Exhibit 10.1.1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated September 27th, 1999, between
XIRCOM, INC., a California corporation ("Xircom"), and FRANKLIN ELECTRONIC
PUBLISHERS, INCORPORATED, a Pennsylvania corporation ("Franklin").
W I T N E S S E T H :
WHEREAS, Franklin is engaged in, among other things, the business of
designing, developing, producing and marketing electronic organizers and related
products under the ▇▇▇ and ▇▇▇ PRO brand names (the "▇▇▇ Products") [+]
(collectively, the "▇▇▇ Business"); and
WHEREAS, Xircom desires to purchase, and Franklin desires to sell,
all of Franklin's right, title and interest in and to the assets, business and
properties used in whole or primarily in connection with the ▇▇▇ Business on the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, Xircom and Franklin hereby agree as follows:
First: Closing; Exchange.
1.1. The Closing. The closing (the "Closing") of the transactions
set forth in Sections 1.2 and 1.3 shall take place at 10:00 a.m., eastern time,
on the date hereof at the offices of Rosenman & Colin LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. (Hereinafter, such date is referred to as the "Closing
Date" and such time on the Closing Date is referred to as the "Closing Time.")
1.2. Sale and Purchase of the Assets. At the Closing, Franklin shall
sell, convey, transfer, assign and deliver to Xircom all of Franklin's right,
title and interest in and to the following described assets (collectively, the
"▇▇▇ Assets"):
(i) All of the inventory identified on Schedule 1.2(a) (it
being understood that such inventory shall be conveyed to Xircom F.O.B.
Franklin);
(ii) All of Franklin's rights under the contracts, agreements
and commitments identified on Schedule 1.2(a);
(iii) The registered and unregistered trademarks, trademark
applications, trade names, registered and unregistered copyrights,
know-how, patents, patent applications, trade secrets, domain names and
other intellectual property and proprietary rights and processes
(collectively, "Intellectual Property") identified on Schedule 1.2(a);
(iv) All sales and promotional materials, advertising
literature, advertising rights, customer orders, quotations and bids
relating to the ▇▇▇ Assets and the ▇▇▇ Business; and
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(v) All other assets used in whole or primarily in connection
with the ▇▇▇ Business.
The ▇▇▇ Assets shall not include (1) any assets listed on Schedule 1.2(a) as
excluded from this transaction (the "Excluded Assets") and (2) any of Franklin's
assets which would otherwise constitute a part of the ▇▇▇ Assets, the assignment
or attempted assignment of which would be invalid or would constitute a breach
of any contract, agreement or commitment to which it is a party or by which it
may be bound; provided, however, that any such asset referred to in this clause
(2) shall be held by Franklin for the benefit of Xircom. The sale, conveyance,
transfer, assignment and delivery of the ▇▇▇ Assets by Franklin to Xircom
hereunder shall be effected by such assignments, transfers of title, bills of
sale and other instruments as shall be reasonably requested by Xircom.
1.3. Purchase Price and Liabilities.
(a) Purchase Price. At the Closing, Xircom shall pay to or for the
benefit of Franklin $13,250,000 (the "Purchase Price"), which shall be paid by
wire transfer of immediately available Federal funds to accounts designated by
Franklin.
(b) Liabilities. At the Closing, Xircom shall assume and agree to
pay, perform and discharge the liabilities and obligations (the "Assumed
Liabilities") (I) under the contracts, agreements and commitments set forth on
Schedule 1.2(a) which are assigned to Xircom (or held for the benefit of Xircom)
arising or accruing after the Closing Time or which are to be performed after
the Closing Time, (II) relating to sales commissions resulting from ▇▇▇ Products
sold by Xircom following the Closing Date, (III) relating to credits for
cooperative advertising which runs after the Closing Date with respect to ▇▇▇
Products sold by
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Franklin prior to the Closing Date; (IV) relating to claims made by Franklin's
customers under Franklin's price protection policies with respect to ▇▇▇
Products sold by Franklin prior to the Closing Date which claims arise as a
result of Xircom's post-Closing Date pricing policies; and (V) except as
elsewhere noted in this Agreement as regards or will be associated with any
obligation or duties imposed on Franklin in relation to the class action titled
Winigrad ▇. ▇▇▇▇▇▇▇▇ Electronic Publishers, Inc., arising under warranty claims,
return rights or comparable customer rights for ▇▇▇ Products shipped or sold by
Franklin prior to the Closing Time, including, but not limited to, any
obligations to Starfish Software or ▇▇▇▇▇ Enterprises that arise or accrue after
the Closing Time under any agreements listed in Schedule 1.2(a) that are held by
Franklin for the benefit of Xircom hereunder. Such assumption and agreement
shall be effected by such instruments as shall be reasonably requested by
Franklin. Xircom shall not assume or have any liability with respect to any
liability or obligation of Franklin related to the Excluded Assets or any other
liability or obligation related to the ▇▇▇ Business, including, without
limitation:
(i) liabilities of Franklin in connection with or relating to
this Agreement, including counsel and accountant's fees, and broker's
commissions;
(ii) liabilities in connection with or relating to all
actions, suits, claims, proceedings, demands, assessments and judgments,
costs, losses, liabilities, damages, deficiencies and expenses (whether or
not arising out of third party claims), including, without limitation,
interest, penalties, reasonable attorneys' and accountants' fees and all
amounts paid or payable in investigation, defense or settlement of any of
the foregoing, to the extent the same relate to or arise from the
operation of the ▇▇▇ Business prior to the Closing Date, other than
liabilities arising under warranty claims, return rights and
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comparable customer rights for ▇▇▇ Products shipped or sold by Franklin
prior to the Closing Time; and
(iii) liabilities for trade account payables and other accrued
liabilities relating to the business and operations of Franklin for
periods prior to the Closing Date.
(c) Allocation of Purchase Price. The Purchase Price shall be
allocated as specified in Schedule 1.3(c). Neither Franklin nor Xircom shall
file any tax return or take any position, tax or otherwise, or make any filing
inconsistent with the allocations set forth in Schedule 1.3(c).
(d) Sales and Transfer Taxes and Fees. Xircom and Franklin shall
each file such tax returns or other documentation with each "Governmental Body"
for which they, as a seller or buyer (as the case may be) of assets are
primarily liable, and shall provide a copy thereof to the other party, with
respect to any sales taxes and/or use taxes, recording fees, personal property
title application fees, patent and trademark assignment registration fees, and
all other taxes and fees on transfer of the ▇▇▇ Assets arising by virtue of the
sale of the ▇▇▇ Assets by Franklin to Xircom. Notwithstanding anything else
herein to the contrary, each of Xircom and Franklin shall coordinate with the
other party so that each shall pay when due from assets other than the ▇▇▇
Assets one-half of all such taxes and fees regardless of whether the liability
for such taxes or fees is imposed by law upon Franklin or upon Xircom.
"Governmental Body" means any Federal, state, local or foreign governmental
authority or regulatory body, any subdivision, agency, commission or authority
thereof (including, without limitation, environmental protection, planning and
zoning), or any quasi-governmental or private body exercising any regulatory
authority thereunder and any person directly or indirectly owned by
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and subject to the control of any of the foregoing, or any court, arbitrator or
other judicial or quasi-judicial tribunal.
Second: Existing Franklin Finished Goods.
2.1. Certain of the ▇▇▇ Assets are currently labeled and identified
as Franklin products. Franklin and Xircom agree that Xircom is authorized to
sell these Franklin-labeled products for Xircom's own account. Franklin hereby
designates and authorizes Xircom to act as a distributor of such
Franklin-labeled products, solely until such time as all such Franklin-labeled
products have been sold by Xircom. Xircom is authorized to retain and to use any
existing Franklin-labeled packaging, manuals, labels, product markings and
related items purchased under this Agreement associated with such
Franklin-labeled products, solely in connection with sales by Xircom of such
Franklin-labeled products.
2.2. Xircom agrees that it will annotate, overlay, supplement or
otherwise modify all applicable manuals, product literature and other end-user
items to ensure that the end-user is referred directly to Xircom for any and all
product support, warranty claims, repair, return and other post-sale ▇▇▇ Product
related activity.
Third: Representations and Warranties of Franklin. Franklin
represents and warrants to Xircom that:
3.1. Organization and Good Standing. Franklin is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Franklin has the power and authority to conduct
all of the business and activities conducted by it and to own or lease all of
the assets owned or leased by it.
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3.2. Authority. The Board of Directors of Franklin has authorized
the execution and delivery by Franklin of this Agreement and all other documents
contemplated hereby and the performance and consummation of the transactions
contemplated hereby and thereby. Franklin has the corporate power and authority
to execute and deliver this Agreement and all other documents contemplated
hereby, to consummate the transactions hereby and thereby contemplated and to
take all other actions required to be taken by it pursuant to the provisions
hereof and thereof. This Agreement and all other documents required hereby have
been duly and validly executed and delivered by Franklin to Xircom, are valid
and binding upon Franklin and enforceable against Franklin in accordance with
their respective terms.
3.3. No Default; Non-Contravention. Except as set forth on Schedule
3.3, neither the execution and delivery of this Agreement and all other
documents contemplated hereby nor the consummation of the transactions
contemplated hereby and thereby (a) will constitute any violation or breach of
the Certificate of Incorporation or By-Laws of Franklin or (b) will result in
the breach or termination of or give rise to a right of termination of, or
accelerate the performance required by, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under
(i) any provision of any contract, agreement, instrument, judicial or
administrative order or decree to which Franklin is a party and by which the ▇▇▇
Assets or the ▇▇▇ Business may be affected or (ii) any order, writ, injunction,
decree, statute, rule or regulation applicable to the ▇▇▇ Assets, the ▇▇▇
Business or Franklin, in each case, that would limit Franklin's ability to
consummate the transactions contemplated by this Agreement, or (c) will result
in the creation of any "Lien" on any of the ▇▇▇ Assets that would limit
Franklin's ability to consummate the transactions contemplated by
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this Agreement. "Lien" means any mortgage, charge, pledge, lien, security
interest, claim, encumbrance or restriction, of any kind or nature.
3.4. Consents and Approvals. Except as set forth on Schedule 3.4, no
consent, authorization, order or approval of, or filing or registration with,
any Governmental Body or third party is required for the execution and delivery
by Franklin of this Agreement and all other documents contemplated hereby and
the consummation by Franklin of the transactions contemplated hereby and
thereby, including the assignment of Franklin's right, title and interest in and
to the ▇▇▇ Assets (without termination or alteration).
3.5. Compliance with Law. (a) Except as set forth on Schedule
3.5(a), Franklin has complied in all material respects with all statutes, laws,
treaties, rules, codes, ordinances, regulations, permits, certificates and
orders of any Governmental Body and all judgments, decrees, injunctions, writs,
orders and like actions of any Governmental Body, applicable to Franklin, the
▇▇▇ Business or the ▇▇▇ Assets, including, without limitation, any federal,
state or local laws, rules or regulations regulating fair and equal employment
practices, the safety of the workplace, antitrust, wages, hours, collective
bargaining and the payment of withholding or taxes of all types.
(b) Franklin has obtained and maintained all permits, licenses,
consents and approvals necessary for Franklin to conduct the ▇▇▇ Business
required by any Governmental Body. All such permits, licenses, consents and
approvals are set forth on Schedule 3.5(b).
3.6. Title; Liens. Franklin has good title to all of the ▇▇▇ Assets,
free and clear of all Liens.
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3.7. Litigation. Except as set forth on Schedule 3.7, there is no
action, suit, claim, proceeding or investigation pending or, to the knowledge of
Franklin, threatened against or affecting any of the ▇▇▇ Assets or the ▇▇▇
Business. The matters set forth on Schedule 3.7, if decided adversely to
▇▇▇▇▇▇▇▇, ▇▇▇▇ not result in a material adverse change in the ▇▇▇ Assets or the
▇▇▇ Business..
3.8. Intellectual Property. (a) Franklin has exclusive ownership of,
or a license to use, all Intellectual Property relating to or used by Franklin
in relation to the ▇▇▇ Assets or the ▇▇▇ Business (collectively, the "▇▇▇
Intellectual Property"). The ▇▇▇ Intellectual Property is listed on Schedule
3.8. Franklin's rights in all of the ▇▇▇ Intellectual Property owned by Franklin
are freely transferable. There are no claims or demands of any other person
pertaining to any of the ▇▇▇ Intellectual Property owned by Franklin and no
proceedings have been instituted, or are pending or, to the knowledge of
Franklin, threatened, which challenge the rights of Franklin in respect thereof.
Except as set forth on Schedule 3.8, Franklin has the right to use, free and
clear of claims or rights of other persons, all customer lists, designs,
manufacturing or other processes, computer software, systems, data compilations,
research results and other information required for or incident to the ▇▇▇
Assets or the ▇▇▇ Business.
(b) All of the patents, patent applications, trademark
registrations, trademark applications and registered copyrights included in the
▇▇▇ Intellectual Property have been duly registered in, filed in or issued by
the United States Patent and Trademark Office, the United States Register of
Copyrights, or the corresponding offices of other jurisdictions as identified on
Schedule 3.8, and have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations of the United
States or each such other jurisdiction.
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(c) All licenses or other agreements under which Franklin is granted
rights in the ▇▇▇ Intellectual Property are listed in Schedule 1.2(a). Except as
set forth on Schedule 3.8, to the knowledge of Franklin, all said licenses or
other agreements are in full force and effect and there is no material default
by any party thereto. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Xircom.
(d) All licenses or other agreements under which Franklin has
granted rights to others in ▇▇▇ Intellectual Property are listed in Schedule
3.8. To the knowledge of Franklin, all said licenses or other agreements are in
full force and effect and there is no material default by any party thereto, and
all Franklin's rights thereunder are freely assignable. True and complete copies
of all such licenses or other agreements, and any amendments thereto, have been
provided to Xircom.
(e) Franklin has taken all steps required in accordance with sound
business practice to establish and preserve its ownership of, and as applicable,
the confidentiality of, all ▇▇▇ Intellectual Property rights. Franklin has
required all employees having access to valuable non-public information of
Franklin to execute agreements in the form attached to Schedule 3.8. Franklin
has no knowledge of any infringement by others of any of its ▇▇▇ Intellectual
Property rights.
(f) Except as set forth on Schedule 3.8, to the knowledge of
Franklin, the ▇▇▇ Assets and the ▇▇▇ Business do not infringe on any
Intellectual Property rights of any other person or party. No proceeding
charging Franklin with infringement by the ▇▇▇ Assets or the ▇▇▇ Business of any
adversely held Intellectual Property has been filed or, to the knowledge of
Franklin, is threatened to be filed. To Franklin's knowledge, there exists no
unexpired patent
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or patent application which includes claims that would be infringed by or
otherwise adversely affect the ▇▇▇ Assets or the ▇▇▇ Business. To the knowledge
of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ is not making unauthorized use of any confidential
information or trade secrets of any person in connection with the ▇▇▇ Assets or
the ▇▇▇ Business.
3.9. Completeness of ▇▇▇ Assets. The ▇▇▇ Assets are adequate and
suitable for the conduct of the ▇▇▇ Business and include all tangible and
intangible property necessary for Xircom to continue the conduct of the ▇▇▇
Business as now conducted by Franklin. The Inventory consists of items of first
quality useable in the ordinary course of business. The work in process and
finished goods included within such inventory are suitable for the ▇▇▇ Business
and are of at least the standard quality for such items.
3.10. Contracts. Except as otherwise set forth on Schedule 1.2(a),
Franklin is not in default under any contract, agreement or commitment set forth
on Schedule 1.2(a) which are assigned to Xircom (or held for the benefit of
Xircom), nor has any event occurred which, with notice or lapse of time, or
both, could result in a default under any such contract, agreement or
commitment. To the knowledge of Franklin, Schedule 1.2(a) also describes all
actions, omissions and defaults, if any, by the other party to any such
contract, agreement or commitment which, with notice or lapse of time, or both,
could result in a default thereunder. Except as noted on Schedule 1.2(a), each
such contract, agreement or commitment is in full force and effect, is freely
transferable and/or assignable to Xircom, and constitutes a valid and binding
obligation of, and is legally enforceable in accordance with its terms against,
the parties thereto.
3.11. Customers and Sales. Schedule 3.11 is a list of the largest 20
customers of ▇▇▇ Products, together with summaries of the sales made to each
such customer during the most
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recent fiscal year. Except as indicated in Schedule 3.11, Franklin does not have
any information indicating that any of these customers intend to cease or
materially alter the amount of ▇▇▇ Products they are presently purchasing from
Franklin.
3.12. Full Disclosure. All documents delivered by Franklin in
connection with this Agreement and the transactions contemplated hereby are true
and complete and authentic. The representations, warranties and statements
contained in this Agreement and the certificates, Exhibits and Schedules
delivered to Xircom pursuant to this Agreement by Franklin, when taken together,
do not omit or fail to state a material fact required to be stated therein or
necessary in order to make such representations, warranties and statements not
misleading or incomplete in light of the circumstances under which they were
made.
Fourth: Covenants.
4.1. Non-Competition.
(a) As a material inducement to Xircom to enter into this Agreement and
consummate the transactions contemplated hereby, Franklin agrees, on behalf of
itself and all its existing and future subsidiaries, that, for three years after
the Closing, it will not, without the prior written consent of Xircom, directly
or indirectly, engage or participate in, be employed by or assist in any manner
or in any capacity, or have any interest in or make any loan to any person,
firm, corporation or business which engages anywhere in the world in the
business of designing, manufacturing or selling synchronizable electronic
personal computer companion information management organizers which utilize the
PCMCIA format; provided, however, that the provisions of this Section 4.1(a)
shall terminate if Xircom and all of Xircom's subsidiaries (and its and their
successors or assigns, if any) shall no longer engage in such business.
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(b) As a material inducement to Xircom to enter into this Agreement and
consummate the transactions contemplated hereby, Franklin agrees, on behalf of
itself and all its existing and future subsidiaries, that, for eighteen months
after the Closing, it will not, without the prior written consent of Xircom,
directly or indirectly, engage or participate in, be employed by or assist in
any manner or in any capacity, or have any interest in or make any loan to any
person, firm, corporation or business which engages anywhere in the world in the
business of designing, manufacturing or selling synchronizable electronic
personal computer information management organizers, synchronizable electronic
personal digital assistants, and related synchronizable electronic handheld or
portable multi-function personal information management products which, in each
case, have dimensions less than 100 millimeters long and less than 70
millimeters wide and less than 10.75 millimeters thick as per the orientations
noted on Exhibit 4.1(b) attached hereto; provided, however, that the provisions
of this Section 4.1(b) shall terminate if Xircom and all of Xircom's
subsidiaries (and its and their successors or assigns, if any) shall no longer
engage in such business and further provided that the provision shall not apply
to any card module which contains memory and is intended for use and insertion
into any electronic product, such as a ▇▇▇▇▇▇▇(R) card, which is a current
product of Franklin.
4.2. No Solicitation of Employees. Neither Franklin nor any of its
existing or future subsidiaries will at any time, for three years after the
Closing, directly or indirectly, employ any person who, at the Closing, was an
employee of Xircom, or solicit, encourage, assist, initiate discussion or engage
in negotiation with any such person regarding employment, without
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the prior written consent of Xircom. Neither Xircom nor any of its existing or
future subsidiaries will at any time, for three years after the Closing,
directly or indirectly, employ any person who, at the Closing, was an employee
of Franklin, or solicit, encourage, assist, initiate discussion or engage in
negotiation with any such person regarding employment, without the prior written
consent of Franklin.
Fifth: Representations and Warranties of Xircom. Xircom represents
and warrants to Franklin that:
5.1. Organization and Good Standing. Xircom is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California.
5.2. Authority. The execution and delivery by Xircom of this
Agreement and all other documents contemplated hereby and the performance and
consummation of the transactions contemplated hereby and thereby has been
authorized by Xircom. Xircom has the corporate power and authority to execute
and deliver this Agreement and all other documents contemplated hereby, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by it pursuant to the provisions hereof and
thereof. This Agreement and all other documents required hereby have been duly
and validly executed and delivered by Xircom to Franklin, are valid and binding
upon Xircom and enforceable against Xircom in accordance with their respective
terms.
5.3. No Default; Non-Contravention. Neither the execution and
delivery of this Agreement and all other documents contemplated hereby nor the
consummation of the transactions contemplated hereby and thereby contemplated
will constitute any violation or
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breach of the organizational documents of Xircom or any provision of any
contract, agreement, instrument, judicial or administrative order or decree to
which Xircom is a party.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
5.4. Consents and Approvals. No consent, authorization, order or
approval of, or filing or registration with, any Governmental Body or third
party is required for the execution and delivery by Xircom of this Agreement and
all other documents contemplated hereby and the consummation by Xircom of the
transactions contemplated hereby and thereby.
Sixth: Conditions to Xircom's Obligations. All obligations of Xircom
under this Agreement are subject to the fulfillment of each of the following
conditions, any or all of which may be waived in whole or in part by Xircom, in
its sole discretion:
6.1. Certificates. Xircom shall have received (1) a certificate of
the Secretary of Franklin, dated the Closing Date, setting forth the resolutions
of the Board of Directors of Franklin approving this Agreement and all other
documents required hereby and authorizing the transactions hereby contemplated,
and (2) such other evidence with respect to the fulfillment of said conditions
as Xircom may reasonably request upon reasonable prior notice.
6.2. License Agreement. Franklin shall have executed and delivered
the License Agreement in the form of Exhibit A (the "License Agreement")
relating to a license [+].
6.3. Services Agreement. Franklin shall have executed and delivered
the Services Agreement in the form of Exhibit B (the "Services Agreement").
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6.4. Assignments of Agreements. Except as set forth on Schedule 6.4,
Franklin shall have obtained such consents to assignments from third parties as
may be necessary to provide for the transfer of all contracts, agreements and
commitments applicable to the ▇▇▇ Business from Franklin to Xircom.
Seventh: Conditions to Franklin's Obligations. All obligations of
Franklin under this Agreement are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
Franklin, in its sole discretion:
7.1. Certificates. Franklin shall have received (1) a certificate of
the Secretary of Xircom, dated the Closing Date, setting forth the resolutions
of the Board of Directors of Xircom approving this Agreement and all other
documents required hereby and authorizing the transactions hereby contemplated,
and (2) such other evidence with respect to the fulfillment of said conditions
as Franklin may reasonably request upon reasonable prior notice.
7.2. License Agreement. Xircom shall have executed and delivered the
License Agreement.
7.3. Services Agreement. Xircom shall have executed and delivered
the Services Agreement.
Eighth: Indemnification.
8.1. Indemnification by Franklin. Franklin agrees to indemnify and
hold harmless Xircom and its officers and directors, and each of their
respective affiliates (each, an "Other Xircom Indemnified Party"), from and
against, and to reimburse Xircom and each Other Xircom Indemnified Party with
respect to, any and all loss, damage, liability, cost and expense,
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including attorneys' fees (collectively, "Damages"), incurred by Xircom or such
Other Xircom Indemnified Party by reason of or arising out of or in connection
with (1) a breach of any representation or warranty contained in Article THIRD
of this Agreement, (2) the failure of Franklin to perform any covenant or
agreement required by this Agreement to be performed by it, (3) any actions,
suits, claims, proceedings or investigations involving Franklin or its
affiliates (including the class action titled Winigrad ▇. ▇▇▇▇▇▇▇▇ Electronic
Publishers, Inc. and more fully described on Schedule 3.7), the ▇▇▇ Business or
the ▇▇▇ Assets asserted against Xircom or any Other Xircom Indemnified Party and
arising out of any matter occurring or accruing prior to the Closing Time, other
than liabilities arising under warranty claims, return rights and comparable
customer rights for ▇▇▇ Products shipped or sold by Franklin prior to the
Closing Time, or (4) any liabilities or debts of Franklin other than the Assumed
Liabilities.
8.2. Indemnification by Xircom. Xircom agrees to indemnify and hold
harmless Franklin and its officers and directors, and each of their respective
affiliates (each, an "Other Franklin Indemnified Party"), from and against, and
to reimburse Franklin and each Other Franklin Indemnified Party with respect to,
any and all Damages incurred by Franklin or such Other Franklin Indemnified
Party by reason of or arising out of or in connection with (1) a breach of any
representation or warranty contained in Article FIFTH of this Agreement, (2) the
failure of Xircom to perform any covenant or agreement required by this
Agreement to be performed by it, (3) any actions, suits, claims, proceedings or
investigations involving the ▇▇▇ Business or the ▇▇▇ Assets asserted against
Franklin or any Other Franklin Indemnified Party and arising out of any matter
occurring or accruing after the Closing Time, (4) any liabilities arising under
warranty claims, return rights and comparable customer rights for ▇▇▇ Products
no matter when shipped or sold, (5) any and all Assumed Liabilities or (6) any
credits taken by
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Franklin's customers with respect to price protection or cooperative advertising
which credits constitute Assumed Liabilities.
8.3. Indemnification Procedures. A party entitled to recover an
indemnification payment pursuant to this Article EIGHTH (the "Indemnified
Party") (a) shall give the party required to make such payment (the
"Indemnifying Party") prompt notice of any claim, demand, suit, proceeding or
action (a "Claim") by any person against the Indemnified Party, (b) shall
consult with the Indemnifying Party as to the procedure to be followed in
defending, settling, or compromising the Claim, (c) shall not consent to any
settlement or compromise of the Claim without the written consent of the
Indemnifying Party (which consent, unless the Indemnifying Party has elected to
assume the exclusive defense of such Claim, shall not be unreasonably withheld
or delayed), and (d) shall permit the Indemnifying Party, if it so elects, to
assume the exclusive defense of such Claim, all at the cost and expense of the
Indemnifying Party. If the Indemnified Party shall (i) fail to notify or to
consult with the Indemnifying Party with respect to any Claim in accordance with
subparagraph (a) or (b) above or (ii) consent to the settlement or compromise of
any Claim without having received the written consent of the Indemnifying Party
(unless, if the Indemnifying Party has not elected to assume the exclusive
defense of such Claim, the consent of the Indemnifying Party is unreasonably
withheld or delayed), the Indemnifying Party shall be relieved of its
indemnification obligation with respect to such Claim (provided that failure to
notify the Indemnifying Party of a Claim shall only so relieve the Indemnifying
Party to the extent the failure to notify actually prejudiced the Indemnifying
Party). If the Indemnifying Party shall elect to assume the exclusive defense of
any Claim, it shall notify the Indemnified Party in writing of such election,
and the Indemnifying Party shall not be liable hereunder for any fees or
expenses of the Indemnified Party's counsel
19
relating to such Claim after the date of delivery to the Indemnified Party of
such notice of election. In the event of such election, the Indemnified Party
shall cooperate with the Indemnifying Party and provide it with access to all
books and records of the Indemnified Party relevant to the Claim. The
Indemnifying Party will not compromise or settle any Claim without the written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed) if the relief provided is other than monetary damages for
which the Indemnifying Party is liable hereunder and such relief would adversely
affect the Indemnified Party.
8.4. Basket; Payment. Notwithstanding anything to the contrary set
forth in this Article EIGHTH, Xircom shall not be entitled to indemnification
pursuant to Section 8.1 until the aggregate amount of Damages pursuant to
Section 8.1 exceeds $100,000 (the "Floor"). Once Xircom's Damages pursuant to
Section 8.1 exceed the Floor, Xircom shall be entitled to be indemnified for the
full amount of such Damages in excess of the Floor; provided, however, that
Franklin shall not be required to indemnify Xircom for Damages pursuant to
Section 8.1 in excess of the Purchase Price.
Ninth: Expenses of the Transaction; Brokers. Except for the services
performed for Franklin by Broadview International LLC whose fees shall be paid
by Xircom out of the total Purchase Price at the Closing Time, each of Franklin
and Xircom represents and warrants that it has not employed or utilized the
services of any broker in connection with this Agreement or the transactions
contemplated hereby. Except as otherwise expressly set forth herein, each of
Franklin and Xircom agrees to pay its own expenses (including brokers',
attorneys' and auditors' fees) in connection with this Agreement and the
transactions hereby contemplated.
20
Tenth: Further Assurances. Franklin agrees that it will, at any time
and from time to time after the Closing Date, upon the request of Xircom, and
without further consideration, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, conveyances and assurances reasonably requested by
Xircom as may be required for the better assigning, transferring, granting,
conveying, assuring, and confirming to Xircom, or to its successors and assigns,
or for the aiding, assisting, collecting and reducing to possession any or all
of the ▇▇▇ Assets to be assigned to Xircom as provided herein, and any or all
obligations of Franklin hereunder. Xircom agrees that it will, at any time and
from time to time after the Closing Date, upon the request of Franklin, and
without further consideration, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
assumptions and assurances reasonably requested by Franklin as may be required
for the better assumption by Xircom of the Assumed Liabilities, and any or all
obligations of Xircom hereunder.
Eleventh: Miscellaneous.
11.1. Survival of Representations. All statements, certifications,
indemnifications, representations and warranties made herein by Franklin and
Xircom, and its respective obligations to be performed pursuant to the terms
hereof, shall survive the Closing for a period of one year.
11.2. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(i) when delivered personally against written receipt therefor or by private
courier, (ii) when actually delivered by
21
registered or certified United States mail, return receipt requested, or (iii)
when received by telecopy (provided that it is confirmed by a means specified in
clause (i) or (ii)), addressed as follows:
If to Franklin, to:
Franklin Electronic Publishers, Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Xircom, to:
Xircom, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Nordman, Cormany, Hair & Compton
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party may indicate by a notice delivered to the
other parties.
22
11.3. No Modification Except in Writing. This Agreement may not be
changed, modified or amended except by a writing signed by the party to be
charged and then only to the extent therein set forth.
11.4. Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, and all other documents to be delivered in connection herewith
and therewith, sets forth the entire agreement and understanding between
Franklin and Xircom as to the subject matter hereof and thereof, respectively,
and merges and supersedes all prior discussions, agreements and understandings
of every kind and nature among them, and neither Franklin nor Xircom shall be
bound by any condition, definition, warranty or representation other than as
expressly provided for in this Agreement.
11.5. Severability. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, the remainder of this Agreement and the application of such provision
to other persons or circumstances shall not be affected unless the provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
11.6. Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement and the rights and obligations of the parties hereto may
not be assigned without the prior written consent of the other party hereto.
11.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be
23
performed wholly within said State, without giving effect to the conflict of
laws principles thereof.
11.8. Captions. The captions appearing in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope and intent of this Agreement or any of the
provisions hereof.
11.9. Publicity. Except as otherwise required by law, press releases
concerning the transactions contemplated by this Agreement shall be made only
with the prior agreement of Franklin and Xircom.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
XIRCOM, INC. FRANKLIN ELECTRONIC
PUBLISHERS, INCORPORATED
By: ▇. ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary and General Counsel Title: Executive Vice President
24
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
FOR THE INFORMATION REPRESENTED BY A
DAGGER [+] HEREIN. THE OMITTED INFORMATION
HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Schedule 1.2(a)
I. REX ASSETS
All of Franklin's rights arising under the following ▇▇▇ related
Agreements:
(a) Starfish Agreement as of ▇▇▇▇▇ ▇, ▇▇▇▇
(▇) Starfish Agreement as of February 19, 1998
(c) Citizen Agreement as of ▇▇▇▇▇ ▇, ▇▇▇▇
(▇) Amendment #2 as of November 11, 1997
(e) Amendment #3 as of April 1, 1998
(f) Amendment #4 as of March 24, 1998
(g) Amendment #5 as of July 13, 1998
(h) ▇▇▇▇▇ Enterprises Agreement dated October 1, 1997
[+]
1
All of Franklin's rights under the following ▇▇▇ Related Trademark Registrations
and Filings:
--------------------------------------------------------------------------------
▇▇▇▇ COUNTRY STATUS
--------------------------------------------------------------------------------
▇▇▇ U.S.A. Registration No. 2,205,231 issued November
24, 1998.
--------------------------------------------------------------------------------
▇▇▇ logo U.S.A. Registration No. 2,205,326 issued November
24, 1998.
--------------------------------------------------------------------------------
Five Symbol Set U.S.A. ITU case in which use declaration was
filed. Response to rejection filed.
--------------------------------------------------------------------------------
REXessory U.S.A. Pending. Response to formalities rejection
filed. Allowance is expected.
--------------------------------------------------------------------------------
▇▇▇ (stylized) Canada Allowed. Storage Tek Canada, Inc. may
oppose.
--------------------------------------------------------------------------------
▇▇▇ Canada Allowed. Storage Tek Canada, Inc. may
oppose.
--------------------------------------------------------------------------------
▇▇▇ (stylized) E.C. Allowed without opposition. Registration
fee has been paid. Registration should
issue.
--------------------------------------------------------------------------------
REX E.C. Opposition has been lodged and information
concerning this opposition is being
received once the EC Trademark Office
determines the admissibility of the
opposition. It is opposition No. B141103.
--------------------------------------------------------------------------------
RxREX U.S.A. ITU case. We will file a Request for an
Extension of Time to Allege Use.
--------------------------------------------------------------------------------
▇▇▇ PRO U.S.A. Case allowed. Statement of Use prepared and
out for signature to be filed by August 23,
1999.
--------------------------------------------------------------------------------
▇▇▇ READY U.S.A. Response to certain objections on
formalities has been filed. We expect
application to be allowed.
--------------------------------------------------------------------------------
Six Symbol Set U.S.A. Trademark application filed on April 14,
1999. Awaiting Office Action.
--------------------------------------------------------------------------------
Six Icon Set U.S.A. Trademark application filed on April 14,
1999. Awaiting Office Action.
--------------------------------------------------------------------------------
All of Franklin's rights under the following United States patents and patent
applications:
--------------------------------------------------------------------------------
SERIAL NUMBER TITLE STATUS
--------------------------------------------------------------------------------
[+] [+] [+]
--------------------------------------------------------------------------------
[+] [+] [+]
--------------------------------------------------------------------------------
All of Franklin's rights in the following ▇▇▇ programs:
(1) Unregistered copyright rights in "cradle speed up code" (subject to
Assignment of Technology dated June 30, 1997) (2) Application for
copyright registration in BCO Bank Switch Support Code
[+]
Domain Names
1. ▇▇▇▇▇▇▇▇.▇▇▇
2. ▇▇▇▇▇▇.▇▇▇
3. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
4. ▇▇▇▇▇▇▇▇▇.▇▇▇
5. ▇▇▇▇▇▇▇▇.▇▇▇
6. ▇▇▇▇▇▇▇▇.▇▇▇
7. ▇▇▇▇▇.▇▇▇
Other ▇▇▇ Assets:
(i) prepaid expenses, advances, rights under royalty payments, or other
comparable rights under agreements between Franklin and third parties associated
with the ▇▇▇ [+] related Agreements noted above in this Schedule 1.2 (a);
(ii) work in process, finished goods in inventory, packaging and manuals
(to the extent necessary to allow for completion of work in process to convert
same into finished goods), and related physical assets used in whole or
primarily in connection with the ▇▇▇ Business for sale to and use by ultimate
end users;
(iii) all technical data and documentation, including all hardware design
information, drawings, manufacturing and test data, and related information as
used or as needed by Franklin in the ▇▇▇ Business;
(iv) all software (including applicable source code), including all
relevant drivers, applications programs, utilities, diagnostic tools, and
related programs incorporated and used by Franklin in the ▇▇▇ Business as listed
on this Schedule;
(v) all designs, styles, product concepts, prototypes, inventions (whether
reduced to practice or not), know-how, processes, procedures, research records,
test information, market
3
surveys, marketing know-how, manufacturing information, research, studies, and
related information used in whole or primarily in connection with the ▇▇▇
Business.
(vi) 800 number for ▇▇▇ support: ▇-▇▇▇-▇▇▇-▇▇▇▇
(vii) tooling for ▇▇▇ products.
[Worldwide Inventory List to Come]
II. EXCLUDED ASSETS
a. [+]
b. [+]
c. Accounts receivable, cash, or cash equivalents (other than prepaid
expenses and advances as noted above in this Schedule 2.2(a) under Other ▇▇▇
Assets).
Schedule 1.3(c) - Purchase Price Allocation
[TO COME]
Schedule 3.3 - Non-Contravention
NONE
Schedule 3.4 - Consents and Approvals
NONE
Franklin requires the consent of a lender to consummate the transactions
contemplated hereby.
Schedule 3.5(a) - Government Rules
NONE
Schedule 3.5(b) - Permits
FCC Tests: EMI Test June 3, 1997
Immunity Test June 24, 1997
Schedule 3.7 - Litigation
Winigrad ▇. ▇▇▇▇▇▇▇▇ Electronic Publishers, Inc., Superior Court of New Jersey,
Law Division, Camden County, Docket No. L157498
Schedule 3.8 - Intellectual Property
(a) The Intellectual Property included on Schedule 1.2(a).
(c) The following defaults exist under the Starfish Agreement of February
19, 1998:
(i) Starfish has not produced the Pro SDK as required under P. 1(a)
of such Agreement;
(ii) Starfish has not completed the development of the ▇▇▇ Sport
Program in accordance with the product specifications and milestones referred to
in P. 1(a) of such Agreement; and
(iii) Starfish has not localized the ▇▇▇ Pro Programs as required
under P. 7 of such Agreement.
(d) Assignment of Technology dated June 30, 1997.
[(e) The BCO Bank Switch Code is found in the Motorola Startac Clipon
Organizer.]
Schedule 3.11 - ▇▇▇ Products' Customer List
[+]
Schedule 4.1(b)
[GRAPHIC OMITTED]
Schedule 5.4 - Consents and Approvals
Schedule 6.4 - Assignments of Agreements
[Attached]
[+]