemplated by this Agreement or any of the Ancillary
Documents.
7.2 HSR Filings
-----------
In addition to and without limiting ST Chatsworth's covenants contained
in Section 7.1, ST Chatsworth will:-
(a) take promptly all actions necessary to make the filings required of
ST Chatsworth under the HSR Act;
(b) comply at the earliest practicable date with any request for
additional information received by ST Chatsworth from the Federal
Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act; and
(c) co-operate with MCUS in connection with MCUS's filing under the HSR
Act and in connection with resolving any investigation or other
regulatory inquiry concerning the transactions contemplated by this
Agreement commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state attorneys
general and CFIUS under the Exon-▇▇▇▇▇▇ Amendment of the
transactions contemplated by this Agreement and by the Ancillary
Documents and, in connection therewith, provide CFIUS with such
information concerning the transactions contemplated by this
Agreement and the Ancillary Documents as is reasonably necessary or
desirable.
7.3 Maintenance of Goodwill
-----------------------
ST Chatsworth shall use such reasonable efforts to assist MCUS to
maintain the goodwill of the Disk Drive Business, including making visits
to the suppliers and customers.
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8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ST CHATSWORTH TO CLOSE
-----------------------------------------------------------------
The obligation of ST Chatsworth to acquire the Acquired Assets and assume
the Assumed Liabilities as contemplated hereby shall be subject to the
fulfilment, on or prior to the Closing Date, unless otherwise waived, in
whole or in part, in writing by ST Chatsworth, of the following
conditions:-
8.1 Representations and Warranties
------------------------------
The representations and warranties of MCUS set forth in Section 4 hereof
shall be true and correct in all respects when made and shall be true and
correct in all respects on the Closing Date as if made on and as of such
date, except to the extent that such representations and warranties were
made as of a specified date as to such representations and warranties the
same shall continue on the Closing Date to have been true as of the
specified date.
8.2 Performance of Covenants
------------------------
MCUS shall have performed in all material respects all of its obligations
contained in this Agreement to be performed on or prior to the Closing
Date, and ST Chatsworth shall have received a certificate to such effect,
executed by MCUS and dated as of the Closing Date, in form satisfactory
to ST Chatsworth. Notwithstanding the provisions of Sections 8.1 and 8.2
hereof, ST Chatsworth shall be entitled to enforce, without regard to
materiality, the representations, warranties, agreements, covenants and
obligations which are made by MCUS herein and which are not, by their
terms, qualified as to materiality.
8.3 Orders and Laws
---------------
There shall not be in effect on the Closing Date any order or law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or
any of the Ancillary Documents or which could reasonably be expected to
otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Ancillary
Documents to ST and there shall not be pending or threatened on the
Closing Date any action or proceeding or any other action in, before or
by any Governmental or Regulatory Authority which could reasonably be
expected to result in the issuance of any such order or the enactment,
promulgation or deemed applicability to ST or the transactions
contemplated by this Agreement or any of the Ancillary Documents of any
such law.
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8.4 Regulatory Consents and Approvals
---------------------------------
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit ST and MCUS to
perform their obligations under this Agreement and the Ancillary
Documents and to consummate the transactions contemplated hereby and
thereby:-
(a) shall have been duly obtained, made or given;
(b) shall be in form and substance reasonably satisfactory to ST
Chatsworth;
(c) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived; and
(d) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Ancillary
Documents, including under the HSR Act, shall have occurred,
including without limitation, the approval of MCUS's stockholders of the
transactions contemplated hereby, and ST shall have been furnished with
copies of all applicable resolutions certified by the Secretary or
Assistant Secretary or other appropriate officer of MCUS.
8.5 Delivery of Certificates and Documents to ST Chatsworth
-------------------------------------------------------
MCUS shall have delivered, or caused to be delivered to ST Chatsworth the
certificates as to the legal existence and corporate good standing of
each of MCUS and the MC Affiliates and copies of their respective
memorandum and articles of association, or equivalent, as amended, issued
or certified by the Secretary or Assistant Secretary or other appropriate
officer of MCUS (except for any jurisdiction in which the concept of good
standing is inapplicable).
8.6 Exon-▇▇▇▇▇▇ Amendment
---------------------
ST Chatsworth shall have received written notice from CFIUS of its
determination pursuant to the Exon-▇▇▇▇▇▇ Amendment not to undertake an
investigation of the transactions contemplated by this Agreement and the
Ancillary Documents.
8.7 Pledge
------
That the pledge in favour of the CIT Group/Business Credit Inc, over all
the assets of MC and all other Liens shall be discharged to the extent
that the Acquired Assets shall cease to be subject to such pledge on or
prior to Closing.
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8.8 Damage or Destruction
---------------------
MC shall not have suffered prior to the Closing Date any loss on account
of fire, flood, accident or any other calamity or casualty to an extent
that would materially interfere with the conduct of the Disk Drive
Business or materially impair the value of the Disk Drive Business as a
going concern, regardless of whether any such loss or losses have been
insured against.
8.9 Title Insurance
---------------
In the event ST Chatsworth exercises the option to purchase the US Real
Property, ST Chatsworth shall have received a policy of title insurance
on forms of and issued by one or more title companies reasonably
satisfactory to ST Chatsworth insuring the title of MCUS to the US Real
Property, subject only to such exceptions as are reasonably satisfactory
to ST Chatsworth, and MCUS shall have paid to such title companies all
expenses and premiums of such title companies in connection with the
issuance of such policies.
8.10 Completion of Due Diligence
---------------------------
The completion of a due diligence investigation on each of MCUS and the
MC Affiliates (including, without limitation):-
(a) an audit of the financial condition of Micropolis Thailand and each
of the Purchased Companies whose issued share capital is to be
purchased by ST Chatsworth; and
(b) a legal and financial analysis of each of MCUS and the MC Affiliates
and the Acquired Assets and the Assumed Liabilities on or before
Closing,
and the result of such due diligence exercise being satisfactory to ST
Chatsworth.
Provided that if ST Chatsworth shall not have informed MCUS to the
contrary on or before 29 February 1996, it shall be deemed to be
satisfied with the said due diligence.
8.11 Approval of Board of Directors
------------------------------
The approval by the board of directors of ST Chatsworth of the purchase
or the Disk Drive Business by ST Chatsworth and the entry into this
Agreement by ST Chatsworth.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF MCUS TO CLOSE
----------------------------------------------------
The obligation of MCUS to sell or procure the MC Affiliates to sell the
Acquired Assets as contemplated hereby shall be subject to the
fulfilment, on or prior to the Closing Date, unless otherwise waived in
writing by MCUS of the following conditions:-
9.1 Approval of Board of Directors
------------------------------
The approval of the board of directors of MCUS of the sale of the Disk
Drive Business by MCUS and the entry into this Agreement by MCUS.
9.2 Approval of MCUS Stockholders
-----------------------------
The stockholders of MCUS shall have approved the transactions
contemplated hereby.
9.3 Delivery of Certificates and Documents to MCUS
----------------------------------------------
ST Chatsworth shall have delivered, caused to be delivered, to MCUS the
certificates as to the legal existence and corporate good standing of ST
Chatsworth and the ST Affiliate and copies of their respective memorandum
and articles of association or equivalent, as amended, issued or
certified by the Secretary or Assistant Secretary or other appropriate
officer of ST Chatsworth or the ST Affiliate as appropriate (except for
any of such entities organised under the laws of a jurisdiction in which
the concept of good standing is inapplicable).
9.4 Exon-▇▇▇▇▇▇ Amendment
---------------------
ST Chatsworth shall have received written notice from CFIUS of its
determination pursuant to the Exon-▇▇▇▇▇▇ Amendment not to undertake an
investigation of the transactions contemplated by this Agreement and the
Ancillary Documents.
9.5 Orders and Laws
---------------
There shall not be in effect on the Closing Date any order or law that
became effective after the date of this Agreement restraining, enjoining
or otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Ancillary
Documents or which could reasonably be expected to otherwise result in a
material diminution of the benefits of the transactions contemplated by
this Agreement or any of the Ancillary Documents to MCUS and there shall
not be pending or threatened on the Closing Date any action or proceeding
or any other action in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of
any such order or the enactment, promulgation or deemed applicability to
MCUS or the transactions
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contemplated by this Agreement or any of the Ancillary Documents of any
such law.
9.6 Regulatory Consents and Approvals
---------------------------------
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit MC and ST to
perform their obligations under this Agreement and the Ancillary
Documents and to consummate the transactions contemplated hereby and
thereby:-
(a) shall have been duly obtained, made or given;
(b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived; and
(c) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Ancillary
Documents, including under the HSR Act, shall have occurred.
10. CERTAIN RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
----------------------------------------------------
10.1 Survival of Representations, Warranties, Agreements, Covenants and
------------------------------------------------------------------
Obligations
-----------
All representations, warranties, agreements, covenants and obligations
herein or in any exhibit, schedule, certificate or financial statement
delivered by any party to another party incident to the transactions
contemplated in this Agreement or in any Ancillary Document shall be
deemed to have been relied upon by the other party, shall survive the
execution and delivery of this Agreement, any investigation made by any
party hereto, and the sale and purchase of the Acquired Assets and
payment therefor.
10.2 Further Assurances
------------------
From time to time after the Closing and without further consideration,
the parties will execute and deliver, or arrange for the execution and
delivery of, such other instruments of conveyance and transfer and take
such other action or arrange for such other actions as the other parties
may reasonably request in order to evidence the consummation of the
transactions contemplated hereby and to further effectuate the
transactions contemplated by this Agreement.
10.3 Publicity and Disclosures
-------------------------
No press release or any public disclosure, either written or oral, of the
transactions contemplated by this Agreement shall be made without the
prior knowledge and written consent of MCUS and ST Chatsworth, provided
that
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either MCUS or ST Chatsworth may make such disclosures as are required by
law or the rules and regulations of any stock exchange on which their
shares are quoted after notice to, and, to the extent practicable,
consultation with, the other.
10.4 Further Co-operation of the Parties
-----------------------------------
(a) MCUS and ST Chatsworth agree to use their reasonable efforts and
cooperate in good faith to secure the transfer to ST or the re-
issuance or issuance in the name of ST of all consents, licences and
permits required under applicable law or regulation, federal, state
and local or necessary to the ownership of the Acquired Assets or
the operation of the Disk Drive Business.
(b) After Closing, ST Chatsworth shall at the request of MCUS provide
MCUS access to the records and books sold and transferred herein to
ST Chatsworth for the purpose of enabling MCUS to prepare and file
its tax returns and to comply with other regulatory requirement.
10.5 Consents of Third Parties
-------------------------
To the extent that any transfer or assignment of any Acquired Assets or
Assumed Contract to be transferred and assigned to ST as provided herein
shall require the consent of the other party thereto, or of any other
person or governmental or other authority, and such consent is not
obtained, then as between MC and such other party, person or authority
this Agreement shall not constitute an agreement to assign the same
unless and until such consent shall have been obtained. MCUS agrees that,
at the request of ST, they will use their best efforts, before and after
Closing, to obtain and deliver the consent of the other parties and the
approvals of other persons or authorities, to the extent necessary, to
the assignment of all such contracts, leases, licences, commitments or
rights to ST. Until such consent or approval is obtained, MCUS, at their
expense, shall or shall procure the MC Affiliates to either act as ST's
agent in order to obtain for it the benefits thereunder or will co-
operate with ST in any reasonable arrangement designed to provide for ST
all benefits under such contracts, leases, licenses, commitments or
rights and, to the extent ST obtains the benefit of any such Acquired
Assets or Assumed Contract, ST shall perform its obligations with respect
thereto.
10.6 Mail Received after Closing
---------------------------
(a) In the event that ST receives after the Closing any mail or other
communications addressed to MC, ST may open such mail or other
communications and deal with the contents thereof in its discretion
to the extent that such mail or other communications and the
contents thereof relate to any of the Acquired Assets or to any of
the Assumed Liabilities, including the right to endorse without
recourse the name of MC on any cheque received by ST with respect to
the Acquired
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Assets, and to deal with the proceeds in accordance with the terms
of this Agreement. ST agrees to deliver or cause to be delivered to
MC all other mail and the contents thereof which does not relate to
the Acquired Assets or the Assumed Liabilities, including any
amounts received by ST on or after the Closing Date not in respect
of Acquired Assets or Assumed Liabilities. If any cheque or other
evidence of indebtedness endorsed by ST represents a payment not on
account of an Acquired Asset or Assumed Liability, ST shall pay MC
on the date ST receives payment the amount of such payment.
(b) In the event that MC receive after the Closing Date any mail or
other communications addressed to MC which relates to any of the
Acquired Assets or the Assumed Liabilities, MCUS shall or shall
procure the MC Affiliates to promptly deliver or cause to be
delivered all such mail or other written communication and the
contents thereof to ST. MCUS agrees to co-operate with ST and to
make arrangements reasonably necessary in order to properly deal
with cheques addressed to MC but which belong to ST pursuant to this
Agreement, and to properly direct the proceeds thereof to ST.
10.7 Employment of Business Employees by ST
--------------------------------------
(a) ST Chatsworth or the ST Affiliate may at any time hereafter, offer
employment to such of the current employees of MC employed in the
Disk Drive Business as ST in its absolute discretion deems fit (such
employees to whom ST shall offer employment shall hereinafter be
referred to as the "Business Employees"). ST's or the ST
------------------
Affiliate's offer of employment to the Business Employees shall be
on such terms as ST or the ST Affiliate in its absolute discretion
deems fit. Provided that ST shall offer employment to ▇▇ ▇▇▇ Vapian
and ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, such offer of employment shall be on such terms
as ST in its absolute discretion deems fit and shall commence 120
days after the Closing Date or such earlier date as the parties may
agree. Such Business Employees who accept such offers of employment
are hereinafter referred to as "Transferred Employees." To the
---------------------
extent assignable, MCUS shall and shall procure the MC Affiliates to
assign to ST Chatsworth all confidentiality and non-compete
covenants related to the Disk Drive Business of all Transferred
Employees.
(b) For injuries arising out of employment by MC prior to the Closing
Date, MC shall be liable for any damages, costs, losses, expenses or
liabilities including, without limitation, any workers' compensation
(including benefits, medical and rehabilitation expenses and any
other expenses or obligations) payable under tort, occupational
health and safety laws or otherwise in respect of MC's Business
Employees. ST shall be liable for any such damages, costs, losses,
expenses or liabilities payable for injuries arising out of the
employment of the Transferred Employees by ST on or after the
Closing Date.
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(c) ST shall have no liabilities or obligations under or with respect to
MC's Plans (as defined in Section 4.13).
(d) ST shall have no liabilities or obligations with respect to MC's
employees other than Transferred Employees as set out in Section
1.5(h), and MC shall be solely responsible for such other employees
for all purposes, including, without limitation, any health benefit
continuation, severance, redundancy or other entitlements under any
applicable law.
10.8 Accounts Receivable
-------------------
(a) In relation to the accounts receivable related to the Disk Drive
Business of MC except the Sundry Assets, ST shall render such
reasonable assistance to MC in the collection of the accounts
receivable, however, ST shall not be required to initiate legal
proceedings or to engage a collection agent for this purpose or to
terminate its business relationship with the debtor.
(b) ST shall at the written request of MC supported by reasonable
grounds, stop or suspend the sale of disk drives to any customer
which has unreasonably failed to discharge its debt giving rise to
the aforesaid accounts receivable of MC.
(c) In the event within a period of 90 days after the Closing Date, any
pricing policy adopted by ST Chatsworth has an adverse effect on the
price protection policy of MCUS towards customers, resulting in a
reduction of the aforesaid accounts receivable, ST Chatsworth will
indemnify MCUS for the reduction in the aforesaid accounts
receivable during the 90-day period.
10.9 Transfer Tax Liabilities
------------------------
(a) ST Chatsworth shall be responsible for all documentary, stamp,
sales, use, notarisation, excise, transfer or other taxes or fees
payable in respect of the sale and transfer of the Acquired Assets
and Assumed Liabilities including any value added tax, but excluding
any income taxes payable by MC in relation to or arising from the
sale of the Acquired Assets and the Assumed Liabilities (the
"Transfer Tax Liabilities" or "Transfer Taxes").
------------------------ --------------
(b) ST Chatsworth and MCUS shall use reasonable efforts to minimise the
Transfer Tax or to recover any Transfer Taxes paid and shall
cooperate with each other in such efforts and in the filing of any
exemption, application, returns or reports relating to the Transfer
Taxes. MCUS shall deliver on a timely basis to ST Chatsworth any
documents which may be used by ST Chatsworth under applicable state
or local law to support the position that the sale of any Acquired
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Assets pursuant hereto is not subject to a Transfer Tax (including
resale certificates and similar documents relating to the sale of
inventory for resale of property incorporated into inventory for
resale), and shall promptly deliver to ST Chatsworth any other
documents reasonably requested by ST Chatsworth with respect to the
applicability of any Transfer Tax.
10.10 Provisions in Relation to the Name "Micropolis"
-----------------------------------------------
(a) MC undertakes that at no time after the Closing Date shall it or the
MC Affiliates or related company use as or as part of its corporate
name or as, or as part of, any trade ▇▇▇▇, service ▇▇▇▇ or logo
(whether any of the foregoing is registered or unregistered) or as
or as part of any trading or business name, the name "Micropolis" or
any name which is the same as, similar to or a colourable imitation
of, the name "Micropolis".
(b) Within 3 months, in the case of premises, sales literature and
stationery and 6 months in the case of products, following the
Closing Date, MCUS shall and shall procure the MC Affiliates or
other related company to remove the "Micropolis" name or ▇▇▇▇ from
its premises, products, sales literature and stationery and by the
last day of the relevant period and so far as practicable during the
relevant period shall delete from existing stocks of sales
literature and stationery, references to the "Micropolis" name or
▇▇▇▇ by taking reasonable steps to delete the same with an ink
marker so that no trace can be seen of the "Micropolis" name or
▇▇▇▇.
(c) Promptly after the Closing, MCUS shall and shall procure the MC
Affiliates or other related company whose corporate name or title is
or includes the name "Micropolis" to change the corporate name or
title to remove the name "Micropolis" therefrom.
(d) After the Closing Date, MCUS undertakes to provide ST with such
assistance as may be required to enable ST or such party nominated
by ST Chatsworth to register the name "Micropolis" with the relevant
registry of companies and businesses or other similar or analogous
body as ST may determine.
10.11 Warranty Servicing
------------------
After the Closing Date, ST shall take all reasonable steps to perform, in
accordance with its normal business standards, the obligations of MC to
provide after-sales service or to meet warranty claims of customers in
relation to inventory sold in the normal course of the Disk Drive
Business by MC prior to the Closing Date, insofar as the same are
required by MC's conditions of sale.
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10.12 Inventory Sent for Evaluation
-----------------------------
In relation to the inventory delivered to customers of MC prior to the
date hereof for evaluation, on the return of such inventory by the
customers, ST shall return the inventory to MCUS.
10.13 AMK Leasehold
-------------
At the request of ST Chatsworth, Micropolis Singapore shall use its best
endeavours to obtain from the lessor such extension of the lease of the
AMK Leasehold as ST Chatsworth may require and upon such extension the
irrevocable licence granted to ST Chatsworth to use the leasehold
interest in relation to the AMK Leasehold to the exclusion of Micropolis
Singapore shall be extended accordingly.
11. INDEMNIFICATION
---------------
11.1 General Indemnification by MCUS
-------------------------------
(a) MCUS agrees to indemnify and hold each of ST Chatsworth and the ST
Affiliates and their respective officers, directors, affiliates,
employees and agents (individually a "ST Indemnified Party" and
--------------------
collectively the "ST Indemnified Parties"), harmless from and
----------------------
against any damages, liabilities, losses and expenses and any claims
by third persons (including, without limitation, reasonable
solicitors' fees, amounts paid in settlement of any claim or suit,
fines, penalties or interest, of any kind or nature whatsoever
including loss of profits and/or consequential damages) ("Loss" or
----
"Losses"), which may be sustained or suffered by an ST Indemnified
------
Party arising out of or by reason of:-
(i) a breach of any representation or warranty of MCUS made in
this Agreement, the Disclosure Schedule or any Ancillary
Document;
(ii) any failure to perform any agreement or covenant of MCUS in
this Agreement or in any Ancillary Document to be performed
or complied with; and
(iii) any liability of MCUS that is not an Assumed Liability.
(b) Provided that no claim shall be made in respect of the aforesaid
indemnity by the ST Indemnified Parties unless notice shall have
been given by ST Chatsworth to MCUS within 12 months following
Closing in the case where the claim relates to the Acquired Assets
and the Assumed Liabilities (except Micropolis Thailand and the
Purchased Companies where ST Chatsworth has elected to purchase the
issued share capital thereof) and 24 months following Closing in the
case
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where the claim relates to Micropolis Thailand and the Purchased
Companies where ST Chatsworth has elected to purchase the issued
share capital thereof.
(c) The maximum aggregate liability of MCUS for all claims in respect of
the aforesaid indemnity shall not exceed the Purchase Price.
(d) No claim shall be made in respect of the aforesaid indemnity unless
the aggregate amount of all such claims exceeds US$100,000.
11.2 Environmental Indemnification by MCUS
-------------------------------------
MCUS agrees to indemnify and hold each of the ST Indemnified Parties
harmless from and against any Losses including any claim by third persons
(including, without limitation, any foreign, provincial, state or local
agency having jurisdiction over environmental matters or Environmental
Laws) (including, without limitation, reasonable solicitors' fees,
amounts paid in settlement of any claim or suit and costs of clean-up,
restoration, remediation or removal required under Environmental Laws)
which may be sustained or suffered by any of the ST Indemnified Parties
arising out of or by reason of:-
(a) any environmental matters disclosed in the Disclosure Schedule;
(b) any of the following occurring prior to the Closing Date;
(i) generation, use, treatment, handling, storage or disposal, or
arrangement for the treatment, handling, storage or disposal,
of Hazardous Materials on, or release of Hazardous Materials
to or from, the Real Property permitted, taken or made by any
person whomsoever, whether or not in compliance with
Environmental Laws then in force;
(ii) the removal of Hazardous Materials from the Real Property
and/or the ultimate disposition of such Hazardous Materials,
by any person whomsoever, whether or not in compliance with
Environmental Laws then in force;
(iii) the use of the Real Property by any person whomsoever in such
a manner as to cause a violation of any Environmental Laws or
to potentially give rise to any liability or obligation for
the remediation or restoration of the Real Property or any
other affected property, or for the treatment, storage,
removal, disposal, release or arrangement for removal or
disposal or transportation of any Hazardous Materials;
(iv) any violation of Environmental Laws in relation to the Real
Property;
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(v) the failure by any person to obtain, maintain current, and
comply with the terms and conditions of, all permits,
approvals, licenses and other authorisations and renewals
thereof, required by the Environmental Laws for the use and
operation of the Real Property; and
(vi) the exposure of employees of any owner, operator or lessees
of the Real Property to Hazardous Materials on or in relation
to the Real Property.
The obligations of MCUS under this Section 11.2 shall survive
indefinitely.
11.3 Notice and Defence of Claim
---------------------------
(a) In the event that any party shall incur or suffer any Losses in
respect of which indemnification may be sought by such party
pursuant to the provisions of this Section 11, the party seeking to
be indemnified hereunder (the "Indemnified Party") shall assert a
-----------------
claim for indemnification by written notice (a "Notice") to the
------
party from whom indemnification is sought (the "Indemnifying Party")
------------------
stating the nature and basis of such claim. In the case of Losses
arising by reason of any third party claim, the Notice shall be
given within sixty (60) days of the filing or other written
assertion of any such claim against the Indemnified Party, but the
failure of the Indemnified Party to give the Notice within such time
period shall not relieve the Indemnifying Party of any liability
that the Indemnifying Party may have to the Indemnified Party except
to the extent that the Indemnifying Party is actually prejudiced
thereby.
(b) The Indemnified Party shall provide to the Indemnifying Party on
request all information and documentation reasonably necessary to
support and verify any Losses which the Indemnified Party believes
give rise to a claim for indemnification hereunder and shall give
the Indemnifying Party reasonable access to all premises (including
the Real Property), books, records and personnel in the possession
or under the control of the Indemnified Party which would have
bearing on such claim.
(c) In the case of any claims for which indemnification is sought, the
Indemnified Party shall have the option:-
(i) to conduct and control or cause the Indemnifying Party to
conduct and control any proceedings or negotiations in
connection therewith; and
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(ii) to perform and control or direct or cause the Indemnifying
Party to perform and control or direct the performance of
activities required, including remedial activities, under
Environmental Laws.
The parties agree to cooperate fully with one another in connection
with the matters set out in this Section 11.3(c).
(d) Notwithstanding anything in this Agreement to the contrary, MCUS
shall be responsible for any liability or obligation as a result of
ST's failure to comply with applicable law in connection with the
ownership or operation of the Disk Drive Business by ST after the
Closing if the Disk Drive Business is owned or operated after the
Closing in the manner owned or operated prior to Closing except that
MCUS shall be responsible for such on-going failure to comply until
the earlier of:-
(i) the first anniversary of the Closing Date; or
(ii) the date upon which ST obtains actual knowledge that such
manner of operation is in violation of applicable law.
11.4 No Tax Effect; Insurance
------------------------
(a) Indemnification for Losses payable pursuant to the indemnification
provisions in this Section 11 shall be on a dollar for dollar basis
and shall be determined without regard to deductibility for tax
purposes or other tax benefits to the Indemnified Party or any other
person or entity resulting therefrom.
(b) The Indemnifying Party shall make any indemnification payments
determined to be payable to the Indemnified Party hereunder promptly
after such determination is made, without delay, and without regard
to any expectation that the Indemnified Party will recover insurance
proceeds as a direct result of the matter giving rise to the claim
for which indemnification payments are to be made. The Indemnified
Party shall have no obligation whatsoever to seek to recover or make
a claim for insurance proceeds as a result of any matter giving rise
to an indemnification claim of the Indemnified Party against the
Indemnifying Party. Notwithstanding the foregoing, if the
Indemnified Party receives any insurance proceeds as a direct result
of the matter giving rise to any indemnification claim of the
Indemnified Party prior to the date upon which the Indemnifying
Party is given notice of the claim, the Indemnifying Party's
indemnification obligation with respect to such claim shall be
reduced by the amount of any such insurance proceeds actually
received by the Indemnified Party. If the Indemnified Party receives
any insurance proceeds as a direct result of the matter giving rise
to any indemnification claim of the Indemnified Party against the
Indemnifying Party after the
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Indemnifying Party has paid such indemnification claim to the
Indemnified Party, then the Indemnified Party shall promptly turn
over my such insurance proceeds received to the Indemnifying Party
to the extent of the payments made by the Indemnifying Party to the
Indemnified Party on the claim.
12. TERMINATION OF AGREEMENT
------------------------
12.1 Termination
-----------
At any time prior to the Closing Date, this Agreement may be terminated:-
(a) by the written agreement of ST Chatsworth and MCUS;
(b) by MCUS if there has been a material misrepresentation, breach of
warranty or breach of covenant by ST Chatsworth in its
representation, warranties and covenants set forth herein and such
breach results in a failure to satisfy a condition to MCUS's
obligation to consummate the transactions provided herein;
(c) by ST Chatsworth if there has been a material misrepresentation,
breach of warranty or breach of covenant by MCUS in their
representations, warranties and covenants set forth herein and such
breach results in a failure to satisfy a condition to ST
Chatsworth's obligation to consummate the transactions provided
herein;
(d) by MCUS if the conditions stated in Section 9 have not been
satisfied on or prior to the Closing Date; or
(e) by ST Chatsworth if the conditions stated in Section 8 have not been
satisfied on or prior to the Closing Date.
12.2 Effects of Termination
----------------------
If this Agreement shall be terminated as above provided, all obligations
of the parties hereunder shall terminate without liability of any party
to the other whether for costs, damages or otherwise; provided however,
that termination pursuant to Section 12.1(b) or (c) by reason of a
knowing and wilful breach by ST Chatsworth or MCUS of its representations
and warranties or covenants shall not relieve the breaching party from
any liability to the other party hereto.
12.3 Right to Proceed
----------------
Anything in this Agreement to the contrary notwithstanding, if any of the
conditions specified in Section 8 have not been satisfied at or prior to
the Closing, ST Chatsworth shall have the right to proceed with the
transactions contemplated hereby without waiving any of its rights
hereunder, and if any
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of the conditions specified in Section 9 have not been satisfied at or
prior to the Closing, MCUS may determine to proceed with the transactions
contemplated hereby without waiving any of their rights hereunder.
13. MCUS's NON-COMPETITION COVENANTS
--------------------------------
13.1 Non-Competition of MCUS
-----------------------
MCUS covenants and agrees with each of ST Chatsworth and each of the ST
Affiliates that it and the MC Affiliates and other affiliates which are
controlled by or under common control with MCUS and/or the MC Affiliates
will not without the prior written consent of ST, directly or indirectly,
anywhere within the world (the "Territory"), during the period
---------
commencing on the Closing Date and expiring on the fifth (5th)
anniversary of the Closing Date (the "Restrictive Period"):-
------------------
(a) form, acquire (except for the ownership of less than five (5%)
percent of the issued and outstanding capital stock of a publicly
traded company), finance, assist, support, provide premises,
facilities, goods or services to, or become associated in any
capacity or to any extent, directly or indirectly with, an
enterprise which is substantially similar to, as to types of
customers or products or otherwise competitive with the Disk Drive
Business of MC as heretofore conducted (a "Competing Business")
------------------
provided that the foregoing shall not prohibit MC from engaging in
transactions with parties which conduct a Competing Business so long
as such transactions with such parties are not directly or
indirectly connected with such other parties Competing Business;
(b) interfere with or attempt to interfere with or induce or attempt to
induce any Transferred Employee to leave the employ of ST or any of
it affiliates, or violate the terms of their contract with any of
them;
(c) cause or attempting to cause:-
(i) any client, customer or supplier of the Disk Drive Business
to terminate or materially reduce its business with ST, or
(ii) any officer, employee or consultant of ST engaged in the Disk
Drive Business to resign or sever a relationship with ST; or
(d) disclose (unless compelled by judicial or administrative process) or
using any confidential or secret information relating to the Disk
Drive Business or any client, customer or supplier of the Disk Drive
Business.
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13.2 Injunctive Relief
-----------------
The parties hereto acknowledge and agree that the breach by MCUS and the
MC Affiliates of the restrictive covenant contained in Section 13.1 would
cause irreparable injury to each of ST Chatsworth and/or each of the ST
Affiliates or any of them and that the remedy at law for any such breach
would be inadequate, and MCUS agrees and consents that, in addition to
any other available remedy, temporary and permanent injunctive relief may
be granted in any proceeding which may be brought by ST or any ST
Affiliate to enforce such restrictive covenant without necessity of proof
that any other remedy at law is adequate.
13.3 Enforcement
-----------
ST Chatsworth and MCUS intend that the covenants of Section 13.1 shall be
deemed to be a series of separate covenants, one for each country or
province of each and every state, territory or jurisdiction of, each
country included within the Territory and one for each month of the
Restrictive Period. If, in any judicial proceeding, a court shall refuse
to enforce any of such covenants, then such unenforceable covenants shall
be deemed eliminated from the provisions hereof for the purpose of such
proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceeding. If, in any judicial
proceeding, a court shall refuse to enforce any one or more of such
separate covenants because the total time thereof is deemed to be
excessive or unreasonable, then it is the intent of the parties hereto
that such covenants, which would otherwise be unenforceable due to such
excessive or unreasonable period of time, be in force for such lesser
period of time as shall be deemed reasonable and not excessive by such
court.
14. NON-DISCLOSURE COVENANTS
------------------------
14.1 Non-Disclosure of Information by MCUS
-------------------------------------
It is understood that the Disk Drive Business acquired by ST hereunder is
of a confidential nature. MCUS agrees that it will and will procure that
the MC Affiliates will never divulge or appropriate to their own use, or
to the use of any third party, any Confidential Information (as
hereinafter defined).
14.2 Definition of Confidential Information
--------------------------------------
As used in this Section 14 and elsewhere in this Agreement, the term
"Confidential Information" means the following oral or written
------------------------
information relating to the business operations and affairs of the Disk
Drive Business of MC including know-how, technology, inventions, designs,
methodologies, trade secrets, patents, secret processes and formula,
information and data relating to the development, research, testing,
manufacturing, marketing, sale, distribution and use of products, sources
of supplies, budgets and strategic
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plans, the identity and special need of customers, plants and other
properties, provided that the term "Confidential Information" shall not
include:-
(a) any such information that can be shown to have been in the public
domain or generally known or available to customers, suppliers or
competitors of ST through no breach of the provisions of this
Section 14 or other non-disclosure covenants;
(b) any such information that rightfully comes into the receiving
party's possession after the Closing Date, without violation of the
provisions of this Section 14 or other non-disclosure covenants; and
(c) any such information that was independently developed after the
Closing Date by the receiving party without violation of the
provisions of this Section 14 or other non-disclosure covenants; and
provided further that MC may retain and use Confidential Information to
the extent it relates to any business of MC other than the-Disk Drive
Business.
14.3 Injunctive Relief
-----------------
The parties hereto acknowledge and agree that the breach by MCUS and the
MC Affiliates and employees of the restrictive covenant contained in
Section 14.1 would cause irreparable injury to each of ST Chatsworth
and/or each of the ST Affiliates or any of them and that the remedy at
law for any such breach would be inadequate, and MCUS agrees and consents
that, in addition to any other available remedy, temporary and permanent
injunctive relief may be granted in any proceeding which may be brought
by ST or any ST Affiliate to enforce such restrictive covenant without
necessity of proof that any other remedy at law is adequate.
15. MISCELLANEOUS
-------------
15.1 Expenses
--------
ST Chatsworth and MCUS shall pay the fees and expenses of their
respective accountants and legal advisors incurred in connection with the
transactions contemplated by this Agreement, except as otherwise provided
in Section 3.
15.2 Notices
-------
Any notice or other communication required or permitted to be given to
any party hereunder shall be in writing and shall be given to such party
at such party's address set forth below or such other address as such
party may hereafter specify by notice in writing to the other party. Any
such notice or other communication shall be addressed as aforesaid and
given (and shall be deemed to have been duly given upon receipt) by:-
▇-▇▇
▇▇
(▇) ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
(▇) hand delivery;
(c) reputable overnight courier; or
(d) facsimile transmission.
To MCUS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Fax: ▇ (▇▇▇) ▇▇▇ ▇▇▇▇
To ST Chatsworth: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
#01-01/02 The ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇▇
15.3 Waiver
------
The failure of any party hereto at any time or times hereafter to
exercise any right, power, privilege or remedy hereunder or to require
strict performance by the other or another party of any of the
provisions, terms or conditions contained in this Agreement or in any
other document, instrument or agreement contemplated hereby or delivered
in connection herewith shall not waive, affect, or diminish any right,
power, privilege or remedy of such party at any time or times thereafter
to demand strict performance thereof; and, no rights of any party hereto
shall be deemed to have been waived by any act or knowledge of such
party, or any of its agents, officers or employees, unless such waiver is
contained in an instrument in writing, signed by such party. No waiver by
any party hereto of any of its rights on any one occasion shall operate
as a waiver of any of its other rights or any of its rights on a future
occasion.
15.4 Bulk Sales Act
--------------
The parties hereby waive compliance with the bulk sales act or comparable
statutory provisions of each applicable jurisdiction. MCUS shall
indemnify ST and its officers, directors, employees and agents in respect
of, and hold each of them harmless from and against, any and all losses
suffered, incurred or sustained by any of them or to which any of them
becomes subject, resulting from, arising out of or relating to the
failure of MCUS to comply with the terms of any such provisions
applicable to the transactions contemplated by this Agreement.
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15.5 Section Headings
----------------
The Section headings in this Agreement are for convenience of reference
only and shall not be deemed to be a part of this Agreement or to alter
or affect any provisions, terms or conditions contained herein.
15.6 Exhibits and Schedules
----------------------
Any exhibits, schedules, financial statements and other documents
referenced herein shall be deemed to be attached hereto and made a part
hereof.
15.7 Severability
------------
Wherever possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law. If
any portion of this Agreement is declared invalid for any reason in any
jurisdiction, such declaration shall have no effect upon the remaining
portions of this Agreement which shall continue in full force and effect
as if this Agreement has been executed with the invalid portions thereof
deleted. Furthermore, the entirety of this Agreement shall continue in
full force and effect in all other jurisdictions.
15.8 Entire Understanding
--------------------
This Agreement sets forth the entire agreement and understanding between
the parties with respect to the subject matter hereof and merges any and
all discussions, negotiations, letters of intent or agreements in
principle between them. None of the parties shall be bound by any
conditions, warranties, understandings or representations with respect to
such subject matter other than as expressly provided herein, or as duly
set forth on or subsequent to the date hereof in writing and signed by a
duly authorised officer of the party to be bound thereby.
15.9 Binding Effect
--------------
This Agreement shall be binding upon and shall inure to the exclusive
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and permitted assigns.
Except as otherwise expressly provided in this Agreement, this Agreement
is not intended to, nor shall it, create any rights in any other person.
15.10 Governing Law
-------------
This Agreement is and shall be deemed to be a contract entered into and
made pursuant to the laws of Singapore, and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of
Singapore.
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15.11 Choice of Forum and Consent to Jurisdiction
-------------------------------------------
Each party hereby irrevocably submits to the exclusive jurisdiction of
the district or state court of California in any action, suit or
proceeding arising out of or relating to this Agreement or any of the
Ancillary Documents or any of the transactions contemplated hereby or
thereby, provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this Section 15.11 and shall not be deemed
to be a general submission to the jurisdiction of said courts or in the
State of California other than for such purpose. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such
action, suit or proceeding brought in such a court and any claim that any
such action, suit or proceeding brought in such a court has been brought
in an inconvenient forum. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
15.12 Assignability
-------------
Except as set forth in this Section 15, neither this Agreement nor any
rights or obligations hereunder are assignable by MCUS or ST Chatsworth.
Rights of ST Chatsworth under this Agreement are assignable in part or
wholly to any affiliate of ST Chatsworth and any assignee of ST
Chatsworth shall succeed to and be possessed of the rights of ST
Chatsworth hereunder to the extent of the assignment made, provided,
however, that any such assignment by ST Chatsworth shall not relieve ST
Chatsworth of its obligations hereunder and any assignee of ST shall also
assume any of the obligations of ST Chatsworth hereunder. In addition,
after the Closing, ST Chatsworth may assign all or any part of its rights
and/or obligations under this Agreement to any person who acquires
substantially all of the assets of the Disk Drive Business from ST
Chatsworth.
15.13 Counterparts; Delivery by Facsimile
-----------------------------------
This Agreement may be executed in counterparts and by each party hereto
on a separate counterpart, all of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier or facsimile transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.
15.14 Certain Definitions
-------------------
For the purposes of this Agreement:-
(a) an "affiliate" of any specified natural persons shall mean and
---------
include the members of such person's immediate family;
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70
(b) an "affiliate" of any specified other person shall mean and
---------
include any person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such person;
(c) a "person" shall mean and include any natural person, firm,
------
partnership, association, corporation, limited liability company,
company, unincorporated organisation, trust, public body or
government or any department or agency thereof; and
(d) the following defined terms have the meanings indicated below:-
"CERCLA" means the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended, and the rules
and regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response and
-------
Liability Information System, as provided for by 40 C.F.R. S300.5.
"CFIUS" means The Committee on Foreign Investments in the United
-----
States.
"Environmental Claim" means, with respect to any person, any
-------------------
written or oral notice, claim, demand or other communication
(collectively, a "claim") by any other person alleging or asserting
such person's liability for investigatory costs, cleanup costs,
Governmental or Regulatory Authority response costs, damages to
natural resources or other property, personal injuries, fines or
penalties arising out of, based on or resulting from:-
(a) the presence, or release into the environment, of any
Hazardous Material at any location, whether or not owned by
such person; or
(b) circumstances forming the basis of any violation or alleged
violation, of any Environmental Law.
The term "Environmental Claim" shall include, without limitation,
any claim by any Governmental or Regulatory Authority for
enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any applicable Environmental Law, and any
claim by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.
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71
"Exon-▇▇▇▇▇▇ Amendment" means Section 721 of the Defense Production
---------------------
Act of 1950, as amended, and any successor thereto and the
regulations issued pursuant thereto or in consequence thereof.
"Governmental or Regulatory Authority" means any court, tribunal,
------------------------------------
arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political
subdivision.
"HSR Act" means Section 7A of the ▇▇▇▇▇▇▇ Act (Title II of the
-------
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended)
and the rules and regulations promulgated thereunder.
"Liens" means any mortgage, pledge, assessment, security interest,
-----
lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale contract, title retention contract or
other contract to give any of the foregoing.
"Micropolis Limited" means the company registered in the Cayman
------------------
Islands with its address c/o ▇▇▇ ▇▇▇▇ Trust Corporation (Cayman)
Limited, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ Indies.
"Micropolis Thailand" means Micropolis Corporation (Thailand) Ltd
-------------------
with its address at ▇▇▇/▇-▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Micropolis Singapore" means the Singapore branch of Micropolis
--------------------
Limited with its address at Block ▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇ #▇▇-▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"NPL" means the National Priorities List under CERCLA.
---
"Purchased Companies" means Micropolis GmbH, Micropolis Ltd.,
-------------------
Micropolis S.A.R.L., Micropolis Japan Limited and Micropolis
Australia Pty. Limited.
"ST's Accountants" means Messrs ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
----------------
"Taxes" means all forms of taxation, whenever created or imposed
-----
of any jurisdiction, and whether imposed by a local, municipal,
governmental, state, federation or other body, and without limiting
the generality of the foregoing, shall include income, capital-
based, sales, use, ad valorem, gross receipts, license, value added,
franchise, transfer, recording, withholding, payroll, employment,
excise, occupation, premium, utility and property taxes, together
with any deficiencies, related interest, penalties and additions to
any such tax, or additional amounts imposed by any taxing authority
(domestic or foreign).
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72
"US Dollars" and "US$" mean the lawful currency of the United
---------- ---
States of America.
15.15 No Rights to Third Parties
--------------------------
Nothing in this Agreement is intended, or shall be construed, to confer
upon or give any person or entity other than the parties to this
Agreement any rights or remedies under or by reason of this Agreement.
15.16 Pronouns and Plurals
--------------------
All pronouns used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or
persons may require in the context, and the singular form of nouns,
pronouns and verbs will include the plural, and vice versa, whichever the
context may require.
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73
Schedule 1
----------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
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74
Schedule 2
----------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
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75
Schedule 3
----------
First, Second, Third and Fifth Storey
Block ▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇
First to Fifth Storey
Block ▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇
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76
Schedule 4
----------
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ forming part of
Government Survey Lots 7634, 9419, 10979 and 12500,
▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇ ▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇.
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77
Schedule 5
----------
MICROPOLIS CORPORATION
WORLD-WIDE LOCATIONS
ADDRESS/ START DATE
LESSOR/ DATE END
SQ. FT. /TERM MO. RENT 1995 1996
--------------------------------------------------------------------------------------------
UNITED STATES MUSA
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE
Micropolis Corporation ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇ 12/15/93 $2,300.00 $27,600 $27,600
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1/31/97
Plano, TX, USA
# of Employees: 3 LESSOR: H.D. DELAWARE PROPERTIES, INC.
SQ. FT. 2,253
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE
Micropolis Corporation ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., #▇▇▇ 5/1/94 $4,212.00 $50,544 $50,544
Western Regional Sales ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇/▇▇/▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇
# of Employees: 7 LESSOR: 100 HOMELAND CORP
SQ. FT. 2,568 Lease Signed 3/1/94
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. 1/1/96 $1,905.00 $22,860.00 $0
Micropolis Corporation SUITE 320 12/31/96
Southern Calif. District Sales ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇, ▇▇▇
# of Employees: 5 LESSOR: INTEGRITY FUND II/COLTON CAPITAL
SQ. FT. 1,732 Month-to-Month
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇ ▇▇▇▇▇▇ ▇▇▇▇ 2/1/93 $4,350.00 $52,200 $0
Micropolis Corporation UNIT 303 11/30/96
Eastern Regional OEM Sales Office SALEM, NH
Salem, NH, USA
# of Employees: 8 LESSOR: GUDEK ENTERPRISES REALTY TRUST
SQ. FT. 3,527
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
ADDRESS/ START DATE
LESSOR/ END DATE
SQ. FT. /TERM 1997 1998 1999
------------------------------------------------------------------------------------------------------------------------------------
UNITED STATES MUSA
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE
Micropolis Corporation ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇ 12/15/93 $2,300 $0 $0
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1/31/97
Plano, TX, USA
# of Employees: 3 LESSOR: H.D. DELAWARE PROPERTIES, INC.
SQ. FT. 2,253
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE
Micropolis Corporation ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., #▇▇▇ 5/1/94 $50,544 $16,848 $0
Western Regional Sales Office ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 4/30/98
San Jose, CA, USA
# of Employees: 7 LESSOR: 100 HOMELAND CORP
SQ. FT. 2,568 Lease Signed 3/1/94
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. 1/1/96 $0 $0 $0
Micropolis Corporation SUITE 320 12/31/96
Southern Calif. District Sales ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇, ▇▇▇
# of Employees: 5 LESSOR: INTEGRITY FUND II/COLTON CAPITAL
SQ. FT. 1,732 Month-to-Month
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇ 2/1/93 $0 $0 $0
Micropolis Corporation UNIT 303 11/30/96
Eastern Regional OEM Sales Office SALEM, NH
Salem, NH, USA
# of Employees: 8 LESSOR: GUDEK ENTERPRISES REALTY TRUST
SQ. FT. 3,527
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
ADDRESS/ START DATE
LESSOR/ END DATE TOTAL FUTURE
SQ. FT. /TERM THEREAFTER COMMITMENTS
------------------------------------------------------------------------------------------------------------------------------------
UNITED STATES MUSA
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE
Micropolis Corporation ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇ 12/15/93 $0 $29,900
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1/31/97
Plano, TX, USA
# of Employees: 3 LESSOR: H.D. DELAWARE PROPERTIES, INC.
SQ. FT. 2,253
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE
Micropolis Corporation ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., #▇▇▇ 5/1/94 $0 $117,936
Western Regional Sales ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇/▇▇/▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇
# of Employees: 7 LESSOR: 100 HOMELAND CORP
SQ. FT. 2,568 Lease Signed 3/1/94
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. 1/1/96 $0 $0
Micropolis Corporation SUITE 320 12/31/96
Southern Calif. District Sales ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇, ▇▇▇
# of Employees: 5 LESSOR: INTEGRITY FUND II/COLTON CAPITAL
SQ. FT. 1,732 Month-to-Month
Facility Leased
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇ ▇▇▇▇▇▇ ▇▇▇▇ 2/1/93 $0 $0
Micropolis Corporation UNIT 303 11/30/96
Eastern Regional OEM Sales Office SALEM, NH
Salem, NH, USA
# of Employees: 8 LESSOR: GUDEK ENTERPRISES REALTY TRUST
SQ. FT. 3,527
Branch of: Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
* Approximate number of employees based on 12/15/95 Manpower Report
Page 1
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MICROPOLIS 1/17/96
MICROPOLIS CORPORATION
WORLD-WIDE LOCATIONS
ADDRESS/ START DATE
LESSOR/ END DATE
SQ FT. /TERM MO. RENT 1995 1996
--------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇▇▇ ▇. ▇▇▇▇▇ 11/1/95 $1,325.00 $9,135.00 $15,900
North Central District Sales Office ▇▇▇▇▇ ▇▇▇ ▇▇/▇▇/▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ DES PLAINES, IL
# of Employees: 3
LESSOR: HIFFMAN, SHAFFER, ANDERSON, INC.
Branch of: Micropolis Corporation SQ. FT. 1,116
--------------------------------------------------------------------------------------------
SUBTOTAL - US PROPERTIES $1,065,819 $94,044
------------------------------------------------------------------------------------------------------------------------------------
ADDRESS/ START DATE
LESSOR/ END DATE
SQ FT. /TERM 1997 1998 1999
--------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇▇▇ ▇. ▇▇▇▇▇ 11/1/95 $0 $0 $0
North Central District Sales Office ▇▇▇▇▇ ▇▇▇ ▇▇/▇▇/▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ DES PLAINES, IL
# of Employees: 3
LESSOR: HIFFMAN, SHAFFER, ANDERSON, INC.
Branch of: Micropolis Corporation SQ. FT. 1,116
--------------------------------------------------------------------------------------------
SUBTOTAL - US PROPERTIES $52,844 $16,848 $0
------------------------------------------------------------------------------------------------------------------------------------
ADDRESS/ START DATE
LESSOR/ END DATE TOTAL FUTURE
SQ FT. /TERM THEREAFTER COMMITMENTS
--------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇▇▇ ▇. ▇▇▇▇▇ 11/1/95 $0 $15,900
North Central District Sales Office ▇▇▇▇▇ ▇▇▇ ▇▇/▇▇/▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ DES PLAINES, IL
# of Employees: 3
LESSOR: HIFFMAN, SHAFFER, ANDERSON, INC.
Branch of: Micropolis Corporation SQ. FT. 1,116
--------------------------------------------------------------------------------------------
SUBTOTAL - US PROPERTIES $0 $163,736
------------------------------------------------------------------------------------------------------------------------------------
* Approximate number of employees based on 12/15/95 Manpower Report
Page 2
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MICROPOLIS CORPORATION
WORLD-WIDE LOCATION
ADDRESS/ START DATE
LESSOR/ END DATE
SQ.FT. /TERM ▇▇.▇▇▇▇ 1995 1996 1997
-------------------------------------------------------------------------------------------------------
EUROPE
ENGLAND
Type: WAREHOUSE ACRE ROAD 10/23/86 (Pounds)5,208 $98,119 $98,119 $98,119
Micropolis Ltd. READING 7/7/11 AT 1.57 $/(Pounds)
Berkshire, England BERKSHIRE 25 years
# of Employees: N/A ENGLAND
Facility: Leased LESSOR: GRIMWADE AND ▇▇▇▇▇▇▇
wholly owned subsidiary of: SQ.FT. 8,000
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 9/21/93 (Pounds)15,583 $0 $85,629 $293,584
Micropolis Ltd. ▇▇▇▇▇▇ GRANGE 9/17/05 AT 1.57 $/(Pounds)
Berkshire, England READING
# of Employees: 36 BERKSHIRE 12 years Note: 1 or 2 yrs - free
ENGLAND
Facility: Leased
wholly owned subsidiary of: LESSOR: LLOYDS BANK SF NOMINEES LTD
Micropolis Corporation SQ.FT. 34,000
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE MICROPOLIS SARL 12/1/87 FF10,000 $20,636 $0 $0
Micropolis S.A.R.L. 2 RUE ▇▇ ▇▇▇▇▇▇▇ AUX FRAISES 11/30/95 AT .1876 $/FF
▇▇▇▇▇▇, France ▇.▇. ▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
# of Employees: 3 FRANCE
Facility: Leased LESSOR: ACTIPIERRE
wholly owned subsidiary of: SQ.FT. Cancellable every 3 years with 6 month notice
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE MICROPOLIS GmbH 9/1/93 DM 6,809 $53,061 $55,719 $58,501
Micropolis GmbH ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ 8/31/98 AT .6494 $/DM
Munchen, Germany 8033 PLANEGG BEI MUNCHEN
# of Employees: 6 WEST GERMANY
LESSOR: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
wholly owned subsidiary of: SQ.FT. 3,600
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE MICROPOLIS SRL 6/1/95 IL 1,668,122 $12,395 $0 $0
Micropolis S.r.l. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇/▇ 5/31/96 AT IL 1,588/$
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ MILAN
# of Employees: 3 ITALY
Facility: Leased LESSOR:
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE MICROPOLIS A.B. 7/1/92 SEK 5170 $9,274 $0 $0
Micropolis A.B. ▇▇▇▇▇ ▇▇▇▇▇ 3 AT 6.69 Krona/$
Jardalla, Sweden 17540 JARFALLA Mo. to Mo.
# of Employees: 1 SWEDEN
LESSOR:
wholly owned subsidiary of: SQ.FT. 269
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - EUROPEAN PROPERTIES $193,484 $239,466 $450,203
-------------------------------------------------------------------------------------------------------
TOTAL FUTURE
1998 1999 THEREAFTER COMMITMENTS
------------------------------------------------------------------------------------------------------
EUROPE
ENGLAND
Type: WAREHOUSE $98,119 $98,119 $1,177,425 $1,569,900
Micropolis Ltd.
Berkshire, England
# of Employees: N/A
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE $293,584 $293,584 $1,761,502 $2,727,882
Micropolis Ltd.
Berkshire, England
# of Employees: 36
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE $0 $0 $0 $0
Micropolis S.A.R.L.
▇▇▇▇▇▇, France
# of Employees: 3
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE $40,949 $0 $0 $ ▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
# of Employees: 6
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE $0 $0 $0 $0
Micropolis S.r.l.
Milan, Italy
# of Employees: 3
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
Type: SALES OFFICE $0 $0 $0 $0
Micropolis A.B.
Jardalla, Sweden
# of Employees: 1
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - EUROPEAN PROPERTIES $432,651 $391,702 $2,938,927 $4,452,949
-------------------------------------------------------------------------------------------------------
*Approximate number of employees based on 12/15/95 Manpower Report
Page 3
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ADDRESS/ START DATE
LESSOR/ END DATE
SQ.FT. /TERM ▇▇.▇▇▇▇ 1995 1996 1997
-----------------------------------------------------------------------------------------------------
TYPE WAREHOUSE ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇ - ▇▇ UNITS 7/1/94 S$11900 $0 $0 $0
Micropolis Limited SINGAPORE 1440 6/30/95 AT .685 $/S$
Singapore Mo. to Mo.
# of Employees: N/A LESSOR: HOUSING & DEVELOPMENT BOARD
SINGAPORE
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL - SINGAPORE $2,785,270 $1,247,714 $616,500
------------------------------------------------------------------------------------------------------
TOTAL FUTURE
1998 1989 THEREAFTER COMMITMENTS
------------------------------------------------------------------------------------------------------
TYPE WAREHOUSE $0 $0 $0 $0
Micropolis Limited
Singapore
# of Employees: N/A
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL - SINGAPORE $616,500 $616,500 $15,412,500 $21,294,983
------------------------------------------------------------------------------------------------------
*Approximate number of employees based on 12/15/95 Manpower Report
Page 4
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MICROPOLIS CORPORATION
WORLD-WIDE LOCATIONS
ADDRESS/ START DATE
LESSOR/ END DATE
SQ. FT. /TERM MO. RENT 1995
------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL - SINGAPORE $52,200
------------------------------------------------------------------------------------------------------------------------------------
TAIWAN
Type: SALES OFFICE MICROPOLIS CORP. 9/1/94 NT$ 114,434 $33,534
Asia/Pacific Sales Headquarters (TAIWAN BRANCH) 8/31/96 AT 27.30$/NT$
Micropolis Corporation ▇▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ KEELUNG ROAD, SEC. 1
# of Employees: 2 TAIPEI, TAIWAN, ROC
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA
A.$6,692 $53,536
Type: SALES OFFICE ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ AT 1.35S/A.$
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
North Sydney, Australia
# of Employees: 2
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
JAPAN
Type: SALES OFFICE MADRE MATSUDA BLDG. 3F-312 Y707,797 $82,462
Micropolis Corporation ▇-▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇-▇▇ ▇▇ ▇▇▇.▇▇▇/▇
▇▇▇▇▇, ▇▇▇▇▇ TOKYO, JAPAN 102
# of Employees: 2
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - ASIAN PROPERTIES $3,007,001
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - ALL PROPERTIES $4,266,305
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ADDRESS/ START DATE
LESSOR/ END DATE
SQ. FT. /TERM 1996 1997 1998
------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL - SINGAPORE $0 $0 $0
------------------------------------------------------------------------------------------------------------------------------------
TAIWAN
Type: SALES OFFICE MICROPOLIS CORP. 9/1/94 $33,534 $0 $0
Asia/Pacific Sales Headquarters (TAIWAN BRANCH) 8/31/96
Micropolis Corporation ▇▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ KEELUNG ROAD, SEC. 1
# of Employees: 2 TAIPEI, TAIWAN, ROC
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA
Type: SALES OFFICE ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Micropolis Corporation NORTH SYDNEY, NSW 2060 AUSTRALIA
North Sydney, Australia
# of Employees: 2
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
JAPAN
Type: SALES OFFICE MADRE ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇ Corporation ▇-▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
# of Employees: 2
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - ASIAN PROPERTIES $1,281,247 $616,500 $616,500
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - ALL PROPERTIES $1,614,757 $1,119,547 $1,065,999
------------------------------------------------------------------------------------------------------------------------------------
ADDRESS/ START DATE
LESSOR/ END DATE TOTAL FUTURE
SQ. FT. /TERM 1999 THEREAFTER COMMITMENTS
------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL - SINGAPORE $0 $0 $0
------------------------------------------------------------------------------------------------------------------------------------
TAIWAN
Type: SALES OFFICE MICROPOLIS CORP. 9/1/94 $0 $0 $33,534
Asia/Pacific Sales Headquarters (TAIWAN BRANCH) 8/31/96
Micropolis Corporation ▇▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ KEELUNG ROAD, SEC. 1
# of Employees: 2 TAIPEI, TAIWAN, ROC
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA
Type: SALES OFFICE ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Micropolis Corporation NORTH SYDNEY, NSW 2060 AUSTRALIA
North Sydney, Australia
# of Employees: 2
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
JAPAN
Type: SALES OFFICE MADRE ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇ Corporation ▇-▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
# of Employees: 2
Facility: Leased
wholly owned subsidiary of:
Micropolis Corporation
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - ASIAN PROPERTIES $616,500 $15,412,500 $21,328,517
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL - ALL PROPERTIES $1,008,202 $18,351,427 $25,945,202
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* Approximate number of employees based on 12/15/95 Manpower Report
Page 5
C-81
82
Schedule 6
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1. Leased data transmission lines from AT&T with a monthly payment of
US$26,500.
2. Computer rental equipment leases from Hewlett-Packard, with a total
amount to be financed of US$116,820 and monthly payments of US$3,893.61.
3. One car leasing agreement, with a remaining amount to be financed of
approximately US$90,000.
4. Leases of photocopy machines, at a monthly rate of approximately $4,500.
C-82
83
Schedule 7
----------
1. Distribution Agreements
2. OEM Contracts for the sale of disk drives
3. Spring Board Agreement
4. Sales Agreement/Representative Agreements
5. Advertising Contracts and Contracts/Commitments for Trade shows with a
total commitment of not more than US$1,000,000
6. Computer software, licence and maintenance agreements related to the
purchase of the Chatsworth Corporate Assets.
C-83
84
Schedule 8
----------
1. Deed of Assignment of Building Agreement dated 27 September 1995 between
Micropolis Limited and ST Capital Limited.
2. Deed of Assignment of Building Contract dated 27 September 1995 between
Micropolis Limited and ST Capital Limited.
3. Mortgage in Escrow between Micropolis Limited and ST Capital Limited.
4. Deed of Assignment of Building Agreement between Micropolis Limited and
Singapore Technologies Construction Pte Ltd.
5. Mortgage in Escrow between Micropolis Limited and Singapore Technologies
Construction Pte Ltd.
6. Pledge Agreement dated 18 March 1992 between Micropolis Corporation,
Micropolis Limited and The CIT Group/Business Credit, Inc.
C-84
85
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Seller
------
Signed by J. ▇▇▇▇▇ ▇▇▇▇▇ )
for and on behalf of )
MICROPOLIS CORPORATION )
in the presence of:- )
Buyer
-----
Signed by ▇▇▇▇ ▇▇▇ FU )
for and on behalf of )
ST CHATSWORTH PTE LTD )
in the presence of:- )
C-85
