Document:

Exhibit 10.2

 

 

ASSET PURCHASE AND SALE AGREEMENT

 

 

BY AND AMONG

 

 

SANMINA-SCI CORPORATION

 

SANMINA-SCI SYSTEMS
SINGAPORE PTE. LTD.

 

 

AND

 

 

ADAPTEC MANUFACTURING (S) PTE. LTD.

 

 

Dated as of December 23, 2005

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Certain Definitions

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND
  SALE OF ASSETS

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Purchase and Sale of Assets

  	
  8

  
	
   

  	
  2.2

  	
  Assumption of Liabilities

  	
  10

  
	
   

  	
  2.3

  	
  Closing

  	
  12

  
	
   

  	
  2.4

  	
  Post-Closing Purchase Price Adjustments

  	
  13

  
	
   

  	
  2.5

  	
  Prorations

  	
  15

  
	
   

  	
  2.6

  	
  Taxes

  	
  16

  
	
   

  	
  2.7

  	
  Nontransferable Assets

  	
  16

  
	
   

  	
  2.8

  	
  Taking of Necessary Action;
  Further Action

  	
  17

  
	
   

  	
  2.9

  	
  Allocation of Purchase Price Consideration

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS
  AND WARRANTIES OF SELLER

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Organization, Qualification, and
  Corporate Power

  	
  18

  
	
   

  	
  3.2

  	
  Authorization

  	
  18

  
	
   

  	
  3.3

  	
  No Conflicts

  	
  18

  
	
   

  	
  3.4

  	
  Consents

  	
  18

  
	
   

  	
  3.5

  	
  Legal Compliance

  	
  18

  
	
   

  	
  3.6

  	
  Tax Matters

  	
  19

  
	
   

  	
  3.7

  	
  Title of Properties; Absence of
  Liens and Encumbrances; Condition of Equipment

  	
  19

  
	
   

  	
  3.8

  	
  Intellectual Property

  	
  20

  
	
   

  	
  3.9

  	
  Contracts

  	
  20

  
	
   

  	
  3.10

  	
  Power of Attorney

  	
  21

  
	
   

  	
  3.11

  	
  Insurance

  	
  21

  
	
   

  	
  3.12

  	
  Litigation

  	
  21

  
	
   

  	
  3.13

  	
  Employees

  	
  21

  
	
   

  	
  3.14

  	
  Labor Matters

  	
  21

  
	
   

  	
  3.15

  	
  Environment, Health and Safety

  	
  22

  
	
   

  	
  3.16

  	
  Fees

  	
  23

  
	
   

  	
  3.17

  	
  Complete Copies of Materials

  	
  23

  
	
   

  	
  3.18

  	
  Board Approval

  	
  23

  
	
   

  	
  3.19

  	
  Inventories

  	
  23

  
	
   

  	
  3.20

  	
  Facility and Tangible Personal Property

  	
  24

  
	
   

  	
  3.21

  	
  Sufficiency of Purchased Assets

  	
  24

  
	
   

  	
  3.22

  	
  Operations Permits

  	
  24

  
	
   

  	
  3.23

  	
  ISO Certifications and Non-Governmental
  Certifications

  	
  24

  
	
   

  	
  3.24

  	
  Suppliers

  	
  24

  

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS
  AND WARRANTIES OF PARENT AND BUYER

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization, Qualification, and
  Corporate Power

  	
  25

  
	
   

  	
  4.2

  	
  Authorization

  	
  25

  
	
   

  	
  4.3

  	
  No Conflicts

  	
  25

  
	
   

  	
  4.4

  	
  Consents

  	
  26

  
	
   

  	
  4.5

  	
  Purchase Price

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V PRE-CLOSING
  COVENANTS

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Operation of Business

  	
  26

  
	
   

  	
  5.2

  	
  Access to Information

  	
  28

  
	
   

  	
  5.3

  	
  Notice of Developments

  	
  28

  
	
   

  	
  5.4

  	
  No Solicitation

  	
  29

  
	
   

  	
  5.5

  	
  Reasonable Efforts

  	
  29

  
	
   

  	
  5.6

  	
  Notices and Consents

  	
  29

  
	
   

  	
  5.7

  	
  Employee Matters

  	
  29

  
	
   

  	
  5.8

  	
  Confidentiality

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI OTHER AGREEMENTS AND COVENANTS

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Additional Documents and Further
  Assurances

  	
  30

  
	
   

  	
  6.2

  	
  Inventory Put and Call; Covenant
  to Purchase Inventory

  	
  30

  
	
   

  	
  6.3

  	
  Repurchase of Inventory and
  Equipment Under Certain Circumstances

  	
  32

  
	
   

  	
  6.4

  	
  Consigned Inventories

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII CONDITIONS TO
  THE CLOSING

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Conditions to Parent’s and Buyer’s
  Obligation to Close

  	
  34

  
	
   

  	
  7.2

  	
  Conditions to Seller’s Obligations

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Representations, Warranties and Covenants

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX INDEMNIFICATION

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Indemnification by Seller

  	
  37

  
	
   

  	
  9.2

  	
  Indemnification by Buyer and
  Parent

  	
  38

  
	
   

  	
  9.3

  	
  Notice and Opportunity to Defend

  	
  39

  
	
   

  	
  9.4

  	
  Remedies

  	
  40

  
	
   

  	
  9.5

  	
  Certain Limitations

  	
  40

  
	
   

  	
  9.6

  	
  Environmental Covenants

  	
  41

  
	
   

  	
  9.7

  	
  Escrow

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X TERMINATION

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Termination of the Agreement

  	
  42

  
	
   

  	
  10.2

  	
  Effect of Termination

  	
  43

  

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE XI MISCELLANEOUS

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Press Releases and Public
  Announcements

  	
  43

  
	
   

  	
  11.2

  	
  No Third-Party Beneficiaries

  	
  43

  
	
   

  	
  11.3

  	
  Entire Agreement and Modification

  	
  43

  
	
   

  	
  11.4

  	
  Amendment

  	
  43

  
	
   

  	
  11.5

  	
  Waivers

  	
  43

  
	
   

  	
  11.6

  	
  Successors and Assigns

  	
  44

  
	
   

  	
  11.7

  	
  Counterparts

  	
  44

  
	
   

  	
  11.8

  	
  Headings

  	
  44

  
	
   

  	
  11.9

  	
  Notices

  	
  44

  
	
   

  	
  11.10

  	
  Governing Law

  	
  45

  
	
   

  	
  11.11

  	
  Severability

  	
  46

  
	
   

  	
  11.12

  	
  Expenses

  	
  46

  
	
   

  	
  11.13

  	
  Construction

  	
  46

  
	
   

  	
  11.14

  	
  Seller Disclosure Letter

  	
  46

  
	
   

  	
  11.15

  	
  Attorneys’ Fees

  	
  46

  
	
   

  	
  11.16

  	
  Further Assurances

  	
  46

  
	
   

  	
  11.17

  	
  Time of Essence

  	
  46

  
	
   

  	
  11.18

  	
  Consent to Jurisdiction

  	
  47

  
	
   

  	
  11.19

  	
  Schedules and Exhibits

  	
  47

  

 

iii

 

	
  EXHIBITS

  
	
   

  
	
  Exhibit A –Transition Services Agreement

  
	
  Exhibit B – Employee Secondment Agreement

  
	
  Exhibit C – Facility Transfer Agreement

  
	
  Exhibit D – Supply Agreement

  

 

iv

 

ASSET PURCHASE AND SALE AGREEMENT

 

THIS ASSET PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of
December 23, 2005, by and among Sanmina-SCI Corporation, a Delaware corporation
(“Parent”), Sanmina-SCI
Systems Singapore Pte. Ltd., a company incorporated in Singapore and a
wholly-owned subsidiary of Parent (“Buyer”)
and Adaptec Manufacturing (S) Pte. Ltd., a company incorporated in Singapore (“Seller”). 
Parent, Buyer and Seller are sometimes referred to herein individually
as a “Party” and collectively as
the “Parties.”

RECITALS

 

A.            Seller
is engaged the Business at the facility listed on Schedule A (the “Facility”). 
For purpose of this Agreement, the “Business”
means the printed circuit board assembly manufacturing and storage system
manufacturing currently conducted by Seller using the Purchased Assets at the
Facility, which Business will be transferred to Buyer pursuant to this
Agreement.

 

B.            Seller desires to sell
to Buyer, and Buyer desires to purchase from Seller, on the terms and subject
to the conditions set forth herein, the Purchased Assets of Seller described
herein, and Seller desires Buyer to assume the Assumed Liabilities, which Buyer
would agree to assume on the terms and subject to the conditions set forth
herein.

 

C.            The Board of Directors
of each of Parent, Buyer and Seller believes it is in the best interests of its
respective corporation and shareholders that the transactions contemplated
hereby be consummated and, in furtherance thereof, has approved this Agreement
and the transactions contemplated hereby.

 

D.            Parent, Buyer and
Seller desire to make certain representations, warranties, covenants and other
agreements in connection with the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the parties
agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1           Certain Definitions. 
As used in this Agreement, the following terms have the following meanings
(terms defined in the singular to have a correlative meaning when used in the
plural and vice versa).  Certain other
terms are defined in the text of this Agreement.

 

(a)           “Actions or Proceeding” means any action,
suit, proceeding, or arbitration.

 

 

(b)           “Affiliate” means any Person that directly
or indirectly, through one of more intermediaries, controls or is controlled by
or is under common control with the Person specified.  For purposes of this definition, control of a
Person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by voting power, Contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.

 

(c)           “Assets” of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including without
limitation, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory and goods.

 

(d)           “Assumed Liabilities” has the meaning set
forth in Section 2.2(b).

 

(e)           “Books and Records” of any Person means all
files, documents, instruments, papers, books and records relating to the
business, operations, condition of (financial or other), results of operations
and Assets of such Person, including without limitation financial statements,
Tax Returns, budgets, reliability and cost data, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Permits, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental
studies and plans.

 

(f)            “Business Day” shall mean a day other than
Saturday and Sunday or any day on which banks located in the Republic of
Singapore or the State of California are authorized or obligated to close.

 

(g)           “Closing Fixed Asset and Inventories Statement”
means the statement of Closing Net Asset Value of Fixed Assets and Inventories
based on the unaudited pro forma balance sheet in respect of the Business as of
the Closing Date, prepared in accordance with generally accepted accounting
principles as consistently applied by Seller in Seller’s preparation of its
periodic financial statements in each of the three quarters which precede the
Closing Date (other than the omission of notes and normal reoccurring
adjustments).

 

(h)           “Closing Date” means the date which is two
(2) business days following the satisfaction or, if permitted pursuant to the
terms of Article VII hereof, waiver of the conditions to Closing set forth
in Article VII hereof, or at such other place and such other time or date
as the parties hereto shall mutually agree.

 

(i)            “Closing Documents” means all those
documents, deeds and other instruments which are required by the Definitive
Agreements or by operation of law for the consummation of the purchase and sale
of the Purchased Assets pursuant to this Agreement and the Ancillary Agreements
and the other transactions contemplated thereby (the “Transaction”).

 

2

 

(j)            “Closing Net Asset Value” shall mean the
following:

 

(i)            an
amount equivalent to the standard cost of Inventories as of November 4, 2005 on
the books of Seller on the Closing Date and, to the extent Inventories did not
have standard cost on the books of Seller as of November 4, 2005, standard cost
as of the Closing Date; plus

 

(ii)           an
amount equivalent to the net book value of Fixed Assets on the books of Seller
as of the Closing Date.

 

(k)           “Critical Employees” shall mean the mean the
Employees identified on Schedule 5.7 hereto.

 

(l)            “Definitive Agreements” means this
Agreement, the Ancillary Agreements and the other the binding, detailed and
definitive agreements to be executed between the Parties in respect of the
Transaction.

 

(m)          “Employee” means each employee or consultant
of Seller, including without limitation Transferred Employees, who is employed
in connection with the Business.

 

(n)           “Employee Secondment Agreement” shall mean
that certain agreement substantially in the form attached as Exhibit B
hereto pursuant to which certain employees of Seller engaged in the Business
will be seconded to Buyer.

 

(o)           “Employment
Liabilities” shall mean any and all claims, debts,
liabilities, commitments and obligations, whether fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or unnaccrued,
known or unknown, whenever or however arising, including all costs and expenses
relating thereto arising under law, rule, regulation, permit, action or
proceeding before any governmental authority, order or consent decree or any
award of any arbitrator of any kind relating to any benefit plan, employment
agreement or otherwise relating to an Employee and his or her employment with
Seller.

 

(p)           “Escrow Agreement” shall mean the escrow
agreement in the form reasonably agreed upon by Buyer, Seller and Citibank,
N.A. (or such other escrow agent as Seller and Buyer shall agree), as escrow
agent (the “Escrow Agent”).

 

(q)           “Excluded Liabilities” has the meaning set
forth in Section 2.2(c).

 

(r)            “Execution Date” means the date of the
signing and execution of the Definitive Agreements.

 

(s)           “Expensed Items” means supplies and similar
consumable material on hand at the Facility that are related to and of a nature
customarily used in the Business (other than such supplies and materials
associated with any Excluded Assets).

 

(t)            “Facility” means the facility used in the
operation of the Business and located at the location set forth on Exhibit A,
including all leasehold and facility improvements thereto and fixtures.

 

3

 

(u)           “Facility Transfer Agreement” means the
agreement substantially in the form attached as Exhibit C hereto
pursuant to which ownership of the Facility will be transferred to Buyer.

 

(v)           “Fixed Assets” means all items of plant,
equipment, machinery, tools, furniture and furnishings, office materials and
supplies and other fixed assets listed or described in Schedule 1.1(v)
as of the Closing Date, provided, however,
that as defined herein Fixed Assets shall not include any of the Excluded
Assets and the Facility, including the Facility, leasehold improvements and
fixtures or any buildings or other structures, information technology systems
(other than Purchased IT Systems) or custom equipment, including but not
limited to custom, Business-specific test fixtures, that can only be used in
the Business and is not readily adaptable to alternative uses and including
equipment utilized by the ASIC and desktop software group engineering teams of
Seller that are located at the Facility.

 

(w)          “Governmental Body” means any:

 

(i)            nation,
province, state, county, city, town, village, district, or other jurisdiction
of any nature;

 

(ii)           federal,
provincial, state, local, municipal, foreign, or other government;

 

(iii)          governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);

 

(iv)          multi-national
organization or body; or

 

(v)           body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.

 

(x)            “GST Tax Amount” shall mean an amount equal to Singapore
Goods and Services Tax (“GST”) that may
be chargeable in respect of the sale of the Purchased Assets under this
Agreement.

 

(y)           “Indebtedness” of any Person means all
monetary obligations of such Person (i) for borrowed money,
(ii) evidenced by notes, bonds, debentures or similar instruments,
(iii) for the deferred purchase price of goods or services (other than
trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases or (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other
Person.

 

(z)            “Intellectual Property” means any or all of
the following and all worldwide common law and statutory rights in, arising out
of, or associated therewith: (i) United States and foreign patents and
utility models and applications therefor and all reissues, divisions,
reexaminations, renewals, extensions, provisionals, continuations and
continuations-in-part thereof (“Patents”);
(ii) inventions (whether patentable or not), improvements, trade secrets,
proprietary information, know-how, and any rights in technology, invention
disclosures,

 

4

 

technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) copyrights, copyright registrations and applications therefor, and
all other rights corresponding thereto throughout the world; (iv) domain
names, uniform resource locators (“URLs”),
other names and locators associated with the Internet, and applications or
registrations therefor (“Domain Names”);
(v) industrial designs and any registrations and applications therefor;
(vi) trade names, logos, common law trademarks and service marks,
trademark and service mark registrations, related goodwill and applications
therefor throughout the world (“Trademarks”);
(vii) all rights in databases and data collections; (viii) all moral
and economic rights of authors and inventors, however denominated; and
(ix) any similar or equivalent rights to any of the foregoing (as
applicable).

 

(aa)         “Inventories” means all good production
ready inventories of raw materials and work in process listed on Schedule 1.1(aa)
as of the Closing Date.  Schedule 1.1(aa)
shall include Inventories which, based on firm, non-cancelable customer
purchase orders or customer forecasts, which Seller believes will be used in
products to be delivered to Seller within the six (6) month period following
the Closing Date.  For purposes of
Section 6.2 hereof, the term “Inventories” shall also include material,
components and other supplies acquired by Seller pursuant to purchase orders or
other Assigned Contracts assumed by Sellers hereunder as of the Closing
Date.  Inventories shall not include
finished goods.

 

(bb)         “Law”
means any law, statute, rule, regulation, ordinance, extension order, or other
pronouncement having the effect of law of the United States, any foreign
country or any U.S., Singapore or foreign state, county, city or other
political subdivision or of any Governmental Body.

 

(cc)         “Liability” means any Indebtedness,
obligation or other liability of a Person (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due).

 

(dd)         “Lien”
means any mortgage, pledge, lien, charge, claim, security interest, adverse
claims of ownership or use, restrictions on transfer, defect of title or other
encumbrance of any sort, other than (a) mechanic’s, materialmen’s, and
similar liens with respect to any amounts not yet due and payable, and (b) customary liens for Taxes not yet due and payable.

 

(ee)         “Material Adverse
Effect” means with respect to (i) Parent or Buyer, any material
adverse change in the business, operations, assets (including intangible
assets), liabilities (contingent or otherwise), results of operations or
financial performance or condition (financial or otherwise) of such Party,
which is material to Parent and Buyer, taken as a whole, and (ii) with respect to Seller, any material adverse change
in the business, operations, assets (including intangible assets), liabilities
(contingent or otherwise), results of operations or financial performance or
condition (financial or otherwise) of such Party which is material to the
Business taken as a whole; provided, however,
that in determining whether a Material Adverse Effect has occurred, any effect
to the extent attributable to the following shall not be considered:  (a) changes in laws, rules or regulations
of general applicability or interpretations thereof by governmental entities,
and (b) any effects resulting from the announcement of this Agreement in
accordance with this Agreement.

 

5

 

(ff)           “Multiemployer Plan” shall mean any “Pension
Plan” which is a “multiemployer plan,” as defined in Section 3(37) of
ERISA.

 

(gg)         “Order” means any writ, judgment, decree,
injunction, administrative order, directive or similar order or directive of
any Governmental Body (in each such case whether preliminary or final).

 

(hh)         “Permit” shall mean the licenses, permits,
authorizations, registrations, certificates, variances, approvals, consents and
franchises and similar rights obtained from governments and any Governmental
Body, and any pending applications relating to the foregoing.

 

(ii)           “Person”
means any individual, corporation (including any non-profit corporation),
company, general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, Governmental
Body or other entity.

 

(jj)           “Preliminary Fixed Asset and Inventories Statement”
means the statement of Preliminary Net Asset Value of Fixed Assets and
Inventories based upon Seller’s good faith estimate of the unaudited pro forma
balance sheet in respect of the Business as of the Closing Date prepared in
accordance with generally accepted accounting principles as consistently
applied by Seller in Seller’s preparation of its periodic financial statements in
each of the three quarters which precede the Closing Date (other than the
omission of notes and normal reoccurring adjustments).

 

(kk)         “Preliminary Net Asset Value” shall mean the
following:

 

(i)            an
amount equivalent to the standard cost of Inventories as of November 4, 2005 on
the books of Seller on the Closing Date and, to the extent Inventories did not
have standard cost on the books of Seller as of November 4, 2005, standard cost
as of the Closing Date; plus

 

(ii)           an
amount equivalent to the net book value of Fixed Assets on the books of Seller
as of the Closing Date

 

(ll)           “Purchased IT Systems” are those systems set forth on Schedule 1.1(ll).

 

(mm)       “Purchase Order” means all material,
components and other supplies to be acquired by Seller pursuant to purchase
orders listed on Schedule 1.1(mm) which are not Inventory or
Expensed Items.  Schedule 1.1(mm)
shall include purchase orders for material, components and other supplies
which, based on firm, non-cancelable customer purchase orders or customer forecasts,
Seller reasonably believes will be used in products to be delivered to Seller
within the six (6) month period following the Closing Date after taking into
account the Inventory set forth on Schedule 1.1(aa).

 

(nn)         “Purchase Price” means an amount equal to the Preliminary Net Asset Value
(as adjusted pursuant to Section 2.4) (the “Preliminary Net Asset Value Amount”) plus
the purchase price of the Facility (the “Facility Purchase Price”)
of $9.5 million.

 

6

 

(oo)          “Representatives”
means, with respect to a Person, that Person’s officers, directors, employees,
accountants, counsel, investment bankers, financial advisors, agents and other
representatives.

 

(pp)         “Seller’s Retained Environmental Liabilities” means any
liability, obligation, judgment, penalty, fine, cost or expense, (including
reasonable attorneys’ fees and environmental consultant costs) of any kind or
nature, or the duty to indemnify, defend or reimburse any Person (an “Environmental Liability”) with respect to: (i) the
presence on or before the Closing Date of any Hazardous Material in the soil,
groundwater, surface water, air or building materials of any Business Facility
(other than any Hazardous Material in Inventory Fixed Asset and Expenses
Items), or known by Seller to be migrating to any Business Facility as of the
Closing Date (“Pre-Existing Contamination”);
(ii) the migration at any time prior to or after the Closing Date of Pre-Existing
Contamination to any other real property, or the soil, groundwater, surface
water, air or building materials thereof; (iii) the exposure of any Person
to Pre-Existing Contamination or to Hazardous Materials in the course of or as
a consequence of any activities of the operation
of the printed circuit board assembly manufacturing and storage system
manufacturing business conducted by Seller in Singapore prior to the Closing,
without regard to whether any health effect of the exposure has been manifested
as of the Closing Date; (iv) the violation of any Environmental Laws by
the Seller or its agents, employees, predecessors in interest, contractors,
invitees or licensees prior to the Closing Date or in connection with the
operation of the Business prior to the Closing Date; (v) any actions or
proceedings brought or threatened by any third party with respect to any of the
foregoing that they existed as of the Closing Date and (vi)  Section
1.1(pp)(iv) to the extent it continues during the six (6) month period
following the Closing Date; provided, however, that to the extent Buyer becomes
aware of any of the foregoing during the six (6) month period following the
Closing Date and such liability arises from Buyer’s continued operation of the
Business, Buyer shall promptly notify and confer with Seller and shall take
reasonable steps to mitigate and if appropriate remediate such noncompliance
provided that Seller shall reimburse Buyer for reasonable costs incurred
therefore.  For the avoidance of doubt, such remediation costs shall be included in
Seller’s Retained Environmental Liabilities.  The foregoing notwithstanding, an
Environmental Liability shall not be considered a Seller’s Retained
Environmental Liability to the extent it arises from Buyer’s negligent actions.

 

(qq)         “Subsidiaries” means any and all corporations,
partnerships, joint ventures, associations and other entities controlled by the
applicable Person directly or indirectly through one or more intermediaries.

 

(rr)           “Supply Agreement” means that certain Supply
Agreement attached hereto as Exhibit D entered into by Buyer and
Seller as of the date hereof relating to the provision of manufacturing
services by Buyer.

 

(ss)         “Transferred Employee” means any Employee or
other individual currently providing services to Seller who becomes an employee
of Buyer as a result of the Secondment Agreement.

 

(tt)           “Transition Services Agreement” means that
certain Transition Services Agreement substantially in the form attached hereto
as Exhibit A to be entered into by Buyer and

 

7

 

Seller in substantially
the same form at the Closing with respect to the provision of certain
transition services with respect to the Business following the Closing Date.

 

ARTICLE II

PURCHASE AND SALE OF ASSETS

 

2.1           Purchase and Sale of Assets.

 

(a)           Purchase and Sale of Assets Purchase and Sale.  Upon the
terms and subject to the conditions set forth herein, at the Closing (as
defined in Section 2.3(a) hereof), Buyer shall purchase from Seller, and
Seller shall irrevocably sell, convey, transfer, assign and deliver to Buyer,
the Purchased Assets (as defined in Section 2.1(b) hereof), free and clear
of all Liens (other than Permitted Liens). 
All payment amounts expressed in this Agreement are in U.S. dollars.

 

(b)           Definition of Purchased Assets.  For all
purposes of and under this Agreement, the term “Purchased Assets” shall mean, refer to and include all of
Seller’s right, title and interest in and to all of the following tangible and
intangible assets, properties and rights to the extent owned, used or held for
use by Seller as of the Closing (but specifically excluding the Excluded Assets
(as defined in Section 2.1(c) hereof)):

 

(i)            the Fixed
Assets, the Inventories, Purchased IT Systems, the Expensed Items and the other
tangible personal property used in connection with the Business, and listed on Schedule 2.1(b)(i)
hereto (the “Tangible Personal Property”);

 

(ii)           all
rights of Seller in, to or under (A) the leases or subleases of Tangible
Personal Property listed on Schedule 2.1(b)(ii)(A) as to which
Seller is the lessor or sublessor, and (B) the leases of Tangible Personal
Property listed on Schedule 2.1(b)(ii)(B) as to which Seller is the
lessee or sublessee, together with any options to purchase the underlying
property (the leases and subleases described in subclauses (A) and (B)
hereof, the “Personal Property Leases”);

 

(iii)          all Books and Records of Seller solely
relating to the Purchased Assets and necessary for the conduct of the Business
at the Closing, other than Books and Records of Seller concerning trade secrets
or other confidential information of Seller, privileged information, internal
financial statements and related information or records; and files and records
of Employees or related human resource matters prior to the Closing (the “Seller Records”);

 

(iv)          all rights
under any contracts, indentures, mortgages, instruments, Liens, guaranties or
other agreements of Seller set forth on Schedule 2.1(b)(iv)
and the Purchase Orders, other than the Excluded Agreements (the “Assigned Contracts”);

 

(v)           all
Permits (including applications therefor) used in the conduct of the Business
set forth in Schedule 2.1(b)(v) (the “Assumed Permits”);

 

8

 

(vi)          all
prepaid expenses listed in Schedule 2.1(b)(vi), and all prepaid expenses
made following the date hereof and prior to the Closing that relate exclusively
to the Business (the “Prepaid Expenses”);
and

 

(vii)         all
security deposits deposited by or on behalf of Seller as lessee or sublessee
under the leases for the Personal Property Leases (the “Security Deposits”).

 

The foregoing notwithstanding, the definition of “Purchased Assets”
shall not include “Expensed Items” for purposes of the representations and
warranties set forth in Article III of this Agreement.

 

(c)           Definition of Excluded Assets. 
Notwithstanding anything to the contrary set forth in this
Section 2.1 or elsewhere in this Agreement, the term “Purchased Assets” shall not mean, refer to
or include the following (collectively, the “Excluded
Assets”) to the extent owned, used or held for use by Seller as of
the Closing:

 

(i)            Cash, cash
equivalents, investments in cash,
securities or otherwise and all Seller bank accounts;

 

(ii)           all refunds
of Taxes with respect to Taxes paid or
accrued by Seller and not reimbursed or paid by Buyer;

 

(iii)          all claims,
actions, deposits, prepayments, refunds,
causes of action, choses in action, rights of recovery, rights of set off, and
rights of recoupment of any kind or nature (including any such item relating to
Taxes) to the extent attributable to the Excluded Agreements, Excluded Assets
or the Excluded Liabilities;

 

(iv)          all rights of
Seller under this Agreement and
Ancillary Agreement, or any other agreement, certificate, instrument or other
document executed and delivered by Seller or Buyer in connection with the
Transaction or any side agreement between Seller and Buyer entered into on or
after the date hereof;

 

(v)           all Books
and Records of Seller which relate to the Taxes, Excluded Agreements or
Excluded Assets; provided, however,
Seller agrees that it shall provide Buyer with copies of, or reasonable access
to, such Books and Records to the extent that any such Books and Records
(i) relate to any of the Business, the Purchased Assets or Assumed
Liabilities; and (ii) do not reflect confidential information or
privileged materials;

 

(vi)          all
accounts receivable and all notes, bonds and other evidences of Indebtedness,
and all security agreements related thereto, including any rights with respect
to any third party collection procedures or any other Actions or Proceedings
which have been commenced in connection therewith;

 

(vii)         all
Intellectual Property of Seller, including the trade name Adaptec and
derivatives thereof and logos associated therewith and all related trademarks
and service marks, and software licenses.

 

9

 

(viii)        all
assets other than Purchased Assets, including but not limited to land,
buildings, leasehold improvements, information technology systems, hardware and
software (and other related intellectual property) and custom equipment
including specifically custom test fixtures specific to the Business and
including equipment and assets utilized by the ASIC and desktop software group
engineering teams of Seller.

 

(ix)           all
capital stock, options and other securities of Seller, and all corporate
minutes and stock books of account of Seller, blank stock certificates,
qualifications to conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals and other documents relating to the organization,
maintenance and existence of Seller as a corporation;

 

(x)            all
agreements and contracts to which Seller is a party or is bound or to which its
assets are subject that are not Assigned Contracts; and

 

(xi)           all
assets or rights that relate to the Employee Plans of Seller, all Books and
Records relating to the Employees of Seller as of the Closing.

 

2.2           Assumption of Liabilities.

 

(a)           Assumption.  Upon the terms and subject to the
conditions set forth herein, at the Closing, Buyer shall assume from Seller,
and Seller shall irrevocably convey, transfer and assign to Buyer, all of the
Assumed Liabilities (as defined in Section 2.2(b) hereof).  Buyer shall not assume any liabilities of
Seller pursuant hereto, other than the Assumed Liabilities.

 

(b)           Definition of Assumed Liabilities.  For all
purposes of and under this Agreement, the term “Assumed Liabilities” shall mean, refer to and include the
following Liabilities of Seller (but specifically excluding the Excluded
Liabilities (as defined in Section 2.2(c) hereof)):

 

(i)            all
Liabilities under Assumed Permits
arising after the Closing Date; and

 

(ii)           all
Liabilities related to the Purchased
Assets or the operation of the Business to the extent arising from or related
to any facts or circumstances occurring after the Closing Date;

 

(iii)          all Liabilities relating to Employees that are hired by Buyer or Parent for actions that
occur after the date of hire.

 

(c)           Definition of Excluded Liabilities. 
Notwithstanding anything to the contrary set forth in this
Section 2.2 or elsewhere in this Agreement, the term “Assumed Liabilities” shall not mean, refer
to or include the following (collectively, “Excluded
Liabilities”):

 

(i)            all
Liabilities relating to agreements not
assumed by Buyer (the “Excluded Agreements”);

 

10

 

(ii)           any and all
Liabilities or obligations of Seller
arising from the breach by Seller of any term, covenant or provisions of any of
the Assigned Contracts prior to the Closing;

 

(iii)          subject to
Section 2.6, all Liabilities for Taxes of Seller or Taxes attributable to the
ownership or operation of the Purchased Assets for any taxable period (or
portion of any period) ending on or prior to the Closing Date and, including,
without limitation, all liabilities for Taxes attributable to the Transaction;

 

(iv)          all
Liabilities relating to options,
warrants and other rights to purchase or otherwise acquire shares of capital
stock of Seller or any Affiliate of Seller;

 

(v)           all
Liabilities to shareholders of Seller or
any Affiliate of Seller in their capacity as such;

 

(vi)          all
Liabilities of Seller under the
Definitive Agreements or any other certificate, instrument or other agreement
entered into by the Parties in connection with the Transaction;

 

(vii)         except as set
forth in Section 2.2(b), all Employment Liabilities and all Liabilities
arising under or with respect to any Pension Plan;

 

(viii)        Seller’s
Retained Environmental Liabilities;

 

(ix)           all
Liabilities for legal, accounting, audit and investment banking fees, brokerage
commissions, and any other expenses incurred by the Seller in connection with
the Transaction;

 

(x)            all
Liabilities for or related to Indebtedness of Seller, on its own behalf or on
behalf of other Persons, to banks, financial institutions or other Persons with
respect to borrowed money, and including any accrued interest payable in
respect thereof;

 

(xi)           all
Liabilities that are attributable to any of the Excluded Assets;

 

(xii)          all
Liabilities of Seller with respect to accounts payable;

 

(xiii)         all
Liabilities of Seller for injury to or death of persons (including, without
limitation, workers’ compensation claims) or damages to or destruction of
properties or assets, arising from the sale or distribution of products
distributed, or business services provided, by Seller on or before the Closing
Date, whether or not any such liability arises before or after the Closing
Date, including, without limitation, liability for consequential and punitive
damages in connection with the foregoing; and

 

(xiv)        all Liabilities other than Assumed Liabilities.

 

11

 

2.3           Closing.

 

(a)           The
consummation of the purchase and sale of the Purchased Assets (the “Closing”) shall take place at such place as
Buyer and Seller mutually agree, at 10:00 A.M. local time, on the Closing Date
unless otherwise mutually agreed by Buyer and Seller.  The Closing shall be deemed to be effective
as of 12:01 A.M., local time, at the place where the Purchased Assets are
located on the applicable Closing Date (the “Closing
Time”).

 

(b)           As
soon as practicable following the date hereof and at all times until the
Closing of the purchase by Buyer of all of the Purchased Assets listed or
described in Section 2.1(b), Buyer and Seller shall cooperate in good
faith to (i) formulate and effect a plan and closing schedule for the
transfer of the Purchased Assets and the Business to Buyer pursuant to this
Agreement, and (ii) identify the Purchased Assets to be purchased by Buyer
pursuant to this Agreement at the Closing, and (iii) identify the Assumed
Liabilities to be assumed by Buyer pursuant to this Agreement at the Closing.

 

(c)           At
least five (5) Business Days prior to the Closing Date, Seller shall furnish to
Buyer the Preliminary Fixed Asset and Inventories Statement indicating the
Preliminary Net Asset Value as of such date. 
Buyer shall have been given full access to the relevant records and
working papers used by Seller to prepare the Preliminary Fixed Asset and
Inventories Statement.  The Preliminary
Fixed Asset and Inventories Statement shall be reasonably acceptable to Buyer; provided, however, that the Preliminary Fixed Asset and
Inventories Statement shall be deemed to be reasonably acceptable to Buyer if
prepared in accordance with the terms of this Agreement.

 

(d)           At
the Closing, on the terms and subject to the
conditions set forth in this Agreement, as full payment for the transfer of the
Purchased Assets by Seller to Buyer, Parent and/or Buyer shall pay to
Seller the Purchase Price (as defined below) and the GST Tax Amount by wire
transfer of immediately available funds in United States dollars to such account
or accounts as Seller may direct by written notice delivered to Buyer by Seller
at least two (2) Business Days prior to the applicable Closing Date, subject to
Section 2.3(f) below with respect to the Escrow.

 

(e)           At
the Closing, and simultaneously with the payment of the Purchase Price and the
GST Tax Amount payable in connection therewith pursuant to Section 2.3(d),
(i) Seller shall assign and transfer to Buyer good and valid title in and
to the Purchased Assets (free and clear of all Liens, other than Permitted
Liens) by delivery of (A) a General Assignment and Bill of Sale in form
and substance reasonably acceptable to Buyer and Seller (the “General Assignment”), duly executed by
Seller; (B) the Facility Transfer Agreement duly executed by Seller; and
such other instruments of conveyance, assignment and transfer as Buyer shall
reasonably request, in form and substance reasonably acceptable to Buyer and
Seller, as shall be effective to vest in Buyer good and valid title to the
applicable Purchased Assets as contemplated by this Agreement (the General
Assignment and the other instruments being collectively referred to herein as
the “Assignment Instruments”); and
(ii) Buyer shall assume from Seller the due payment, performance and
discharge of the Assumed Liabilities by delivery of (A) an Assumption
Agreement in form and substance reasonably acceptable to Seller and Buyer (the “Assumption Agreement”), duly executed by
Buyer and (B) such other instruments of

 

12

 

assumption as Seller
shall reasonably request, in form and substance reasonably acceptable to Seller
and Buyer, as shall be effective to cause Buyer to assume the Assumed
Liabilities as and to the extent provided in Section 2.2(b) (the
Assumption Agreement and such other instruments referred to in
clause (ii)(B) being collectively referred to herein as the “Assumption Instruments”).  At the Closing, there shall also be delivered
to Seller and Buyer the certificates and other contracts, documents and instruments
required to be delivered pursuant to Article VII hereof.

 

(f)            Escrow.  At the Closing, ten percent (10%) of the
Purchase Price being paid under Section 2.3(d) above shall be paid to the
Escrow Agent to be held and administered by the Escrow Agent in escrow as
security for the indemnification obligations of Seller for Damages under
Article IX (the “Escrow”)
pursuant to the terms of the Escrow Agreement; provided
that to the extent the Purchase Price is adjusted pursuant to Section 2.4,
(i) upward, then ten percent of such Increase Amount payable by Buyer
under Section 2.4(f)(i) shall be paid into Escrow and held pursuant to the
Escrow Agreement, or (ii) downward, then ten percent (10%) of such
Decrease Amount will be paid by the Escrow Agent to Buyer.  In addition, to the extent that Buyer and/or
Parent exercises its Put Right under Sections 6.2 or 6.3 of the Purchase
Agreement, and the Seller purchases certain Unused Inventories or Inventories
from the Buyer and/or Parent, all or a portion of the purchase price of such
Unused Inventories or Inventories shall be paid by the release of an amount
equal to such purchase price of such inventories (calculated in accordance with
Sections 6.2 and 6.3) from the Escrow Account to the Buyer and/or Parent (the “Inventory Escrow Amount”); provided, however, that the
Inventory Escrow Amount shall not exceed ten (10%) percent of the portion of
the Purchase Price paid for the Inventories as determined in Section
1.1(j)(i).  Any amounts then held in Escrow
and not previously paid in respect of any claims for indemnification under
Article IX or, released in connection with Seller’s purchase of Inventory
under Sections 6.2 or 6.3, or subject to any pending claims under
Article IX, shall be released to Seller not more than five (5) days after
the twelve month anniversary of the Closing (the “Escrow
Release Date”).  Any amounts
earned in respect of the Escrow shall be considered a part of the Escrow and
held pursuant to the Escrow Agreement.

 

2.4           Post-Closing
Purchase Price Adjustments.

 

(a)           Preparation
of Closing Net Asset Value Statement. 
As soon as reasonably practicable after the Closing Date (within thirty
five (35) days if commercially reasonable but, in any event, not later than
forty-five (45) days after the Closing Date), Seller shall prepare and deliver
to Buyer at Seller’s expense an unaudited Closing Fixed Asset and Inventories
Statement indicating the Closing Net Asset Value as of the Closing Date (the “Closing Net Asset Value Statement”).  The date Seller delivers the Closing Net
Asset Value Statement shall be referred to as the “Notice Date”.  Buyer shall reasonably cooperate with Seller’s
finance organization in order to enable the preparation of the Closing Fixed
Asset and Inventories Statement.

 

(b)           Verification.  As soon as reasonably practicable after the
Notice Date (but not later than thirty (30) days after the Notice Date), Buyer
shall verify (i) that the Fixed Assets and the Inventories stated in the
Preliminary Fixed Asset and Inventories Statement and the statement of the
Preliminary Net Asset Value accurately reflect the Fixed Assets and Inventories
delivered to Buyer as part of the Purchased Assets at the Closing and
(ii) that the Closing Net

 

13

 

Asset Value is accurately
reflected on the Closing Fixed Asset and Inventories Statement (the “Verification”).  Seller shall reasonably cooperate with Buyer
in order to enable Buyer to perform the Verification.

 

(c)           Review
of Preliminary Closing.  Buyer shall
be given full access, during regular business hours, to the relevant records
and working papers used by Seller to prepare the Closing Fixed Asset and
Inventories Statement and the Closing Net Asset Value Statement and to review
the results of the Verification in relation to the Closing Fixed Asset and
Inventories Statement and the Closing Net Asset Value Statement.  If Buyer believes that any changes are
required to be made to the Closing Fixed Asset and Inventories Statement and
the Closing Net Asset Value (including but not limited to changes based on
differences between the Closing Fixed Asset and Inventories Statement the
results of the Verification) (a “Material
Uncertainty”), Buyer shall, within the later of seventy-five (75)
days following the Closing Date or thirty (30) days following the receipt by it
of the Closing Fixed Asset and Inventories Statement and the Closing Net Asset
Value Statement (the “Dispute Period”),
give written notice to Seller (a “Dispute
Notice”) of any such proposed change or Material Uncertainty,
describing the change or Material Uncertainty and the basis for the change or
Material Uncertainty in reasonable detail. 
The Closing Fixed Asset and Inventories Statement and the Closing Net
Asset Value Statement shall be binding and conclusive upon, and deemed accepted
by, Buyer unless Buyer shall have timely delivered a Dispute Notice to Seller
during the Dispute Period.

 

(d)           Disputes.  Disputes between Buyer and Seller relating to
the Closing Fixed Asset and Inventories Statement and the Closing Net Asset
Value Statement that cannot be resolved by them through negotiation within
thirty (30) days after receipt by Seller of a Dispute Notice shall be referred
to an independent accounting firm reasonably agreed upon by the Parties for arbitration
(the “Independent Accountant”)
with respect to the Dispute Notice.  The
Independent Accountant will be instructed to select, in its discretion, the
individuals within its organization who will have primary responsibility for
this matter and to reach a determination within forty-five (45) days from the
date of referral.  The Independent
Accountant determination hereunder shall be limited to determining the Closing
Net Asset Value.  The Independent
Accountant will not have the authority alter or vary this Agreement.  The decision of the Independent Accountant
will be final and binding upon the Parties. 
The engagement of the Independent Accountant shall be paid one-half by
Seller and one-half by Buyer.  The
Closing Fixed Asset and Inventories Statement and the Closing Net Asset Value
Statement as adjusted by the Independent Accountant in accordance with this
Section 2.4(d), shall be final and binding on the parties.  It is understood and agreed that the decision
of the Independent Accountant shall not be subject to judicial review by any
court or tribunal under any circumstances whatsoever and the Parties hereby
expressly waive any right to appeal or otherwise seek judicial review of any
decision of the Independent Accountant under this Section 2.4(d).

 

(e)           Final
Closing Fixed Asset and Inventories Statement.  The Closing Fixed Asset and Inventories
Statement and the Closing Net Asset Value Statement shall become final with
respect to all or any portion thereof, and binding upon Buyer and Seller upon
the earlier of (i) the failure by Buyer to timely object to all or any
portion thereof during the Dispute Period, (ii) an agreement between Buyer
and Seller with respect thereto, or (iii) the decision by the Independent
Accountant with respect to any disputed matters pursuant to
Section 2.4(d).  The

 

14

 

Closing Fixed Asset and
Inventories Statement and the Closing Net Asset Value Statement as finally
determined under this Section 2.4, shall be referred to herein as the “Final Closing Fixed Asset and Inventories Statement”
and the “Final Closing Net Asset Value,”
respectively.

 

(f)            Adjustment
to the Closing Net Asset Value.  The
Preliminary Net Asset Value Amount paid at the Closing shall be subject to
adjustment pursuant to the following provisions of this Section 2.4(f):

 

(i)            If
the Final Closing Net Asset Value as reflected in the Final Closing Fixed Asset
and Inventories Statement is less than the Preliminary Net Asset Value as
reflected in the applicable Preliminary Fixed Asset and Inventories Statement,
then the Final Closing Net Asset Value shall be decreased on a dollar-for-dollar
basis by an amount (the “Decrease Amount”)
equal to the amount by which the Final Closing Net Asset Value as reflected in
the Final Closing Fixed Asset and Inventories Statement is less than the
Preliminary Net Asset Value as reflected in the Preliminary Fixed Asset and
Inventories Statement, and the Decrease Amount shall be payable ninety percent
(90%) from Seller to Buyer and ten percent (10%) released from the Escrow by
the Escrow Agent to Buyer in immediately available funds pursuant to
Section 2.4(g).  In the event of a
Decrease Amount, there shall be a corresponding adjustment to the GST Tax
Amount.

 

(ii)           If
the Final Closing Net Asset Value as reflected in the Final Closing Fixed Asset
and Inventories Statement is greater than the Preliminary Net Asset Value as
reflected in the Preliminary Fixed Asset and Inventories Statement, then the
Final Closing Net Asset Value shall be increased on a dollar-for-dollar basis
by an amount (the “Increase Amount”)
equal to the amount by which the Final Closing Net Asset Value as reflected in
the Final Closing Fixed Asset and Inventories Statement is greater than the
Preliminary Net Asset Value as reflected in the Preliminary Fixed Asset and
Inventories Statement, and ninety percent (90%) of the Increase Amount shall be
payable by Buyer to Seller in immediately available funds pursuant to
Section 2.4(g), and ten percent (10%) of the Increase Amount shall be
payable by Buyer to the Escrow Agent to be held in Escrow pursuant to the
Escrow Agreement.  In the event of an
Increase Amount, there shall be a corresponding adjustment to the GST Tax
Amount.

 

(g)           Payments
of Adjustment Amount.  As soon as practicable
(but not more than ten (10) Business Days) after all or any portion of a
Closing Net Asset Value shall become final and binding pursuant to
Section 2.4(e) hereof, Buyer or Seller, as the case may be, shall make the
payment contemplated by Section 2.4(f) in respect of all or such portion
of such Closing Net Asset Value that has become final and binding (it being the
intention of the parties that the payment of all undisputed amounts set forth
in the Final Closing Fixed Asset and Inventories Statement that become final
and binding pursuant to Section 2.4(e) shall not be contingent upon the
resolution of any disputed amounts set forth in such Final Closing Fixed Asset
and Inventories Statement ).

 

2.5           Prorations. 
The following prorations relating to the Purchased Assets and the ownership and
conduct of the Business shall be made as of the Closing Date, with Seller
liable to the extent such items relate to any time period up to the Closing
Date, and Buyer liable to the extent such items relate to periods beginning at
and immediately after the applicable Closing Date:

 

15

 

(a)           Governmental
property or similar taxes or levys on or with respect to the Purchased Assets;

 

(b)           rents,
additional rents, operating expense pass throughs, Taxes and other items
payable by Seller under any personal property leases; and

 

Except as otherwise agreed by the parties, the net amount of all such
pro rations will be settled and paid on the Closing Date.

 

2.6           Taxes. 
Buyer and Seller shall bear equally any sales, use, value-added, gross
receipts, excise, registration, stamp duty or other similar taxes or
governmental fees arising out of the transfer of the Purchased Assets to Buyer
pursuant hereto (“Transfer Taxes”);
provided Buyer shall pay GST that may be
chargeable in respect of the sale of the Purchased Assets under this Agreement
subject to Seller issuing and delivering to Buyer a tax invoice relating to
such GST and provided that GST is chargeable or payable with respect to the
sale of the Purchased Assets under this Agreement and such sale is not
considered by the relevant tax authorities in Singapore to be a sale of a
business as a going concern.  To the
extent permitted by applicable law, Parent, Buyer and Seller shall cooperate in
minimizing Transfer Taxes.

 

(a)           Straddle
Period Taxes.  In the case of any
real or personal property taxes or any similar ad valorem taxes attributable to
the Purchased Assets for which Taxes are reported on a Tax Return covering a
period commencing before the Closing and ending thereafter (a “Straddle Period Tax”), any such Straddle Period Taxes shall
be prorated between Buyer and Seller on a per diem basis.  The party required by law to file a Tax
Return with respect to Straddle Period Taxes shall do so within the time period
prescribed by law.

 

(b)           Tax
Returns.  To the extent relevant to
the Business or the Purchased Assets, each party shall (i) provide the
other with such assistance as may reasonably be required in connection with the
preparation of any Tax Return and the conduct of any audit or other examination
by any governmental authority or in connection with judicial or administrative
proceedings relating to any liability for Taxes and (ii) retain and
provide the other with all records or other information that may be relevant to
the preparation of any Tax Returns, or the conduct of any audit or examination,
or other proceeding related to Taxes.

 

2.7           Nontransferable Assets.  To the extent that any Purchased Asset or
Assumed Liability to be sold, conveyed, assigned, transferred, delivered or
assumed to or by Buyer pursuant hereto, or any claim, right or benefit arising
thereunder or resulting therefrom, is not capable of being sold, conveyed,
assigned, transferred or delivered without the approval, consent or waiver of
the issuer thereof or the other party thereto, or any third person (including a
Governmental Body), or if such sale, conveyance, assignment, transfer or
delivery or attempted sale, conveyance, assignment, transfer or delivery would
constitute a breach or termination right thereof or a violation of any law,
decree, order, regulation or other governmental edict, except as expressly
otherwise provided herein, this Agreement shall not constitute a sale,
conveyance, assignment, transfer or delivery thereof, or an attempted sale,
conveyance, assignment, transfer or delivery thereof absent such approvals,
consents or waivers.  If any such
approval, consent or waiver shall not be obtained, or if an attempted
assignment of any such Purchased Asset or the assumption of any Assumed
Liability by Buyer would be ineffective so that Buyer would not in

 

16

 

fact receive all such Purchased Assets or
assume all such Assumed Liabilities pursuant hereto, Seller, Buyer and Parent
shall cooperate in a mutually agreeable arrangement and use reasonable diligent
efforts to provide Buyer with the benefits and assume the obligations of such
Purchased Assets and Assumed Liabilities in accordance with this Agreement,
including subcontracting, sub-licensing, or sub-leasing to Buyer, or under
which Seller, at Buyer’s expense, would enforce for the benefit of Buyer, with
Buyer assuming all of Seller’s obligations thereunder, any and all rights of
Seller against a third party thereto; provided that
in no event shall Seller be required to make a cash payment to a third-party
(other than as required under any agreement with such third-party) or to Buyer
or Parent solely in connection with its obligations under this Section 2.6.  Buyer and Parent agree to reasonably
cooperate with Seller and supply relevant information to such party or parties
or such third-party in order to assist Seller in its obligations under this
Section 2.6.

 

2.8           Taking of Necessary Action; Further Action.  From time to time after the Closing Date, at
the request of any Party hereto and at the expense of such Party, the Parties
hereto shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such action as Parent or Buyer
may reasonably determine is necessary to transfer, convey and assign to Buyer,
and to confirm Buyer’s title to or interest in the Purchased Assets pursuant to
this Agreement, to put Buyer in actual possession and operating control of such
Purchased Assets as contemplated by this Agreement and to assist Buyer in
exercising all rights with respect thereto.

 

2.9           Allocation of
Purchase Price Consideration.  The sum of the Purchase Price and the
Assumed Liabilities (except to the extent that such Assumed Liabilities are not
required to be capitalized for income tax purposes) shall be allocated among
the Purchased Assets as of the Closing Date in accordance with Schedule 2.9,
which shall be delivered by Buyer three (3) business days prior to the Closing
Date and shall be reasonably acceptable to the Seller.  Any subsequent adjustments to the sum of the
Purchase Price and Assumed Liabilities (except to the extent that such Assumed
Liabilities are not required to be capitalized for income tax purposes) shall
be reflected by Buyer in the allocation hereunder in a manner consistent with
Section 1060 of the Code and the regulations thereunder.  For all Tax purposes, Purchaser and Seller
agree to report the transactions contemplated in this Agreement in a manner
consistent with the terms of this Agreement, including the allocation under Schedule
2.9, and that none of them will take any position inconsistent therewith in
any Tax Return, in any refund claim, in any related litigation, or other related
dispute.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Subject to such exceptions as are
specifically disclosed in the disclosure letter supplied by Seller to Parent
and Buyer (the “Seller Disclosure Letter”),
Seller hereby represents and warrants to Parent and Buyer that the statements
contained in this Article III are true and correct as of the date of this
Agreement and will be true and correct as of the Closing (as though made at the
Closing ); provided, that the
representations and warranties made as of a specified date will be true and
correct as of such date.

 

17

 

3.1           Organization, Qualification, and Corporate Power.  Seller is a corporation duly organized
and validly existing under the laws of Singapore.  Seller has all necessary corporate power and
authority to enter into this Agreement and all
agreements and instruments delivered pursuant hereto (the “Ancillary Agreements”), to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  Seller
is duly licensed or qualified to do business and are in good standing in each
jurisdiction in which the properties owned or leased by them or the operation
of the Business makes such licensing or qualification necessary, except to the
extent that the failure to be so licensed or qualified would not
(i) adversely affect the ability of Seller to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement and
the Ancillary Agreements and (ii) result in a Material Adverse Effect on
the Business or the Purchased Assets.

 

3.2           Authorization.  The execution and delivery of this Agreement and the
Ancillary Agreements by Seller, the performance by Seller of its obligations
hereunder and thereunder and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of Seller and its subsidiaries and no other corporate
proceedings on the part of Seller are necessary to authorize this Agreement or
the Ancillary Agreements, or to consummate the transactions contemplated hereby
and thereby.  This Agreement and the Ancillary Agreements to which Seller is a party have
been duly and validly executed and constitute the valid and legally binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms and conditions, except as such enforceability may be limited
by principles of public policy and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable
remedies.  Except as set forth in
Section 3.2 of the Seller Disclosure Letter, Seller does not own and has
never owned any subsidiaries.

 

3.3           No Conflicts.  Neither the execution and the delivery of this Agreement and the
Ancillary Agreements by Seller nor the consummation of the Transaction will
(A) violate any material constitution, Law, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which Seller is subject, (B) violate or conflict with
any provision of the charter documents, bylaws or organizational documents of
the Seller, or (C) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent
under, any Assigned Contract or any Assumed Permit (or result in the imposition
of any Lien upon any of the Purchased Assets).

 

3.4           Consents. 
Except as set forth in Section 3.4
of the Seller Disclosure Letter, no consent, waiver, approval, order, license,
permit, certificates, filing or authorization of, or registration, declaration
or filing with, any Governmental Body or any third party is required by or with
respect to Seller in connection with the execution and delivery of this
Agreement or the consummation of the Transaction, except for such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable securities laws.

 

3.5           Legal Compliance.  The Business as being conducted by Seller has been and at the
Closing will be in material compliance with all applicable Laws (including
without limitation rules, regulations, codes, plans, injunctions, judgments,
orders, extension orders, decrees, rulings,

 

18

 

and charges thereunder).  No Action, or to the knowledge of Seller,
investigation, charge, complaint, claim, demand, notice or inquiry, is pending,
or to the knowledge of Seller, is threatened against Seller by any Governmental
Body alleging any failure to so comply in any material respect.  Seller has all material Permits that are
necessary to operate the Business and hold the Purchased Assets as of the
Closing.

 

3.6           Tax Matters. 
For purposes of this Agreement, (i) “Tax”
or, collectively, “Taxes”, means
(i) any and all, regardless of country, national, federal, state, local
and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added
(including GST), ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, stamp duties and customs and
other import and export duties together with all interest, penalties and
additions imposed with respect to such amounts; (ii) any liability for the
payment of any amounts of the type described in clause (i) as a result of
being or ceasing to be a member of an affiliated, consolidated, combined or
unitary group for any period (including, without limitation, any liability
under Treas. Reg. Section 1.1502-6 or any comparable provision of foreign,
state or local law); and (iii) any liability for the payment of any
amounts of the type described in clause (i) or (ii) as a result of any
express or implied obligation to indemnify any other person or as a result of
any obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
or transferor entity.

 

Except to the extent not relevant to the
Purchased Assets or the Business:

 

(a)           Seller has timely filed all returns, estimates,
information statements and reports with respect to any material Taxes (“Tax Returns”) that it was required to
file.  All such Tax Returns are correct
and complete in all material respects and have been completed in accordance
with applicable law.  All Taxes owed by
Seller (whether or not shown on any Tax Return) were paid in full when due.

 

(b)           Seller has timely withheld or paid with respect to
its employees or other third parties and timely paid over any withheld amounts
to the appropriate Taxing authority all Singaporean and U.S. federal and state
income Taxes, Federal Insurance Contribution Act, Federal Unemployment Tax Act
and other taxes required to be withheld or paid.

 

(c)           Seller has made available to Parent copies of all Tax
Returns relating to the Business or the Purchased Assets for all periods since
the Seller’s incorporation.

 

(d)           Seller
has paid all Taxes for which Seller is liable to pay in respect of the
Purchased Assets.

 

3.7           Title of Properties; Absence of Liens and
Encumbrances; Condition of Equipment.

 

(a)           All current leases related to the Business are in
full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or

 

19

 

both,
would constitute a default) on the part of Seller and, to the knowledge of
Seller, on the part of any other party thereto.

 

(b)           Seller has good and valid title to, or, in the case
of leased properties and assets valid leasehold interests in, all of the
Purchased Assets, free and clear of any Liens, except (i) as reflected in
the Seller Disclosure Letter, and (ii) such imperfections of title and
encumbrances, if any, which do not detract from the value or interfere with the
present use of, in any material respect, assets subject thereto (the “Permitted Liens”).  Seller is a party to and enjoys the right to
the benefits of all Assigned Contracts.

 

(c)           All
of the Fixed Assets are in good operating condition and repair (normal wear and
tear excepted) and are suitable for the purposes for which they are currently
used.

 

(d)           Seller
has the complete power and right to sell, assign, transfer, convey and deliver
the Purchased Assets to Buyer pursuant to this Agreement.  Following the consummation of the Transaction
and the execution of the instruments of transfer contemplated by this Agreement
and the Ancillary Agreements, Buyer will own, with good and valid title to, or
otherwise acquire the interests of Seller and its subsidiaries in, the
Purchased Assets, free and clear of any Liens, other than the Permitted Liens.

 

3.8           Intellectual Property.  Other than
Intellectual Property Rights included in the Purchased Assets and Assumed
Liabilities and Intellectual Property Rights related to the Excluded Assets, no
transfer of Intellectual Property Rights from Seller to Buyer or Parent is
required for Buyer and/or Parent to conduct the Business as currently conducted
by Seller.  The manufacturing processes
of the Business as currently conducted by the Seller at the Closing and continued
by Buyer or Parent pursuant to the Supply Agreement do not infringe or
misappropriate any Intellectual Property of any third party.  For the avoidance of doubt, the foregoing
sentence shall take prevail in the event of a conflict between such sentence
and the Supply Agreement.

 

3.9           Contracts.  Section 3.9 of Seller Disclosure Letter
lists all written or oral contracts, agreements, commitments and other
arrangements (including any amendment thereto) outstanding as of the date
hereof to which Seller is a party and that relates to the Business, other than
bids submitted to customers, purchase orders and sales orders in the ordinary
course of business (collectively, the “Business
Contracts”).  Seller has delivered to Parent a correct and complete
copy of each Business Contract, and any written modification, amendment or
additional terms (and a written summary setting forth the terms and conditions
of any oral modification, amendment or additional terms) to the Business
Contracts.  With respect to each Business
Contract: (A) the Business Contract, with respect to Seller and, to Seller’s
knowledge, all other parties thereto, is legal, valid, binding, enforceable,
and in full force and effect in all respects; (B) neither Seller nor, to
Seller’s knowledge, any other party is in breach or default, and no event has
occurred, which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
Business Contract; and (C) Seller has not received notice that any party
has repudiated any provision of the Business Contract.  Except as set forth on Section 3.4 of
the Seller Disclosure Letter, Seller has obtained or will obtain prior to the
Closing Date, all necessary consents, waivers and approvals of parties to any
Assigned Contract as are required thereunder in connection with the
transactions contemplated by this

 

20

 

Agreement or to remain in effect without
modification after the Closing. 
Following the Closing, Buyer will be permitted to exercise all of Seller’s
rights under such Assigned Contracts to the same extent in all material
respects that Seller would have been able to had the Transaction not occurred.

 

3.10         Power of Attorney.  There are no outstanding powers of attorney executed on behalf of
Seller and related to the Business, the Purchased Assets or the Assigned
Contracts.

 

3.11         Insurance. 
Seller has delivered to Parent copies of each insurance policy (including
policies providing property, casualty, liability, and workers’ compensation
coverage and bond and surety arrangements) related to the Business with respect
to which Seller is a party.  With respect
to each such insurance policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect (and there has been no notice of
cancellation or nonrenewal of the policy received); (B) Seller is not in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default by Seller, or permit
termination, modification, or acceleration, under the policy; (C) Seller
has not received notice that any party to the policy has repudiated any
provision thereof; and (D) there has been no failure by Seller to give any
notice or present any claim under the policy in due and timely fashion.
Section 3.11 of Seller Disclosure Letter describes any self-insurance
arrangements presently maintained by Seller.

 

3.12         Litigation.  Section 3.12 of Seller Disclosure Letter sets forth each
instance in which to the Business or the Purchased Assets (i) is subject
to any outstanding injunction, judgment, order, decree, ruling, or charge or
(ii) is or has been, or, to the knowledge of Seller, is threatened to be
made a party, to any action, suit, proceeding, hearing, mediation, arbitration,
or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any mediator or arbitrator.

 

3.13         Employees.
Schedule 3.13 contains a complete and accurate list of all
current Employees as of the date hereof, showing for each such Employee the
following: employee name, position held, annual base salary and visa status.

 

3.14         Labor Matters.  No Employee has advised any officer of Seller that he or she plans
to terminate employment with Seller or within the twelve (12) months from the
date of the Closing.  The Seller is not a
party to any special collective bargaining agreement and no special collective
bargaining agreement is being negotiated with respect to the Business.  There are no collective relations in any
Facility.  The Employees are not
organized, and there is no Employees’ committee or collective representation of
any kind.  There is no material unfair
labor practice, charge or complaint pending against the Seller with respect to
the Business, nor is there any material labor strike, work stoppage, grievance
or other labor dispute pending or, to the knowledge of the Seller, threatened
in writing or orally against the Seller with respect to the Business.  The Seller: (i) is in compliance in all
material respects with all applicable Laws respecting employment and wage and
hours, and with all terms and conditions of employment, agreements with third
parties, codes of conduct, visas, work permits, in each case, with respect to
Employees; (ii) have withheld, paid and reported all amounts required by
Law or by agreement to be withheld, reported and paid with respect to wages,
salaries and other payments to Employees; (iii) are not liable for any
arrears of wages or any taxes or any penalty for failure to

 

21

 

comply with any of the foregoing; and
(iv) are not liable for any payment to any Governmental Body, any trust or
other fund governed by or maintained by or on behalf of any Governmental Body,
with respect to unemployment compensation benefits, social security or other
benefits or obligations for Employees (other than routine payments to be made
in the normal course of business and consistent with past practice).  There are no pending, or to the knowledge of
Seller, threatened against the Seller under any employment policy or disability
policy.

 

3.15         Environment, Health and Safety.  For purposes of this Agreement, the following
terms shall have the meanings ascribed to them below:

 

(a)           Definitions:

 

(i)            “Hazardous Material” is any material,
chemical, substance or waste that has been designated by any Governmental Body
to be radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment or the disposal, treatment, transfer, storage
or manufacture of which is regulated in any manner by a Governmental Body.

 

(ii)           “Business Facility” is any property
including the land, the improvements thereon, the groundwater thereunder and
the surface water thereon, that is or at any time has been owned, operated,
occupied, controlled or leased by the Seller in connection with the operation
of the printed circuit board assembly manufacturing and storage system
manufacturing business conducted by Seller in Singapore.

 

(iii)          “Environmental Laws” are all applicable
laws, rules, regulations, orders, treaties, statutes, and codes promulgated by
any Governmental Body which prohibit, regulate or control any Hazardous
Material or any Hazardous Material Activity, including, without limitation, the
Factories Act (Cap 104) of Singapore, the Fire Safety Act (Cap 109A) of
Singapore, the Environmental Pollution Control Act (Cap 94A) of Singapore, the
Environmental Public Health Act (Cap 95) of Singapore, and any other laws and
regulations in Singapore pertaining to occupational health and safety, or
pollution control, the regulations promulgated to any of the foregoing, and all
amendments and modifications of any of the foregoing.

 

(iv)          “Hazardous Materials Activity” is the
transportation, transfer, recycling, storage, use, treatment, manufacture,
removal, remediation, release (or threat of release), exposure of others to,
sale, or distribution of any Hazardous Material or any product containing a
Hazardous Material.

 

(v)           “Environmental Permit” is any approval,
permit, license, clearance or consent required to be obtained from any private
person or any Governmental Body with respect to a Hazardous Materials Activity
which is or was conducted by the Seller.

 

(b)           Condition of Property:  As of the
Closing, except in compliance with Environmental Laws and in a manner that
could not reasonably be expected to subject the Seller to liability, to
knowledge of Seller, no Hazardous Materials, underground storage tanks,
asbestos which is friable of Polychlorinated Biphenyls (PCBs), are present on
any Business Facility or were present on any other Business Facility at the
time it ceased to be owned, operated, occupied, controlled or leased by the
Seller.  To the knowledge of the Seller,
there are no

 

22

 

underground
storage tanks, asbestos which is friable or likely to become friable or PCBs
present on any Business Facility.

 

(c)           Hazardous Materials Activities:  The Seller
has conducted all Hazardous Material Activities relating to the Business in
compliance in all material respects with all applicable Environmental
Laws.  The Hazardous Materials Activities
of the Seller prior to the Closing have not resulted in the exposure of any
person to a Hazardous Material in a manner which has caused or could reasonably
be expected to cause an adverse health effect to any such person.

 

(d)           Permits:  Seller holds all Environmental Permits necessary
for the conduct of the Seller’s Business as currently being conducted by
Seller.

 

(e)           Environmental Litigation:  No action,
proceeding, revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or to the best of the Seller’s knowledge, threatened,
concerning or relating to any Environmental Permit or any Hazardous Materials
Activity of the Seller relating to its Business, or any Business Facility.

 

(f)            Reports and Records:  The Seller has delivered to Buyer
or made available for inspection by Buyer and its agents, representatives and
employees all records in the Seller’s possession concerning the Hazardous
Materials Activities of the Seller relating to its Business and all
environmental audits and environmental assessments of any Business Facility
conducted at the request of, or otherwise in the possession of the Seller.  The Seller has complied with all
environmental disclosure obligations imposed by applicable law with respect to
this transaction.

 

3.16         Fees. 
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder, agent or attorney, with respect to the transactions
contemplated by this Agreement.

 

3.17         Complete
Copies of Materials.  Seller has delivered or made available true and
complete copies of each document (or summaries of same) that has been requested
by Parent, Buyer or their counsel.

 

3.18         Board Approval.  The Board of Directors of Seller has (i) approved this
Agreement, the Ancillary Agreements and the Transaction, (ii) determined
that the Transaction is in the best interests of the shareholders of Seller and
is on terms that are fair to such shareholders, and (iii) if required by
applicable Law, recommended that the shareholders of Seller approve this
Agreement, the Ancillary Agreements and the Transaction.

 

3.19         Inventories.  The Inventories are in all material respects similar in
quality to the raw materials, supplies and work-in-process generally included
in the inventory of the Business in the past. 
Seller has good and valid title to the Inventories free and clear of all
Liens, other than Permitted Liens.  The
Inventories do not consist of, in any material amount, items that are obsolete
or damaged.  The Inventories do not
consist of any items held on consignment. 
Seller is not under any obligation or liability with respect to
accepting returns of items of Inventories or merchandise in the possession of
its customers other than in the ordinary course of the Business consistent with
past practice.  Seller has not changed
the price of any Inventories except for (i) reductions to reflect any
reduction in the cost thereof to Seller, (ii) reductions and increases

 

23

 

responsive to normal competitive conditions and consistent with Seller’s
past sales practices, (iii) increases to reflect any increase in the cost
thereof to Seller and (iv) increases and reductions made with the written
consent of Parent.  All of the
Inventories are located at the Facility.

 

3.20         Facility
and Tangible Personal Property.  Subject to the lease relating to the
Facility, the Facility is owned by the Seller free and clear of any Liens
except for Permitted Liens.  The Seller
is in peaceful and undisturbed possession of the Facility.  There are no structural, electrical,
mechanical, plumbing, roof, paving or other defects in any improvements located
on the Facility (normal wear and tear excepted) as would, in any one instance,
result in an expenditure in excess of US$100,000 to rectify or, in the
aggregate, US$300,000 to rectify.  There
are no outstanding written or, to the Seller’s knowledge, oral contracts made
by Seller for any alterations or improvements on or to the Property which have
not been fully paid.  The Seller has
caused the Purchased Assets to be maintained in accordance with good business
practice, and all the Purchased Assets are in good operating condition and
repair and (normal wear and tear excepted) are suitable for the purposes for
which they are used and intended. 

 

3.21         Sufficiency
of Purchased Assets.  Other than the Excluded Assets and the
Employees, and subject any assets or services being provided pursuant to the
Ancillary Agreements, the sale of the Purchased Assets and the Facility
pursuant to this Agreement and the Ancillary Agreements will effectively convey
to Buyer all of the Assets necessary to operate the Business, as heretofore
conducted by Seller prior to the Closing.

 

3.22         Operations
Permits.  Section 3.23 of the Seller Disclosure Letter sets forth
each License held by Seller as of the date hereof and that relates, directly or
indirectly, and whether or not exclusively related, to the Business
(collectively, the “Business Permits”).

 

(a)           Seller
is not in material default (or with the giving of notice or lapse of time, or
both, would be in material default) under, or violation in any material respect
of, any Business License.

 

(b)           The
Permits to be assumed by Buyer in the Transaction are sufficient to enable
Buyer to conduct the Business as heretofore conducted by the Seller in compliance
in all material respects with all applicable Laws.

 

3.23         ISO Certifications and Non-Governmental
Certifications.

 

(a)           The
Facility is currently certified ISO 9002/ ISO 14001.  The manufacturing operations conducted at the
Facility are in material compliance with the European Union directives
regarding RoHS.

 

(b)           Section 3.24
of the Seller’s Disclosure Letter contains a complete and accurate list of all
customer, supplier and other non-governmental entities that have issued
certifications or quality assurance criteria regarding the Purchased Assets or
Facility.

 

3.24         Suppliers. 
Listed in Section 3.25 of the Seller Disclosure Letter are the names and
addresses of each of the ten most significant suppliers of raw materials,
supplies, merchandise and other goods for the Business for the twelve-month
period ended September 30, 2005 and the amount for which each such supplier
invoiced Seller and its subsidiaries during

 

24

 

such period.  Except as disclosed
in Section 3.25 of the Disclosure Letter, neither Seller nor any of its
subsidiaries has received any notice that any such supplier will not sell raw
materials, supplies, merchandise and other goods to Seller or any of its
subsidiaries at any time after the Closing Date on terms and conditions similar
to those imposed on current sales to the Business, subject only to general and
customary price increases and existing agreements with such suppliers.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
PARENT AND BUYER

 

Subject to such exceptions as are
specifically disclosed in the disclosure letter supplied by the
Parent to Seller (the “Parent Disclosure
Letter”), each of Parent and Buyer, jointly and severally, hereby
represents and warrants to Seller that the statements contained in this
Article IV are true and correct as of the date of this Agreement and will
be true and correct as of the Closing (as though made at the Closing); provided, that the
representations and warranties made as of a specified date will be true and
correct as of such date.

 

4.1           Organization, Qualification, and Corporate Power.  Parent is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware.  Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of Singapore.  Parent and Buyer are duly authorized to
conduct business and are in good standing under the laws of each other
jurisdiction where such qualification is required and in which the failure to
so qualify would not (i) in the aggregate have a Material Adverse Effect
on Parent or Buyer, taken as a whole, or (ii) adversely affect the ability
of Parent or Buyer to execute and deliver this Agreement and the Ancillary
Agreements, or consummate the Transactions.

 

4.2           Authorization.  Parent and Buyer have full power and authority to enter into,
execute and deliver this Agreement and the Ancillary Agreements to which they
are parties, and to consummate the Transaction and to perform their obligations
hereunder and thereunder.  This Agreement
and the Ancillary Agreements to which they are parties constitute the valid and
legally binding obligations of Parent or Buyer, enforceable against Parent or
Buyer in accordance with their respective terms and conditions, except as such enforceability
may be limited by principles of public policy and subject to the laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.

 

4.3           No Conflicts.  Neither the execution and the delivery of this Agreement nor the
consummation of the transactions contemplated hereby, will (A) violate any
material constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which Parent or Buyer is subject, (B) violate or
conflict with any provision of the charters, bylaws or organizational documents
of Parent or Buyer, or (C) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license, instrument, or other
arrangement to which Parent or Buyer is a party or by which either is bound or
to which

 

25

 

any of
their assets is subject, other than any of the foregoing which would not in the
aggregate have a Material Adverse Effect on Parent or Buyer, taken as a whole,
or (ii) adversely affect the ability of Parent or Buyer to execute and
deliver this Agreement and the Ancillary Agreements, or consummate the
Transactions.

 

4.4           Consents.  No consent,
waiver, approval, order, license, permit, certificates, filing or authorization
of, or registration, declaration or filing with, any Governmental Body or any
third party, is required by or with respect to Parent or Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
Transaction, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal and state securities laws, (ii) any applicable
filings required under the noncompetition laws, and (iv) such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings in which the failure of which to obtain would not (i) in the
aggregate have a Material Adverse Effect on Parent or Buyer, or
(ii) adversely affect the ability of Parent or Buyer to execute and
deliver this Agreement and the Ancillary Agreements, or consummate the
Transactions.

 

4.5           Purchase
Price.  Buyer has and will have sufficient cash on
hand to pay the Purchase Price and the GST Tax Amount that may be chargeable in
respect of the sale of the Purchased Assets under this Agreement at the Closing.

 

ARTICLE V

PRE-CLOSING COVENANTS

 

With respect to the period between
the execution of this Agreement and the earlier of the termination of this
Agreement in accordance with its terms and the Closing (the “Pre-Closing Period”):

 

5.1           Operation
of Business.

 

(a)           Seller
agrees that, during the Pre-Closing Period, except as contemplated by this
Agreement, any Ancillary Agreement or the Transactions, or as otherwise
consented to or approved in advance by Parent or Buyer, Seller shall:

 

(i)            use all
commercially reasonable efforts to (i) preserve intact the present
business organization, reputation, contractual and other arrangements of the
Business then under the control of Seller, (ii) keep available (subject to
dismissals and retirements in the ordinary course of business consistent with
past practice) the services of the present Employees of the Business,
(iii) maintain the Purchased Assets in good working order and condition,
ordinary wear and tear excepted, (iv) maintain the goodwill of customers,
suppliers, distributors and other Persons to whom Seller sells goods or
provides services or with whom Seller otherwise has significant business
relationships in connection with the Business, and (v) continue all
current sales, service, marketing, promotional, product development and other
activities relating to the Business;

 

26

 

(ii)           except to
the extent required by applicable Law and consistent with past practice, (i) cause the Books and Records of the Business to be
maintained in the usual, regular and ordinary manner, and (ii) not permit any change in any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax practice,
policy or election or Seller that would materially and adversely affect the
Business, the Purchased Assets or increase the Assumed Liabilities;

 

(iii)          use all
commercially reasonable efforts to continue in full force and effect all
material insurance policies (or comparable insurance policies) insuring the
Business and its Assets; and

 

(iv)          comply in all
material respects with all Laws and Orders applicable to the Business, and
promptly following receipt thereof deliver to Buyer copies of any written
notice received from any Governmental Body or other Person alleging any
violation of any such Law or Order.

 

(b)           Seller
agrees that, during the Pre-Closing Period, except as contemplated by this
Agreement, the Ancillary Agreements or this Transaction or as otherwise
consented to or approved in advance by Parent or Buyer, Seller shall not:

 

(i)            Except for
any existing benefit plan or program or contract, make any representation or
promise, oral or written, to any Employee concerning any employee benefit plan,
except for statements as to the rights or accrued benefits of any Employee
under the terms of any employee benefit plan or agreements, or otherwise
required by Law;

 

(ii)           Except for
any existing benefit plan or program or contract, make any increase in the
salary, wages or other compensation (cash, equity or otherwise) of any Employee
whose annual salary is or, after giving effect to such change, would be the
equivalent individually to in excess of US$50,000 and in the aggregate in
excess of US$100,000;

 

(iii)          adopt, enter
into or become bound by any employee benefit plan, any employment-related
contract or any collective bargaining agreement with respect to the Business or
any of the Employees, or, amending, modifying or terminating (partially or
completely) any such employee benefit Plan, employment-related contract or
collective bargaining agreement, except to the extent required by applicable
Law or existing contractual obligation and, in the event compliance with legal
requirements presents options, only to the extent that the option which Seller
reasonably believes to be the least costly is chosen, except in the ordinary
course of business consistent with past practice;

 

(iv)          terminate
the employment of any Employee, except
for cause, provided Seller provides notice to Parent or Buyer prior to any such
termination, or

 

(v)           enter into
any Contract to do or engage in any of the foregoing items set forth in this

Section 5.1(b).

 

(c)           Seller
agrees that, during the Pre-Closing Period, except as permitted by this
Agreement, the Ancillary Agreements or this Transaction, or as otherwise
consented to or approved in advance by Parent or Buyer, Seller shall not:

 

27

 

(i)            acquire,
lease, license or dispose of or agree to acquire lease, license or dispose of
any assets that would constitute Purchased Assets hereunder, other than in the
ordinary course of business consistent with past practice, or create or incur
any material Lien, other than a Permitted Lien, on any assets that would
constitute Purchased Assets hereunder;

 

(ii)           enter into,
amend, modify, terminate (partially or completely), grant any waiver under or
give any consent with respect to any Business Contract or any Assumed Permit,
in each case other than in the ordinary course of business consistent with past
practice;

 

(iii)          violate,
breach or default in any material respect under, or take or fail to take any
action that (with or without notice or lapse of time or both) would constitute
a material violation or breach of, or material default under, any term or
provision of any Assigned Contract or any Assumed Permit;

 

(iv)          make
any material changes in the conduct of
the Business, except as specifically contemplated or permitted by this
Agreement, or any Ancillary Agreement or this Transaction; or

 

(v)           enter into
any Contract to do or engage in any of the foregoing items set forth in this

Section 5.1(c).

 

5.2           Access to
Information.  The Seller shall permit the Buyer and
its representatives during the Pre-Closing Period to have reasonable access
during normal business hours, upon reasonable advance notice, to the Books and
Records, Employees and assets of the Business (including the testing and
investigation of any Facility as the Buyer deems reasonably necessary prior to
the Closing) then under the control of
Seller for the purposes of, among other things, identifying and
verifying the value of the Purchased Assets to be purchased at the Closing; provided, however, that such access shall be conducted by
the Buyer and its representatives in such a manner as not to interfere unreasonably
with the businesses or operations of the Seller or the Business.  In order to facilitate the resolution of any
claims made by or against or incurred by Parent or Buyer after the Closing or
for any other reasonable purpose, for a period of five years following the
Closing, Seller shall, and shall cause its subsidiaries to, (i) retain all
books and records which are not transferred to Buyer pursuant to this Agreement
and which relate to the Business for periods prior to the Closing and which shall
not otherwise have been delivered to Buyer and (ii) upon reasonable
notice, afford the officers, employees and authorized agents and
representatives of Parent or Buyer, reasonable access (including the right to
make photocopies at Parent of Buyer’s expense), during normal business hours,
to such books and records, all subject to Section 5.8 regarding
confidentiality.

 

5.3           Notice of
Developments.  During the Pre-Closing Period, Seller shall
give prompt notice to Buyer of (i) the occurrence or non-occurrence of any
event of which Seller has knowledge, the occurrence or non-occurrence of which
is reasonably likely to cause any representation or warranty of Seller
contained in this Agreement to be untrue or inaccurate at or prior to the
Closing and (ii) any failure of Seller to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however,
that

 

28

 

the
delivery of any notice pursuant to this Section 5.3 shall not limit or
otherwise affect any remedies available to the Party receiving such notice.

 

5.4           No
Solicitation.  During the Pre-Closing Period, neither Seller
nor any subsidiary of Seller shall (nor shall it permit its Representatives to)
directly or indirectly take any of the following actions with any Person other
than Parent, Buyer and their designees: (a) solicit, initiate, consider,
encourage or accept any proposals or offers from, or conduct discussions with
or engage in negotiations with, any Person relating to any possible Acquisition
Proposal with Seller or any of its subsidiaries (whether such subsidiaries are
in existence on the date hereof or are hereafter organized), (b) provide
information with respect to Seller to any Person, other than Parent or Buyer,
relating to, or otherwise cooperate with, facilitate or encourage any effort or
attempt by any such Person with regard to, any possible Acquisition Proposal
with Seller or any subsidiary of Seller (whether such subsidiaries are in existence
on the date hereof or are hereafter organized), except as required by Law,
(c) enter into a contract or agreement (whether oral or written) with any
Person, other than Parent or Buyer, providing for an Acquisition Proposal with
Seller or any subsidiary (whether such subsidiaries are in existence on the
date hereof or are hereafter organized), or (d) make or authorize any
statement, recommendation or solicitation in support of any possible
Acquisition Proposal with Seller or any subsidiary (whether such subsidiary is
in existence on the date hereof or are hereafter organized) other than by
Parent or Buyer.  Seller shall, and shall
cause its Representatives to, immediately cease and cause to be terminated any
such contacts or negotiations with any Person relating to any Acquisition
Proposal.  As used in this
Section 5.4, “Acquisition Proposal”
shall mean a proposal or offer for (i) a merger, consolidation or other business combination involving an
acquisition of the Business or the Purchased Assets or (ii) any extraordinary business transaction involving or
otherwise relating to the Business or Purchased Assets.

 

5.5           Reasonable
Efforts.  During the Pre-Closing Period, each of the
Parties will use their reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article VII below).

 

5.6           Notices
and Consents.  During the Pre-Closing Period, Seller will
give any notices to third parties and use reasonable commercial efforts to
obtain any third party consents that are required in connection with the
matters identified in Sections 3.3 and 3.4 of Seller Disclosure Letter or
otherwise required in connection with the Transaction so as to preserve all
material rights of or benefits to Seller. 
During the Pre-Closing Period, each of the Parties will give any notices
to, make any filings with, and use its commercially reasonable efforts to
obtain any authorizations, consents, and approvals of Governmental Bodies in
connection with the matters identified in Sections 3.3 and 3.4 of Seller
Disclosure Letter or as otherwise required in connection with the Transactions
contemplated by this Agreement.

 

5.7           Employee
Matters.  In the event that any of
the Critical Employees terminate their employment with the Seller prior to the
Closing or during that portion of the transition period in which such Critical
Employees have significant remaining transition related functions, the Buyer
and Seller will use reasonable commercial efforts to seek to implement a
mutually agreed alternative solution for the fulfillment of such
functions.  Any costs associated with
these matters, including any compensation incentives paid to Critical Employees
to encourage them to

 

29

 

remain employed after the
Closing through the end of the transition period as provided in the Secondment
Agreement, will be shared equally by Buyer and Seller; as mutually agreed by
them; provided that Parent and Buyer will be
responsible only for costs approved by them in advanced; provided
further that Parent and Buyer will be solely responsible for any
compensation for work after the date of transfer of any Transferred Employee
hired by either of them.

 

5.8           Confidentiality.  All Book and Records of Seller, and
other confidential and/or proprietary information of a party to this Agreement
are hereinafter referred to as “Confidential Information.”  A party who owns and discloses its
Confidential Information is referred to below as a “Disclosing
Party” and a party who receives or is given access to a Disclosing
Party’s Confidential Information is referred to below as a “Receiving Party.”  Each party hereto agrees that all Confidential
Information of another party that is disclosed to such party in the course of
negotiating the Transactions contemplated by this Agreement or conducting due
diligence in connection herewith will be held in confidence, and will not be
used or disclosed by the Receiving Party except for the purposes relating to or
permitted by this Agreement for which such Confidential Information was
disclosed, and upon termination of this Agreement or the consummation of the Transactions
contemplated hereby, will be promptly destroyed by the Receiving Party or
returned to the Disclosing Party, upon the Disclosing Party’s written
request.  No party’s employees will be
given access to Confidential Information of another party except on a “need to
know” basis and such employees shall be informed of the need to keep such
Confidential Information confidential. 
It is agreed that Confidential Information will not include information
that: (i) was known to such Receiving Party before receipt of such
information from the Disclosing Party; (ii) is or becomes generally known
to the public through no breach of this Section or any act or omission on the
part of the Receiving Party; (iii) is disclosed by a third party having
the legal right to disclose such information with no obligation of confidence
to the Disclosing Party, or is required to be disclosed as a result of court
order or similar process; or (iv) is independently developed by the
Receiving Party without use of any of the Disclosing Party’s Confidential
Information (as evidenced by a contemporaneous writing).

 

ARTICLE VI

OTHER AGREEMENTS AND COVENANTS

 

6.1           Additional
Documents and Further Assurances. 
Each Party hereto, at the reasonable request of another Party hereto, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be reasonably necessary or desirable for effecting completely
the consummation of the Transactions contemplated hereby (provided that the foregoing will not
require any Party to make any payment of consideration to any other Person).

 

6.2           Inventory
Put and Call; Covenant to Purchase Inventory.  For a period of thirty (30) days following the three (3) month
anniversary of the Closing (the “First  Exercise Period”), (i) Buyer shall have the option to
sell to Seller and Seller shall have to obligation to purchase from Buyer (the
“Put Right”) all Inventories that Buyer
and Seller reasonably agree will reasonably be expected to not have been used
in the manufacture and sale of products of the Business during the 6-month
period following the Closing Date (collectively, the “Estimated

 

30

 

Unused
Inventories”) and (ii) for a
period of thirty (30) days following the six (6) month anniversary of the
Closing (the “Second  Exercise
Period”), Buyer shall have a Put Right with respect to all
Inventories that have not been used in the manufacture and sale of products of
the Business during the 6-month period following the Closing Date (collectively,
and together with the Estimated Unused Inventories, the “Unused Inventories”) and; provided, however, that the
Unused Inventories shall be deemed to be reduced by the following:

 

(a)           The
amount of any inventories of the same kind, or suitable for the same purposes,
as any Unused Inventories, if any, purchased by Buyer and its affiliates and
used in substitution for such Unused Inventories during such 6-month period,
unless such substituted inventories are used by Buyer or such affiliates at the
request of Seller;

 

(b)           The
amount of any Unused Inventories, if any, lost, stolen, destroyed or otherwise
damaged during such 6-month period; and

 

(c)           The
amount of any Unused Inventories, if any, to be used by Buyer or its affiliates
after such 6-month period pursuant to binding, noncancellable purchase orders
received or assumed by Buyer or such affiliates during such 6-month period to
be shipped within 30 days after the end of such 6-month period.

 

(d)           For
purposes of the identification of any Unused Inventories, the Inventories shall
be deemed to be used prior to any other inventories of the same kind, or
suitable for the same purposes, as such Unused Inventories acquired by Buyer or
its affiliates after the date of this Agreement.

 

(e)           Buyer
may exercise its Put Right described in Section 6.2(a) solely by the
delivery, within the First Exercise Period or the Second Exercise Period, as
the case may be, to Seller of notice to such effect that (i) sets forth
(A) a specific description of any Unused Inventories and (B) the
original purchase price less any amount paid by Seller to Buyer with respect to
such Unused Inventory following the Closing Date (such as a “buy down”) of such
Inventories as of the Closing Date (the “Inventory
Repurchase Price”) and (ii) is accompanied by an officer’s
certificate of Buyer that certifies that such Unused Inventories have been
identified, and the Inventory Repurchase Price thereof has been calculated, in
accordance with this Section 6.2. 
Within ten (10) business days after the receipt Seller of such notice,
Seller shall, if it objects to such notice, deliver to Buyer notice that Seller
disputes Buyer’s identification of the Unused Inventories or the calculation of
the Inventory Repurchase Price.  If
Seller fails to timely deliver to Buyer such notice within such 10 business day
period, then Seller shall be deemed to have accepted the exercising party’s
identification of the Unused Inventories and calculation of the Inventory
Repurchase Price.  If Seller timely
delivers to the Buyer such notice within such 10 business day period, then the
parties shall attempt in good faith to reach a resolution of such
disagreement.  If such disagreement is
not resolved within five (5) days after delivery of Seller’s notice, the
Independent Accountants shall be directed to compute the amount of the Unused
Inventories and the Inventory Repurchase Price as promptly as practicable and
such computation shall be binding upon the Parties hereto.  The expenses of Independent Accountant in
connection with such computation shall be borne equally by Buyer and Seller.

 

31

 

(f)            Payment.  Seller shall pay to Buyer the
amount of the Inventory Repurchase Price as finally determined in this Section
within five (5) business days of any such determination and Buyer shall
transfer title of the Unused Inventory to Seller.  The Unused Inventory shall be in
substantially the same condition (other than changes due to the passage of time)
as when purchased by Buyer free and clear of any Liens (except for Permitted
Liens).  Except as set forth in the
foregoing sentence, Buyer makes no representations or warranties with respect
to the Unused Inventories.

 

6.3           Repurchase
of Inventory and Equipment Under Certain Circumstances.

 

(a)           In
the event that during the term of the Supply Agreement, (i) Seller sells,
transfers or otherwise disposes of its DSG business, its systems business or
any other business unit of Seller being supplied by Buyer pursuant to the
Supply Agreement to a third party, other than Buyer or Parent, or an Affiliate
of either (in each case, an “Affected Business”)
and (ii) both (1) the acquirer of the Affected Business does not agree to
be bound by and subject to the terms of the Supply Agreement as in effect on the
date of closing of the transaction involving the Affected Business and (2)
Adaptec, Inc. (“Adaptec”) does not remain
primarily liable for its obligations under the Supply Agreement or Adaptec or
the acquirer of the Affected Business terminates the Supply Agreement in
connection with the sale of the Affected Business, Seller agrees to repurchase
any Fixed Assets or Inventories sold to Buyer hereunder and then held by Buyer
on the date of such repurchase that are associated with the Affected Business
necessary to support Adaptec’s requirements under the Supply Agreement
associated with the Affected Business (and any capital equipment and any raw
material or work in process purchased by Parent or Buyer necessary to support
Adaptec’s requirements under the Supply Agreement that are associated with the
Affected Business) (the “Repurchased Assets”).  In connection with any repurchase of the
Repurchased Assets, Buyer shall represent to Seller
that Buyer is duly and validly organized under the laws of the jurisdiction in
which it is incorporated, that the repurchase has been duly authorized by all
requisite action on the part of Buyer, that such transfer and purchase does not
violate any applicable law or require the consent or authorization of any third
party, that Buyer has good and valid title to the Repurchased Assets, free and
clear of any Liens, except Permitted Liens, and that Buyer has the
complete authority, power and right to sell, assign, transfer, convey and
deliver the Repurchased Assets to Seller pursuant to the repurchase.  The repurchase price for any Inventories sold
to Seller pursuant to this Section 6.3(a) shall be (i) if the Seller’s
obligation to repurchase the Repurchased Assets under this Section 6.3 is
triggered prior to the expiration or exercise of the put right in Section 6.2,
determined in the same manner as the Inventory Repurchase Price is determined
pursuant to Section 6.2 hereof, and (ii) if the Seller’s obligation to
repurchase the Repurchased Assets under this Section 6.3 is triggered after the
expiration or exercise of the put right in Section 6.2, then the repurchase
price shall be the standard cost of such Inventories as shown on the books and
records of Buyer.  The repurchase price
for Fixed Assets shall equal the depreciated value of such Fixed Assets that
would be shown on the books and records of Seller if Seller had continued to
own such Fixed Assets on the date of the closing of the divestiture of the
Affected Business.  The repurchase price
for the Fixed Assets and Inventories pursuant to this Section 6.3(a) shall
be determined by Buyer within fifteen (15) days of the occurrence of an event
that gives Buyer the right to trigger a repurchase pursuant to this
Section.  Thereafter, Seller or Parent
may object to such determination using the same framework as set forth in

 

32

 

Section 6.2(e)
hereof and payment shall be made by Seller or Parent pursuant to the provisions
of Section 6.2(f) hereof.

 

(b)           In
the event that during the term of the Supply Agreement, (i) Seller is
acquired by a third party merger, or other business combination transaction in
which the shareholders of Adaptec immediately prior to such transaction own
immediately after such transaction less than 50% of the outstanding voting
securities of the acquiring or surviving entity (or its ultimate corporate
parent) or the sale of substantially all of the assets of the Seller or
Adaptec’s, other than an acquisition, merger, business combination or sale to
Buyer or Parent, or an Affiliate of either, and (ii) both (1) the acquirer
of Adaptec or all or substantially all of the assets of Seller or Adaptec does
not agree to be bound by and subject to the terms of the Supply Agreement as in
effect on the date of closing of the transaction and (2) Adaptec does not
remain primarily liable for its obligations under the Supply Agreement or
terminates the Supply Agreement prior to its expiration date in connection with
such transaction, Seller agrees to repurchase any Fixed Assets or Inventories
sold to Buyer and held by Buyer on the date of such repurchase necessary to
support Adaptec’s requirements under the Supply Agreement associated with the
business or assets being sold (and any capital equipment and any raw material
or work in process purchased by Parent or Buyer necessary to support Adaptec’s
requirements under the Supply Agreement associated with the business or assets
being sold) (the “Acquisition Assets”).  Buyer shall represent to Seller that Buyer is duly and validly organized under
the laws of the jurisdiction in which it is incorporated, that the repurchase
has been duly authorized by all requisite action on the part of Buyer that such
transfer and purchase does not violate any applicable law or require the
consent or authorization of any third party, that Buyer has good and valid
title to the Acquisition Assets, free and clear of any Liens, except Permitted
Liens, and that Buyer has the complete authority, power and right to
sell, assign, transfer, convey and deliver the Acquisition Assets to Seller
pursuant to the sale of the Acquisition Assets. 
The repurchase price for any Inventories sold to Seller or Parent
pursuant to this Section 6.3(b) shall be (i) if the Seller’s obligation to
repurchase the Repurchased Assets under this Section 6.3 is triggered prior to
the expiration or exercise of the put right in Section 6.2, determined in the
same manner as the Inventory Repurchase Price is determined pursuant to
Section 6.2 hereof, and (ii) if the Seller’s obligation to repurchase the
Repurchased Assets under this Section 6.3 is triggered after the expiration or
exercise of the put right in Section 6.2, then the repurchase price shall be
the standard cost of such Inventories as shown on the books and records of
Buyer.  The repurchase price for Fixed
Assets shall equal the depreciated value of such Fixed Assets that would be
shown on the books and records of Seller if Seller had continued to own such
Fixed Assets on the date of the closing of the divestiture of the Acquisition
Assets.  The repurchase price for the Fixed Assets and
Inventories pursuant to this Section 6.3(b) shall be determined by Buyer
within fifteen (15) days of the occurrence of an event that gives Buyer the
right to trigger a repurchase pursuant to this Section.  Thereafter, Parent may object to such
determination using the same framework as set forth in Section 6.2(e)
hereof and payment shall be made by Parent pursuant to the provisions of
Section 6.2(f) hereof.  A transaction
involving the sale of an Affected Business or a sale of Acquisition Assets
subject to the repurchase obligations of Seller pursuant to Sections 6.3(a) or
(b), is referred to as a “Disposition Transaction”.

 

6.4           Consigned
Inventories.  In the event Seller has
in Buyer’s determination a reasonable amount of inventories related to the
Business as of the Closing Date in excess of the Inventories, the Parties may
reasonably agree that such inventory (the “Consigned Inventory”)

 

33

 

shall remain at the Facility
following the Closing Date without charge to Seller or Adaptec and Seller and
Adaptec shall be given reasonable access to such inventory.  Following each exercise of the Put Right, any
Unused Inventory shall remain at the Facility following such exercise and
thereafter be treated as Consigned Inventory without charge to Seller or
Adaptec and Seller and Adaptec shall be given reasonable access to such
inventory.  During the period reasonably
determined by the Buyer (the “Consignment Period”),
Buyer agrees that, in the event Buyer requires inventories of the same kind and
nature as, and in addition to, the Inventories purchased on the Closing Date
for the manufacture of the products of the Business for delivery to Seller,
Parent and Buyer shall use the Consigned Inventories to the extent reasonably
possible.  In the event Parent or Buyer
use the Consigned Inventories to manufacture products for Seller, Parent or
Buyer shall pay Seller the then standard costs of such inventories on the date of purchase thereof.  Following the Consignment Period, Seller may remove the Consigned Inventory
from the Facility upon reasonable prior written notice to Buyer and Parent, and
Seller shall remove such Consigned Inventory within a reasonable time following
Buyer’s request to Seller to remove such Consigned Inventory.

 

ARTICLE VII

CONDITIONS TO THE CLOSING

 

7.1           Conditions
to Parent’s and Buyer’s Obligation to Close.  The obligations of Parent and Buyer hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Parent, but only in a
writing signed by Parent):

 

(a)           Representations
and Warranties.  The representations and warranties of Seller
set forth in Article III that are qualified as to materiality or Material
Adverse Effect, or in Sections 3.1, 3.2 or 3.3 shall be true and correct,
and those that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, and as of the Closing
with the same force and effect as if made on and as of the Closing (except to
the extent expressly made as of a particular date, in which case as of such
date).

 

(b)           Covenants.  Seller shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by Seller
on or prior to the Closing.

 

(c)           No
Actions.  No action, suit, or proceeding shall be
threatened or pending before any court or quasi-judicial or administrative
agency of any non-U.S. or any U.S. federal, state or local jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would, if successful, (A) prevent consummation
of any of the Transactions contemplated by this Agreement, or (B) result
in a Material Adverse Effect to Seller of the Purchased Assets.

 

(d)           Closing
Certificates.  Seller shall have delivered to Parent an
officer’s certificate to the effect that each of the conditions specified above
in Section 7.1(a) to 7.1(c)
(inclusive) is satisfied in all respects.

 

34

 

(e)           Third
Party Consents.  All consents (or waivers in lieu thereof) to
the performance by Parent, Buyer and Seller of their respective obligations
under this Agreement and the Ancillary Agreements or to the consummation of the
Transaction, listed on Schedule 7.1(e), (i) shall have been
obtained, (ii) shall be in form and substance satisfactory to Parent, and
(iii) shall be in full force and effect.

 

(f)            Delivery
of Documents.  Seller will have
delivered to Buyer the following documents:

 

(i)            the
Assumption Instruments, the Transition
Services Agreement, the Escrow Agreement and the Employee Secondment Agreement;

 

(ii)           all
documents necessary to effect the
transfer of the Purchased Assets and the Assumed Liabilities as listed in
7.1(f)(ii);

 

(iii)          the
Seller Books and Records;

 

(iv)          assignment
instruments with regard to the Assigned
Contracts and the Assumed Permits, including, to the extent required, consents
to the assignments from all Persons whose consent is required for such
assignment;

 

(v)           consents
from all Persons to discharge any Lien
(other than Permitted Liens) existing as of the Closing on the Purchased
Assets, the Business or the Facility set forth in Schedule 7.1(f)(v);
and

 

(g)           Material
Adverse Effect.  There shall not have
been a Material Adverse Effect on the Business or the Purchased Assets, taken
as a whole, nor shall there have occurred any event or development that could
reasonably be expected to result in the future in a Material Adverse Effect on
the Purchased Assets, taken as a whole.

 

(h)           Schedules.  Seller shall have delivered to Buyer Schedule
1.1(v), Schedule 1.1(aa) and Schedule 1.1(mm) at least
three (3) business days prior to the Closing Date.

 

(i)            Board
of Directors.  Buyer shall have
received a certified copy of the resolutions of the board of directors of
Seller executed by an officer of Seller approving this Agreement, the sale and
transfer of the Purchased Assets to Buyer pursuant to this Agreement, and the
Ancillary Agreements.

 

(j)            Preliminary
Fixed Asset and Inventories Statement. 
Seller shall have executed and delivered to Buyer the Preliminary Fixed
Asset and Inventories Statement and a statement indicating the Preliminary Net
Asset Value.

 

(k)           Delivery
of Documents.  Seller will have
delivered to Buyer the following documents:

 

(i)            the
Ancillary Agreements executed by Seller;
and

 

35

 

(ii)           assumption
instruments with regard to the Assigned Contracts and the Assumed Licenses.

 

(l)            No
Actions.  No action, suit, or
proceeding shall be threatened or pending before any court or quasi-judicial or
administrative agency of any non-U.S. or any U.S. federal, state or local
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would, if successful,
(A) prevent consummation of any of the Transactions contemplated by this
Agreement, or (B) result in a Material Adverse Effect to the Business or
the Purchased Assets.

 

7.2           Conditions
to Seller’s Obligations.  The obligations of Seller hereunder are
subject to the fulfillment or satisfaction on, and as of the Closing, of each
of the following conditions (any one or more of which may be waived by Seller,
but only in writing signed by Seller):

 

(a)           Representations
and Warranties.  The representations and warranties of Parent
and Buyer set forth in Article IV that are qualified as to materiality or
Material Adverse Effect, or in Sections 4.1, 4.2 or 4.3 shall be true and
correct, and those that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement, and as of the
Closing with the same force and effect as if made on and as of the Closing
(except to the extent expressly made as of a particular date, in which case as
of such date).

 

(b)           Covenants.  Parent and
Buyer shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by them on or prior to the Closing.

 

(c)           Closing
Certificate.  Parent shall have delivered to Seller an
officer’s certificate to the effect that each of the conditions specified above
in Section 7.2(a) and 7.2(b) is satisfied in all respects.

 

(d)           Board
of Directors.  Seller shall have
received a certified copy of the resolutions of the board of directors of Buyer
approving this Agreement, the sale and transfer of the Purchased Assets to Buyer,
and the Ancillary Agreements.

 

(e)           Purchase
Price.  Seller shall have received
the Purchase Price and the GST Tax Amount.

 

(f)            Delivery
of Documents.  Buyer will have
delivered to Seller the following documents:

 

(i)            the
Assumption Instruments, the Transition Service Agreement, the Escrow Agreement
and the Employee Secondment Agreement; and

 

(ii)           assumption
instruments with regard to the Assigned Contracts and the Assumed Licenses.

 

(g)           Material
Adverse Effect.  There shall not have
been a Material Adverse Effect on Parent or Buyer, taken as a whole, nor shall
there have occurred any event or

 

36

 

development that could
reasonably be expected to result in the future in a Material Adverse Effect on
Parent or Buyer, taken as a whole.

 

(h)           No
Actions.  No action, suit, or
proceeding shall be threatened or pending before any court or quasi-judicial or
administrative agency of any non U.S. or any U.S. federal, state or local
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would, if successful,
(A) prevent consummation of any of the Transactions contemplated by this
Agreement, or (B) result in a Material Adverse Effect to Parent or Buyer.

 

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

 

8.1           Representations,
Warranties and Covenants.  The covenants contained in this Agreement
shall survive the applicable Closing Date in accordance with their terms.  The representations and warranties contained
in this Agreement and the Ancillary Agreements shall survive the applicable
Closing Date for a period of twelve (12) months (such date upon which they
expire being referred to herein as the “Survival
Date”) and shall thereafter expire; provided,
however, that notwithstanding the foregoing (i) the
representations and warranties of Seller contained in Section 3.16
(Environment, Health and Safety) shall survive the Closing Date for a period of
twenty-four (24) months.  Buyer’s or
Parent’s (or any Buyer Indemnitee’s) right to make a claim for indemnification
under Section 9.1, and Seller’s (or any Seller Indemnitee’s) right to make
a claim for indemnification under Section 9.2, shall expire with respect
to such claims which are not made on or prior to the date, if any, on which the
survival period for such representation or warranty expires.  Any claims under Article IX must be
asserted in writing with reasonable particularity by the party making such
claim, including indemnifying the basis of the claim and estimate of the
potential Damages covered thereby.

 

ARTICLE IX

INDEMNIFICATION

 

9.1           Indemnification
by Seller.  Subject to this
Section 9, Seller agrees to defend, indemnify and hold harmless Parent and
Buyer and their respective successors, assigns and Affiliates (individually, a
“Buyer Indemnitee”, and
collectively, the “Buyer Indemnitees”)
from and against and in respect of any and all losses, damages, deficiencies,
liabilities, assessments, judgments, costs and expenses, including attorneys’
fees (both those incurred in connection with the defense or prosecution of the
indemnifiable claim and those incurred in connection with the enforcement of
this provision), net of insurance proceeds received by the Buyer Indemnittee
with respect thereto (collectively, “Damages”)
suffered or incurred by any Buyer Indemnitee which is caused by, resulting from
or arising out of:

 

(a)           any breach
of any representation, warranty or covenant of Seller contained in this
Agreement or in any Ancillary Agreement, or other agreement, certificate,
instrument or other document entered into or delivered by Seller at the Closing
in connection herewith (it being

 

37

 

understood
and agreed that solely for purposes of determining the amount of Damages for
purposes of the indemnification obligations set forth in this Article IX,
all qualifications as to “materiality,” and all “Material Adverse Effect”
qualifications, contained in such representations and warranties shall be disregarded
and have no force or effect);

 

(b)           any Excluded Liabilities;

 

(c)           Taxes of
Seller to the extent provided in Section 2.6;

 

(d)           Liabilities of Seller, whether arising
before or after the Closing Date, arising from or relating to the ownership or
actions or inactions of Seller or the conduct of the Business prior to the
Closing; and

 

(e)           any
and all Damages suffered or incurred by Buyer Indemnitee by reason of or in
connection with any claim or cause of action of any third party to the extent
arising out of the operation of the Business prior to the Closing.

 

To the extent that Seller’s undertakings set forth in
this Section 9.1 may be unenforceable, Seller shall contribute the maximum
amount that it is permitted to contribute under applicable Law to the payment
and satisfaction of all Damages incurred by Buyer Indemnitee.

 

9.2           Indemnification
by Buyer and Parent.  Subject
to this Article IX, the Buyer and Parent each joint and severally agrees
to defend, indemnify and hold harmless the Seller and its respective
successors, assigns and Affiliates (individually, a “Seller Indemnitee”, and collectively, the “Seller Indemnitees”) from and against and
in respect of any and all Damages suffered or incurred by any Seller Indemnitee
which is caused by, resulting from or arising out of:

 

(a)           any breach
of any representation, warranty or covenant of Buyer contained in this
Agreement, or in any Ancillary Agreement, or other agreement, certificate,
instrument or other document entered into or delivered by any Buyer at the
Closing in connection herewith (it being understood and agreed that solely for
purposes of determining the amount of Damages for purposes of the
indemnification obligations set forth in this Article IX, all
qualifications as to “materiality,” and all “Material Adverse Effect”
qualifications, contained in such representations and warranties shall be
disregarded and have no force or effect); and

 

(b)           any Assumed
Liabilities or Assigned Contracts arising out of circumstances existing after
the Closing Date;

 

(c)           Taxes of
Buyer to the extent provided in Section 2.6.

 

(d)           Liabilities
of Buyer or Parent arising from or relating to the ownership or actions or
inactions of Buyer and Parent or the conduct of the Business on or after the
Closing; and

 

38

 

(e)           any
and all Damages suffered or incurred by Seller Indemnitee by reason of or in
connection with any claim or cause of action of any third party prior to the
extent arising out of the operation of the Business on or after the Closing.

 

To the extent that Buyers or Parent’s undertakings set
forth in this Section 9.2 may be unenforceable, Buyer and/or Parent shall
contribute the maximum amount that it is permitted to contribute under
applicable Law to the payment and satisfaction of all Damages incurred by
Seller Indemnities.

 

9.3           Notice
and Opportunity to Defend.  If
any action, proceeding, claim, liability, demand or assessment shall be
asserted against any Buyer Indemnitee or any Seller Indemnitee (the “Indemnitee”) in respect of which such
Indemnitee proposes to demand indemnification, such Indemnitee shall notify the
party obligated to provide indemnification pursuant to Section 9.1 or
Section 9.2 (the “Indemnifying Party”)
thereof within a reasonably prompt period of time after assertion thereof; provided, however, that the failure to so
notify the Indemnifying Party shall only affect the Indemnitee’s right to
indemnification hereunder to the extent that the Indemnifying Party’s interests
are actually and materially prejudiced thereby. 
Subject to rights of or duties to any insurer or other third Person
having liability therefor, the Indemnifying Party shall have the right, within
ten (10) days after receipt of such notice, to assume the control of the
defense, compromise or settlement of any such action, suit, proceeding, claim,
liability, demand or assessment, and to retain counsel in connection therewith;
provided, however, that if the
Indemnifying Party shall exercise its right to assume such control:

 

(a)           the
Indemnitee may, in its sole discretion and at its own expense, employ separate
counsel to represent it in any such matter, and in such event counsel selected
by the Indemnifying Party shall be required to cooperate with such counsel of
the Indemnitee in such defense, compromise or settlement for the purpose of
informing and sharing information with such Indemnitee;

 

(b)           for any
subject matter, the Indemnitee will, at its own expense, make available to the
Indemnifying Party those employees of the Indemnitee or any Affiliate of the
Indemnitee whose assistance, testimony or presence is necessary to assist the
Indemnifying Party in evaluating and in defending any such action, suit,
proceeding, claim, liability, demand or assessment; provided, however, that any such access shall be conducted
in such a manner as not to interfere unreasonably with the business activities
of the Indemnitee and its Affiliates;

 

(c)           the
Indemnifying Party shall not compromise or settle any such action, suit,
proceeding, claim, liability or assessment without the consent of the
Indemnitee, which consent shall not be unreasonably withheld or delayed;

 

(d)           in the event
that any action, suit, proceeding, claim, liability or assessment (or the
compromise or settlement thereof) involves a claim for (i) injunctive
relief that affects or could reasonably be expected to affect the Business in
material any respect, or (ii) a claim for damages (or a claim that could
reasonably be expected to result in damages) in excess of limitations set forth
in Section 9.5(c) and Section 9.5(g), Parent shall have the right to
control the defense and settlement thereof, at the sole cost and expense of the
Indemnified Party (subject to the limitations set forth in Article IX and subject to the Indemnified Party’s right to
make a claim

 

39

 

for
Damages in respect of such cost and expense if appropriate); provided, however, that Parent shall not
compromise or settle any such action, suit, proceeding, claim, liability or
assessment without the consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed.

 

9.4           Remedies.  Except for the right to seek to specifically
enforce the covenants hereunder, and except as specifically provided in this
Agreement (including, without limitation, the immediately succeeding sentence),
following the Closing Date, in the absence of fraud or intentional
misrepresentation (a “Fraud Claim”),
the sole and exclusive remedy of both Buyer and Seller with respect to any
breach of any representation or warranty contained in this Agreement, or any
Ancillary Agreement or in any agreement, certificate, instrument or other
document entered into in connection herewith at the Closing or any covenant or
agreement in this Agreement, shall be restricted to the indemnification rights
set forth in this Article IX. 
Nothing contained in this Article IX or elsewhere in this Agreement
shall limit the liability of either Party under this Agreement if this
Agreement is terminated pursuant to Section 10.1 or otherwise, or if the
transactions contemplated hereby shall not be consummated for any reason.  The foregoing notwithstanding, except for a
Fraud Claim, a Party shall have no further obligations under this Article IX with respect to Damages arising from a breach of a
representation or warranty contained in Article III or Article IV in the event the other Party waives in writing such Party’s satisfaction
of the closing condition under Section 7.1(a) or Section 7.2(a), as
the case may be, due to such breach and closes the transaction.

 

9.5           Certain
Limitations.  The liability of
the Seller, Parent or the Buyer, as applicable, for claims under this Agreement
shall be limited by the following:

 

(a)           At any time
after the applicable Survival Date for a representation and warranty, (i) the Seller shall have no further obligations under
this Article IX for breaches of such representations and warranties of the
Seller, except for Damages with respect to which the Buyer Indemnitee has
timely given the Seller written notice prior to such date in accordance with
Sections 8.1 and 9.3 and (ii) the Buyer shall have no further obligations under this Article IX for
breaches of such representations and warranties of the Buyer, except for
Damages with respect to which the Seller Indemnitee has given the Buyer written
notice prior to such date in accordance with Sections 8.1 and 9.3.

 

(b)           Notwithstanding
anything to the contrary herein, except with respect to Fraud Claims, any claim
by a Buyer Indemnitee against Seller pursuant to Section 9.1(a) shall be
payable by Seller only in the event that the accumulated amount of Damages in
respect of Seller’s obligations to indemnify the Buyer Indemnitees under this
Agreement shall exceed $100,000 in the aggregate (the “Seller Indemnification Threshold”); provided, however, that at such time as
the aggregate amount of Damages in respect of the indemnity obligations of
Seller shall exceed the Seller Indemnification Threshold, Seller shall
thereafter be liable for all Damages suffered or incurred by the Buyer
Indemnitees in excess of such initial $100,000 of Damages.

 

(c)           Notwithstanding
anything to the contrary herein, except with respect to Fraud Claims (for which
there shall be no limitation), in no event shall the maximum aggregate
liability of Seller in respect of any claims by the Buyer Indemnitees against
Seller pursuant to

 

40

 

Section 9.1(a)
for Damages suffered or incurred by any Buyer Indemnitees exceed 10% of the
value of the Purchase Price (as adjusted pursuant to Section 2.4), except that with respect to Damages suffered or
incurred by any Buyer Indemnitee due to a breach of Section 3.16 the maximum aggregate liability of Seller shall
be 20% of the value of the Purchase Price (as adjusted pursuant to Section 2.4).

 

(d)           Notwithstanding
anything to the contrary herein, the limitations contained in this
Section 9.5 shall not apply to claims for indemnification by Buyer
Indemnitees against Seller in pursuant to Sections 9.1(b), 9.1(c), 9.1(d),
and 9.1(e); provided, however,
that except for Fraud Claims, Buyer’s or Parent’s (or any Buyer
Indemnitee’s) right to make a claim for indemnification under Sections 9.1(b), 9.1(c), 9.1(d), and 9.1(e)
shall expire with respect to such claims which are not made on or prior to the
date five years following the Closing Date.

 

9.6           Environmental
Covenants.  The obligations and
rights of the Buyer Indemnitees and Seller Indemnitees with respect to
indemnification for Environmental Liabilities under this Article IX
(whether as an Excluded Liability, Assumed Liability or as a result of a
representation or warranty made in this Agreement), collectively the “Environmental Covenants,” are in addition
to, independent from, and severable from the rights and obligations of said
parties under all other provisions of this Agreement.  It is expressly acknowledged by all parties
hereto that neither the acts or omissions of any party hereto, nor any failure
of any condition or breach of a representation contained in this Agreement, any
Ancillary Agreements, or any other agreements entered into in connection
therewith, shall impair the rights of Seller Indemnitees or Buyer Indemnitees
to enforce the Environmental Covenants for their benefit, it being understood
that the Environmental Covenants are being given in consideration of the
closing of the transactions contemplated by this Agreement.  The Environmental Covenants shall survive the
sale, transfer, assignment, or hypothecation of any ownership interest in a
party benefited hereby or obligated hereunder and the sale, transfer,
assignment, or hypothecation of the business activities of the Facility or
Purchased Assets or the real property at which the Facility is located, or any
portion thereof or interest therein, by any Parent, Buyer or Seller to any
Person.

 

9.7           Escrow.  With respect to any claims for
indemnification, Buyer shall first proceed against the Escrow with respect to
claims Buyer has for indemnification pursuant to this Section 9.  In the
event the Escrow is not sufficient to satisfy any valid indemnification claim
of Buyer, or in the event such claim is made in accordance with the provisions
of this Section 9 after the Escrow
has terminated and recourse to such claim properly be made beyond the escrow,
then Seller shall remain obligated to satisfy such indemnification claim of
Buyer in full (subject to the other limitations in this Article IX).

 

41

 

ARTICLE X

TERMINATION

 

10.1         Termination
of the Agreement.  The Parties may terminate this Agreement as
provided below:

 

(a)           Parent and
Seller may terminate this Agreement as to all Parties by mutual written consent
at any time prior to the Closing;

 

(b)           Parent or
Seller may terminate this Agreement by written notice if the Closing has not
occurred by January 31, 2006; provided,
however, that the right to terminate this Agreement under this
Section 10.1(b)(i) shall not be available to any Party whose action or
failure to act has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;

 

(c)           Parent or
Seller may terminate this Agreement by written notice if: (i) there shall
be a final nonappealable order of a court of competent jurisdiction in effect
preventing consummation of the transactions contemplated by this Agreement or
(iii) there shall be any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated by
this Agreement by any Governmental Body that would make consummation of the
transactions contemplated by this Agreement illegal;

 

(d)           Parent
or Seller if (i) there shall be a final nonappealable order of a court
competent jurisdiction in effect preventing consummation of the transactions
contemplated by this Agreement or (ii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
transactions contemplated by this Agreement by any Governmental Body that would
make consummation of the transactions contemplated by this Agreement illegal.

 

(e)           Parent may
terminate this Agreement by written notice if there shall be any action taken,
or any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the transactions contemplated by this Agreement by any
Governmental Body, which would (i) prohibit Parent’s or Buyer’s ownership
or operation of all or a material portion of the Business or the Purchased
Assets or (ii) compel Parent or Buyer to dispose of or hold separate all
or a material portion of the business or assets of Parent or Seller as a result
of the transactions contemplated by this Agreement;

 

(f)            Parent may
terminate this Agreement by written notice if it is not in material breach of
its obligations under this Agreement and there has been a material breach of
any representation, warranty, covenant or agreement contained in this Agreement
on the part of Seller and such breach has not been cured within thirty (30)
calendar days after written notice to Seller; provided,
however, that, no cure period shall be required for a breach which
by its nature cannot be cured;

 

(g)           Seller may
terminate this Agreement by written notice if it is not in material breach of
its obligations under this Agreement and there has been a material breach of
any representation, warranty, covenant or agreement contained in this Agreement
on the part of

 

42

 

Parent
or Buyer and such breach has not been cured within thirty (30) calendar days
after written notice to Parent; provided,
however, that no cure period shall be required for a breach which by
its nature cannot be cured; and

 

(h)           Parent may
terminate this Agreement by written notice if an event having a Material
Adverse Effect or that may be expected to have a Material Adverse Effect on the
Business or on the Purchased Assets shall have occurred after the date of this
Agreement.

 

10.2         Effect of
Termination.  If any Party terminates this Agreement
pursuant to Section 10.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided
that each Party shall remain liable for any breaches of this Agreement prior to
its termination and provided, further, that the
provisions contained in Section 5.8 (confidentiality) and Article XI
(miscellaneous) shall survive termination.

 

ARTICLE XI

MISCELLANEOUS

 

11.1         Press
Releases and Public Announcements.  No Party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Party; provided, however, that (a) either
Party may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its publicly-traded
securities (in which case such Party will use its reasonable efforts to advise
the other Parties prior to making the disclosure) and (b) Seller may
correspond with third parties in writings in form and substance reasonably
satisfactory to Parent with respect to obtaining consents from such parties
pursuant to Section 7.1(f).

 

11.2         No Third-Party
Beneficiaries.  Except as provided in Article IX with
respect to indemnification, this Agreement shall not confer any rights or
remedies upon any Person other than the Parties, and their respective
successors and permitted assigns, other than as specifically set forth herein.

 

11.3         Entire
Agreement and Modification.  This Agreement (including the exhibits hereto)
and the Ancillary Agreements constitutes the entire agreement among the Parties
with respect to the subject matter hereof and supersedes any prior
understandings, agreements, warranties or representations by or among the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof..

 

11.4         Amendment.  This
Agreement may be amended by the Parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the Parties hereto.

 

11.5         Waivers.  The rights
and remedies of the Parties to this Agreement are cumulative and not
alternative.  Neither the failure nor any
delay by any Party in exercising any right, power or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
such right, power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the

 

43

 

exercise
of any other right, power, or privilege. 
To the maximum extent permitted by applicable law, (i) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other Party;
(ii) no waiver that may be given by a Party will be applicable except in
the specific instance for which it is given; and (iii) no notice to or
demand on one Party will be deemed to be a waiver of any obligation of such
Party or of the right of the Party giving such notice or demand to take further
action without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.

 

11.6         Successors
and Assigns.  This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns.  No Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Parties; provided, however, that so long as Parent
remains liable for all obligations under this Agreement, Parent may
(i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder.

 

11.7         Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same instrument.

 

11.8         Headings.  The section
headings contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.

 

11.9         Notices.  All notices
and other communications required or permitted hereunder shall be in writing,
shall be effective when given, and shall in any event be deemed to be given
upon receipt or, if earlier, (a) upon delivery, if delivered by hand,
(b) three Business Days after the Business Day of deposit with Federal
Express or similar overnight courier, freight prepaid or (c) one Business
Day after the Business Day of facsimile transmission, if delivered by facsimile
transmission with copy by Federal Express or similar overnight courier, freight
prepaid, and shall be addressed to the intended recipient as set forth below:

 

If to
Parent or Buyer:

 

Sanmina-SCI Corporation

2700 North First Street

San Jose, CA 95134

Attention: Robin
Walker, Senior Vice President, Corporate Development

Steven Jackman, Vice President and Corporate Counsel

Telephone No.:  (408) 964-3500

Facsimile No.:   (408) 964-3636

 

44

 

Copy to:

 

Wilson
Sonsini Goodrich & Rosati, Professional Corporation

650
Page Mill Road

Palo
Alto, California  94304

Attention:  Christopher D. Mitchell, Esq.
Facsimile No.:  (650) 493-6811

 

If to Seller:

 

Marshall Mohr

Chief Financial Officer

Adaptec, Inc.

691 S. Milpitas Boulevard

Milpitas, CA  95035

Fax:  (408) 957-1682

 

Copy to:

 

Randy Gast

Vice President of Global
Operations

Adaptec, Inc.

691 S. Milpitas Boulevard

Milpitas, CA  95035

Fax:  (408) 957-7185

 

Copy to:

 

Fenwick & West LLP

275 Battery Street, Suite 1600

San Francisco, California 94111

Attention: Samuel B. Angus, Esq.

Facsimile No.:  (415)
281-1350

 

Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
ten (10) days’ advance written notice to the other Parties pursuant to the
provisions above.

 

11.10       Governing Law.  This
Agreement shall be governed in all respects solely by the substantive laws of
the State of California, without regard to conflicts of laws or the choice of
law principles of any jurisdiction including the State of California, and
without the need of any Party to establish the reasonableness of the
relationship between the laws of the State of California and the subject matter
of this Agreement, and all questions concerning the validity and construction
hereof shall be determined in accordance with the laws of the State of
California.  Notwithstanding the
foregoing, the Employee Secondment Agreement and the Facility Transfer
Agreement will be governed by the laws of the Republic of Singapore.

 

45

 

11.11       Severability.  Any term or
provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other
jurisdiction.

 

11.12       Expenses.  Subject to
the provisions of this Agreement, each Party will bear its own costs and
expenses (including legal and accounting fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.

 

11.13       Construction.

 

(a)           The Parties
have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.  Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. 
The word “including” shall mean including without limitation.

 

(b)           Unless
the context requires otherwise, all words used in this Agreement in the
singular number shall extend to and include the plural, all words in the plural
number shall extend to and include the singular, and all words in any gender
shall extend to and include all genders.

 

11.14       Seller
Disclosure Letter.

 

(a)           The
disclosures in Seller Disclosure Letter, and those in any supplement thereto,
must relate only to the representations and warranties in the section of the
Agreement to which they expressly relate and to any other representation or
warranties in this Agreement to the extent it is readily apparent that such
disclosures relate to such other representations and warranties.

 

(b)           Statements
contained within the Seller Disclosure Letter shall be deemed to be
representations and warranties under this Agreement.

 

11.15       Attorneys’
Fees.  If any legal proceeding or other action
relating to this Agreement is brought or otherwise initiated, the prevailing
Party shall be entitled to recover reasonable attorneys’ fees, costs and
disbursements (in addition to any other relief to which the prevailing Party
may be entitled).

 

11.16       Further Assurances.  The Parties
agree (a) to furnish upon request to each other such further information,
(b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other Party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.

 

11.17       Time of
Essence.  With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

 

46

 

11.18       Consent to Jurisdiction.  Subject to Section 11.2 above, the
competent court in Santa Clara, California (the “Competent Court”) (and not any other court in any state or
country) shall have exclusive jurisdiction in connection with this
Agreement.  Subject to Section 11.2
above, each Party hereby irrevocably submits to the exclusive jurisdiction of
the Competent Court in any action or proceeding arising out of or relating to
this Agreement and irrevocably waives any objection such person may now or
hereafter have as to the venue of any such suit, action or proceeding brought
in the Competent Court or that the Competent Court is an inconvenient forum.

 

11.19       Schedules
and Exhibits.  The Schedules and
Exhibits described herein and attached hereto constitute an inseparable part of
this Agreement and are incorporated into this Agreement for all purposes as if
fully set forth herein.  Any disclosure
made in any Schedule to this Agreement which may be applicable to another
Schedule to this Agreement shall be deemed to be made with respect to such
other Schedule only if a specific cross reference is made thereto or if it is
readily apparent that such disclosure should apply to such other Schedule.

 

47

 

IN WITNESS WHEREOF, the Parties
hereto have executed this Agreement on of the date first above written.

 

 

	
  Parent:

  	
  SANMINA-SCI
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jure Sola

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jure Sola

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Buyer:

  	
  SANMINA-SCI SYSTEMS SINGAPORE PTE. LTD.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jure Sola

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jure Sola

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Seller:

  	
  ADAPTEC
  MANUFACTURING (S) PTE. LTD.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Marshall Mohr

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Marshall Mohr

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  VP&CFO, Adaptec, Inc.

  	
   

  
										

 

 

Exhibit A

 

Transition Services Agreement

 

(See Tab 4)

 

2

 

Exhibit B

 

Employee Secondment Agreement

 

(See Tab 5)

 

3

 

Exhibit C

 

Facility Transfer Agreement

 

(See Tab 6)

 

4

 

Exhibit D

 

Manufacturing Services and Supply Agreement

 

(See Tab 7)

 

5Exhibit 10.3

 

Confidential Treatment
Requested. Certain portions of this document have been omitted pursuant to a
request for confidential treatment and, where applicable, have been marked with
an asterisk to denote where omissions have been made. The confidential material
has been filed separately with the Securities and Exchange Commission.

 

AMENDMENT
TO

MANUFACTURING SERVICES AND SUPPLY AGREEMENT

 

THIS AMENDMENT TO MANUFACTURING SERVICES AND
SUPPLY AGREEMENT (the “Amendment”)
with an effective date as of the Closing Date is made and entered into by and
between ADAPTEC, INC., a Delaware corporation
having a place of business at 691 S, Milpitas Blvd., Milpitas, California
95035, on behalf of itself and its Affiliates (collectively, “ADAPTEC”), and SANMINA-SCI CORPORATION,
a Delaware corporation having its principal place of business at 2700 North
First Street, San Jose, California 95134, on behalf of itself and its
Affiliates (collectively “SANMINA-SCI”).
ADAPTEC and SANMINA-SCI are sometimes individually referred to herein as a “Party” and collectively referred to herein as the “Parties”. Capitalized terms used in this Amendment that are
not defined below or elsewhere in this Amendment are defined in the
Manufacturing Services and Supply Agreement or the Asset Purchase Agreement
dated December 23, 2005 among the parties and their Singapore subsidiaries (the
“Asset Purchase Agreement”) and will have the meaning given to such terms in
the Asset Purchase Agreement or the Manufacturing Services and Supply Agreement,
as the case may be.

 

RECITALS

 

A.            The
Parties have entered into a Manufacturing Services and Supply Agreement (“Agreement”) with an effective date as
of the Closing Date.

 

B.            The
Parties wish to amend the Agreement in accordance with the terms herein contained.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties agree
as follows:

 

1.             Section
4.5 of the Agreement is hereby deleted in its entirety and replaced with the following:

 

4.5           Payment
Terms. Payment terms for all Products purchased by a party hereunder are
net * days after the date of the Invoice. The Parties acknowledge that these
terms are intended to be “firm” (e.g., that payment is expected to be received
on the * day after the Invoice date). ADAPTEC shall be *. On any invoices not
paid by the due date, ADAPTEC shall pay interest from due date to the date of
payment at the rate of 1.5% per month unless such invoice was disputed in good
faith, in which case the interest rate shall be reduced to 1.0% per month.
Unless otherwise stated, all prices are stated in and all payments shall be
made in U.S. Dollars.

 

2.             Except
as set forth in this Amendment, the Agreement shall remain unchanged.

 

* Confidential treatment
requested

 

 

IN WITNESS WHEREOF, the Parties
hereto have caused this Amendment to be executed effective as of the Closing
Date, by their officers, duly authorized.

 

	
  SANMINA-SCI CORPORATION

  	
  ADAPTEC, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Charles C.
  Mason

  	
   

  	
  By:

  	
  /s/ Marshall
  Mohr

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  
	
  Charles C. Mason

  	
   

  	
     Marshall
  Mohr

  	
   

  
	
   

  	
  Typed Name

  	
   

  	
   

  	
  Typed Name

  	
   

  
	
   

  	
   

  
	
  Vice President, Business Development

  	
   

  	
   

  	
    VP
  & CFO

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date

  	
   

  	
   

  	
  Date

  	
   

  

 

2

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