Asset Acquisition Agreement Dated January 15, 1999

Exhibit 2.2


ASSET ACQUISITION AGREEMENT


DATED AS OF JANUARY 15, 1999


AMONG


ADAPTEC, INC.,


ADAPTEC MFG. (S) PTE. LTD.


AND


STMICROELECTRONICS, INC.


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ASSET ACQUISITION AGREEMENT


This ASSET ACQUISITION AGREEMENT (this "AGREEMENT") is made and entered into as of January 15, 1999 (the "EFFECTIVE DATE"), by and among Adaptec, Inc., a Delaware corporation ("AIM"), Adaptec Mfg. (S) Pte. Ltd., a wholly-owned Singapore subsidiary of AIM ("AMS" and, together with AIM, "SELLER") and STMicroelectronics, Inc., a Delaware corporation ("PURCHASER").


W I T N E S S E T H:


WHEREAS, Seller desires to sell and assign to Purchaser, and Purchaser desires to purchase and acquire from Seller, certain assets associated with Seller's Desktop Peripherals Business (as defined below), all upon the terms and subject to the conditions set forth in this Agreement;


WHEREAS, AIM desires to grant to Purchaser, and Purchaser desires to receive from AIM licenses to certain intellectual property rights of AIM in connection with the design, development and manufacture of Products and commercial exploitation of technology associated with the Desktop Peripherals Business; and


WHEREAS, in connection with the sale of assets and grant of licenses described above, Seller will permit Purchaser to make offers of employment and hire employees of Seller who have worked in the Desktop Peripherals Business;


NOW, THEREFORE, in consideration of the facts stated in the above recitals and of the mutual agreements and covenants hereinafter set forth, and for good and valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, the parties agree as follows:


ARTICLE I


CERTAIN DEFINITIONS


SECTION 1.1. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:


"AFFILIATE" or "ASSOCIATE" shall have those meanings ascribed to such terms by Rule 405 promulgated under the 1933 Act.


"ANCILLARY AGREEMENTS" means, collectively, the Bill of Sale, the Assignment and Assumption Agreement, the License Agreement, the Facilities Agreement and the Manufacturing Agreement.


"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and Assumption Agreement substantially in the form of EXHIBIT A.


"ASSUMED LIABILITIES" means (i) any and all liabilities of Seller under the Seller Contracts to the extent that such liabilities arise, are incurred or require performance of an action on or


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subsequent to the Closing Date, (ii) subject to the provisions of Section 10.4, any and all Warranty Claims (as defined in Section 10.4), and (iii) the liabilities and obligations listed on SCHEDULE 1 hereto.


"BILL OF SALE" means the Bill of Sale substantially in the forms of EXHIBIT B.


"BUSINESS ASSETS" means the Purchased Assets and the Licensed Assets.


"CIRCUITS" means discrete circuits that provide one or more functionalities that are a subset of the aggregate functionalities of a Product.


"CLOSING ACCOUNTS RECEIVABLE" means Seller's accounts receivable, unbilled receivables, notes and other amounts receivable from third parties in respect of Products sold by Seller, determined as of the date two business days prior to the Closing Date.


"DESKTOP PERIPHERALS BUSINESS" means Seller's business of designing, developing, manufacturing, testing, marketing, licensing, selling, distributing, using, modifying, operating, installing, servicing, supporting, maintaining, repairing or otherwise using or commercially exploiting one or more of the Products or Product Designs.


"ENCUMBRANCE" means any pledge, lien, collateral assignment, security interest, mortgage, deed of trust, title retention, conditional sale or other security arrangement, or adverse claim of title or ownership, other than those which do not materially detract from or interfere with the ownership of the properties subject thereto.


"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the rulings and regulations promulgated thereunder.


"EXCLUDED ASSETS" means all assets of Seller other than the Purchased Assets and the Licensed Assets, including, without limitation, (i) all Seller's cash, bank accounts and securities; (ii) all insurance policies of Seller and all rights of Seller of every nature and description under or arising out of such insurance policies; (iii) claims for refunds of Taxes paid by Seller prior to the Closing Date; (iv) all assets of, or held by or with respect to, any employee benefit plan (whether or not governed by ERISA) or any trust, fund or account that is related to any such employee benefit plan or that is similar in purpose or function thereto; (v) except as otherwise provided herein, Seller's right, title and interest in the name "Adaptec" or any variation or combination thereof, or Seller's other trademarks, monograms or logos; and (vi) the assets listed on SCHEDULE 13.


"FACILITIES AGREEMENT" means an agreement between Seller and Purchaser providing for the occupancy and use by Purchaser of certain facilities of Seller in substantially the form attached as EXHIBIT C hereto.


"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.


"INTANGIBLE ASSETS" means, collectively, the intangible assets, properties and rights of Seller listed on SCHEDULE 2 hereto.


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"INTELLECTUAL PROPERTY RIGHTS" means any and all existing or future patent rights (including patent applications and disclosures), rights of priority, mask work rights, industrial design rights, copyrights, moral rights, rights of Seller in trade secrets, know-how and any other intellectual property rights recognized in any country or jurisdiction of the world.


"INTERNAL REVENUE CODE" means the U.S. Internal Revenue Code of 1986, as amended, and the Treasury regulations (final and temporary) promulgated thereunder and the administrative pronouncements issued by the Internal Revenue Service relating thereto.


"INVENTORY" means the finished Products described on SCHEDULE 3, as added to as a result of the creation of additional finished Products, or the repurchase of unsold Products pursuant to outstanding agreements with distributors, and/or subtracted from as a result of sales of finished Products, in each case, during the period between the Effective Date and the date two business days prior to the Closing Date. The Purchase Price shall be (x) adjusted upward in an amount equal to Seller's actual cost to manufacture the additional finished Products added to Inventory during such period (provided, that the amount of upward adjustments in respect of Products repurchased from distributors shall not exceed $250,000), (y) adjusted downward in an amount equal to Seller's actual cost to manufacture the finished Products sold during such period and (z) in the event that the Closing shall occur after January 8, 1998, adjusted upward or downward in an amount equal to the reserve applied to the Inventory on the date of determination on a basis consistent with Seller's past practice. Such additions to and subtractions from the Inventory shall be referred to herein as the "INVENTORY ADJUSTMENTS" and the net result of such upward and downward adjustments to the Purchase Price shall be referred to herein as the "NET INVENTORY PRICE ADJUSTMENT."


"LICENSE AGREEMENT" means the Desktop Electronics Technology and Patent License Agreement between AIM and Purchaser substantially in the form of EXHIBIT D hereto.


"LICENSED ASSETS" means the Licensed Assets and Licensed Patents collectively, as such terms are defined in the License Agreement.


"MANUFACTURING AGREEMENT" means an agreement between Seller and Purchaser providing for the fabrication, manufacturing and testing of Products, elements and works-in progress thereof, for a period not to exceed nine months following the Closing Date, in substantially the form attached as EXHIBIT E hereto.


"PERSON" means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.


"PRODUCTS" means the products and products under development of Seller listed in SCHEDULE 4 hereto.


"PRODUCT DESIGN" means the particular arrangement of Circuits that comprise and implement the aggregate functionalities of a Product, as reflected in the layouts and schematic databases listed on SCHEDULE 5. For clarification, a "Product Design" does not include the particular individual Circuits included in a Product.


"PURCHASED TECHNOLOGY DELIVERABLES" means the deliverables listed on SCHEDULE 8.


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"PURCHASER'S DISCLOSURE LETTER" means Purchaser's Disclosure Letter dated as of the Effective Date which is being delivered to Seller concurrently with the execution of this Agreement.


"SELLER CONTRACTS" means those leases, licenses, agreements, contracts, understandings, arrangements, commitments and purchase orders listed on SCHEDULE 6 hereto.


"SELLER'S DISCLOSURE LETTER" means Seller's Disclosure Letter dated as of the Effective Date which is being delivered to Purchaser concurrently with the execution of this Agreement.


"SELLER'S KNOWLEDGE" or "KNOWLEDGE OF SELLER": A particular fact or other matter shall be deemed to be within "Seller's knowledge" if any director-level or more senior officer of Seller is actually aware of such fact or other matter.


"TANGIBLE ASSETS" means (x) the tangible personal property assets listed on SCHEDULE 7 hereto, subject to revision based upon a fixed assets inventory to be conducted within ten business days after the Effective Date, and (y) the personal computers, work stations, laboratory equipment, printers associated with personal computers, and network servers which are fully dedicated to the Desktop Peripherals Business and are not part of Seller's facilities infrastructure, which assets listed in clause (y): (1) are owned by Seller and currently utilized by Employees (as defined in Section 3.11) in the ordinary course of performing their duties for the Desktop Peripherals Business (excluding such assets used only on an incidental basis), and (2) shall not exceed $1,000,000 in aggregate value, and (3) shall be listed on a schedule to be delivered to Purchaser at the Closing. The Tangible Assets listed in clause (y) shall not include the fabrication, manufacturing, testing or packaging equipment used in the production of the Products, telecommunications equipment (including cellular telephones and pagers), projectors, furniture, fixtures, copiers or office supplies.


"TAX" or "TAXES" means all taxes or similar governmental charge or levy of any kind whatsoever (whether payable directly or by withholding), including without limitation, income taxes, gross receipts taxes, franchise taxes, transfer taxes or fees, stamp taxes, sales taxes, use taxes, excise taxes, ad valorem taxes, value added taxes, documentary taxes, intangible personal property taxes, withholding taxes, real or personal property taxes, employee withholding taxes, worker's compensation, payroll taxes, unemployment insurance, social security, minimum taxes or windfall profits taxes, together with any related liabilities, penalties, fines, additions to tax or interest, imposed by any governmental agency.


"THIRD PARTY ASSETS" means (i) the personal property assets, tangible and intangible, licensed or leased to Seller by third parties under certain Seller Contracts and (ii) Seller's license or other rights to such third-party assets under such Seller Contracts.


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ARTICLE II


ACQUISITION OF ASSETS


SECTION 2.1. Assets to Be Acquired and Licensed.


(a) Purchased Assets. Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Purchaser (or cause to be sold, assigned, transferred, conveyed and delivered to Purchaser) and Purchaser shall purchase and acquire from Seller, free and clear of all Encumbrances, all right, title and interest in and to all of the following (collectively, the "PURCHASED ASSETS"):


(i) the Intangible Assets (including all Intellectual Property
Rights therein and thereto);


(ii) the Inventory (subject to the Inventory Adjustments);


(iii) the Product Designs;


(iv) the Tangible Assets;


(v) the Purchased Technology Deliverables;


(vi) the right to enforce confidentiality, non-disclosure,
employee invention assignment and other proprietary rights
agreements between Seller and Hired Employees (as defined in
Article VI below) with respect to the Desktop Peripherals
Business;


(vii) all of Seller's rights under the Seller Contracts, including
Third Party Assets;


(viii) copies of Seller's marketing and sales information, pricing,
marketing plans, business plans, financial and business
projections and other files and records which pertain
exclusively to the Desktop Peripherals Business, but
excluding any personnel files of any Employee; and


(ix) the goodwill associated with the foregoing.


(b) Licensed Assets. The parties acknowledge that, in addition to the Purchased Assets, certain assets related to the Desktop Peripherals Business also are essential to other businesses conducted by Seller or licensed by Seller to third parties. Accordingly, with respect to the Licensed Assets, at the Closing, AIM shall grant to Purchaser licenses to and deliver the Licensed Assets on the terms and conditions set forth in the License Agreement.


(c) Excluded Assets. The parties agree that Seller is not selling or assigning to Purchaser, and the Purchased Assets do not include, any of the Licensed Assets or the Excluded Assets.


(d) Trademark License. Subject to the terms and conditions of this Agreement, as of the Closing, Seller hereby grants to Purchaser and Purchaser accepts a worldwide, nontransferable, fully-paid and royalty-free right and license under any rights Adaptec may have in


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the Adaptec Marks, to reproduce and affix: (i) through the end-of-life of each Product, the Adaptec trademark "AIC" to units of the Products as embedded as of the Closing Date in the mask works for such Products; (ii) for one year after the Closing Date, the Adaptec trademark "AIC" in price lists, literature and advertising for the Products; and (iii) on a Product-by-Product basis, until the sale by Purchaser of all Inventory of such Product transferred to Purchaser on the Closing Date, the Adaptec trademarks "Adaptec" and the stylized "A" logo on the device packaging for the Products (such Adaptec trademarks collectively, the "ADAPTEC MARKS"). Purchaser agrees to cease using the Adaptec Marks upon the expiration of the licenses herein granted. Purchaser acknowledges and agrees that Seller owns and will continue to own all right, title and interest in and to the Adaptec Marks and in any and all goodwill therein and thereto, whether arising as a result of Purchaser's use of the Adaptec Marks or otherwise. Purchaser hereby assigns and, if and as Seller may request in the future, agrees to assign and affirm assignment to Seller of all such right, title and interest in the Adaptec Marks and related goodwill. If requested by Seller, Purchaser will cooperate with Seller in securing any trademark registrations and other indicia of ownership for which Purchaser's cooperation is required as a matter of applicable local law as a result of Purchaser's use of the Adaptec Marks. Purchaser agrees to use the Adaptec Marks in substantially the same manner of current use by Seller unless otherwise agreed by Seller in writing. Without limiting the preceding sentence, without the prior written consent of Seller (which consent shall not be unreasonably withheld), Purchaser agrees not to combine, alter or obscure the Adaptec Marks in any way or authorize any third party to do so.


SECTION 2.2. Liabilities Assumed and Excluded.


(a) As a material inducement and consideration to Seller to enter into this Agreement and perform its obligations hereunder, at the Closing, Purchaser shall assume, pay, perform and discharge the Assumed Liabilities.


(b) Except for the Assumed Liabilities, Purchaser shall not assume or otherwise become obligated to pay, perform or discharge any liabilities, debts or obligations of Seller and Seller shall retain, and shall be solely responsible and liable for paying, performing and discharging when due, all of Seller's liabilities other than the Assumed Liabilities.


SECTION 2.3. Purchase Price; Allocation.


(a) Purchase Price. In consideration of the sale, transfer and assignment of the Purchased Assets to Purchaser and the license of the Licensed Assets to Purchaser, Purchaser agrees to pay to Seller at the Closing the sum of (x) $73,000,000 (seventy-three million United States dollars) plus or minus (y) the Net Inventory Price Adjustment (collectively, the "PURCHASE PRICE") in cash.


(b) Allocation.


(i) Purchase Price. Purchaser and Seller shall use all commercially reasonable efforts to agree upon an allocation of the Purchase Price among the Business Assets, in accordance with the allocation requirements of Section 1060 of the Internal Revenue Code. Purchaser and Seller agree to commence discussions regarding the allocation as soon as practicable, but in no event later than 30 days, following the Closing Date. The allocation of the Purchase Price agreed upon by the parties pursuant to this Section shall be reduced to a writing executed and delivered by Seller and Purchaser to each other (the "PURCHASE PRICE ALLOCATION


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AGREEMENT"). Any subsequent adjustments to the allocable Purchase Price shall be reflected in the Purchase Price Allocation Agreement in a manner consistent with Treasury Regulation Section 1.1060-lT(f).


(ii) Consistent Treatment and Characterization of Amounts. For all Tax purposes, Purchaser and Seller agree to report the transactions contemplated in this Agreement in a manner consistent with the Purchase Price Allocation Agreement, and will not take any position inconsistent therewith in any Tax return, in any refund claim, in any litigation or otherwise, unless required to do so by a governmental authority. Seller and Purchaser shall each be responsible for the preparation of their own Section 1060 statements and forms in accordance with applicable Tax laws, and each shall execute and deliver to each other such statements and forms as are reasonably requested by the other party.


SECTION 2.4. Closing. Subject to the terms and conditions of this Agreement, the sale, purchase, license and transfer of the Business Assets and the assumption of the Assumed Liabilities shall take place at a closing (the "CLOSING") at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo Alto, California at 10:00 a.m., local time, on the second business day after the satisfaction or waiver of the conditions to Closing set forth in Article VIII or at such other time or on such other date or at such other place as Seller and Purchaser may mutually agree in writing (the day on which the Closing takes place being the "CLOSING DATE").


SECTION 2.5. Closing Deliveries by Seller. At the Closing, Seller shall deliver or cause to be delivered to Purchaser or Purchaser's affiliates designated by Purchaser:


(i) all Business Assets to the facility or other location specified by Purchaser, in such manner as Purchaser directs, in each case at Seller's cost and expense; provided, that if Purchaser directs that any Business Assets be delivered to a location more than fifty miles from either Seller's facilities at Milpitas, California or Longmont, Colorado, depending on which location such Business Asset is located, such delivery shall be at Purchaser's sole cost and expense;


(ii) executed counterparts of each Ancillary Agreement to which Seller is a party;


(iii) (x) assignments substantially in the forms of EXHIBIT H (the "PATENT ASSIGNMENTS"), by which Seller shall assign to Purchaser the patents included in the Purchased Assets, executed on Seller's behalf by an officer of Seller with his or her execution notarized, in a form acceptable for recording with the United States Patent and Trademark Office; and (y) assignments from Seller to Purchaser of all registered mask works included in the Purchased Assets, duly executed on behalf of Seller by an officer and notarized, and in a form acceptable for recording with the United States Copyright Office in substantially the forms of EXHIBIT I attached hereto (the "MASK WORK ASSIGNMENTS"); and


(iv) all other items required to be delivered by Seller at the Closing pursuant to Section 8.2 of this Agreement or any other provision hereof or any Ancillary Agreement.


SECTION 2.6. Closing Deliveries by Purchaser. At the Closing, Purchaser shall deliver or cause to be delivered to Seller:


(i) payment of the full amount of the Purchase Price by wire transfer of immediately available funds to an account of Seller designated to Purchaser;


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(ii) executed counterparts of each Ancillary Agreement to which Purchaser is a party; and


(iii) all other items required to be delivered by Purchaser at the Closing pursuant to Section 8.1 of this Agreement or any other provision hereof or any Ancillary Agreement.


SECTION 2.7. Unassignable Assets. Notwithstanding any other provision of this Agreement or any of the Ancillary Agreements, to the extent that any of the Seller Contracts or any other assets constituting part of the Purchased Assets are not assignable or otherwise transferable to Purchaser or if any of the Licensed Assets may not be licensed to Purchaser without the consent, approval or waiver of another party thereto or any third party (including any governmental agency), or if such assignment, transfer or license would constitute a breach thereof or a violation of any applicable law or agreement with any third party, then neither this Agreement nor such Ancillary Agreements shall constitute an assignment or transfer (or an attempted assignment or transfer) thereof until such consent, approval or waiver of such party or parties has been duly obtained. With respect to each Seller Contract or Licensed Asset whose assignment, transfer or license to Purchaser requires the consent, approval or waiver of another party thereto or any third party, Seller shall use all commercially reasonable efforts to obtain such consent, approval or waiver of such other party or parties or such third party to such assignment or transfer as promptly as practicable. To the extent that the consents, approvals and waivers referred to in this Section are not obtained by Seller, Seller shall use all commercially reasonable efforts to (a) provide to Purchaser, at the request and expense of Purchaser, the financial and business benefits of such Seller Contract or Licensed Asset and (b) enforce, at the request and expense of Purchaser, for the account of Purchaser, any rights of Seller arising from any such Seller Contract (including without limitation the right to elect to terminate such Seller Contract in accordance with the terms thereof upon the advice of Purchaser). With regard to the expenses described in the preceding sentence, Purchaser shall only be responsible for the direct expenses of Seller in connection therewith, and if only a portion of such benefits are provided to Purchaser, Purchaser and Seller shall agree in good faith upon a reasonable pro rata payment by Purchaser of the expenses incurred in connection with such benefits. Purchaser agrees to 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. Notwithstanding the foregoing, nothing contained herein shall obligate Seller or Purchaser to expend or pay any amount to third parties to obtain any consents, approvals or waivers.


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF SELLER


Seller hereby represents and warrants to Purchaser that, except as expressly set forth in the Seller's Disclosure Letter, all of the following statements, representations and warranties are true and correct:


SECTION 3.1. Organization and Good Standing of Seller. Each of AIM and AMS is a corporation or similar entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Seller has all requisite corporate power and authority to carry on the Desktop Peripherals Business as now conducted and to enter into this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby.


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SECTION 3.2. Authorization and Validity. The execution and delivery of this Agreement and the Ancillary Agreements and the performance of all obligations of Seller hereunder and thereunder, has been duly and validly authorized by all necessary corporate and shareholder action on the part of Seller. This Agreement has been, and at the Closing the other Ancillary Agreements will be, duly executed and delivered by Seller. This Agreement constitutes, and, upon Seller's execution of each of the other Ancillary Agreements, each of the other Ancillary Agreements will constitute, a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally; and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.


SECTION 3.3. No Conflict. The execution, delivery and performance of this Agreement and the Ancillary Agreements by Seller and the consummation of the transactions contemplated hereby and thereby, subject to compliance with the consents required in SCHEDULE 9, do not and will not (a) result in a violation or default in any material respect of any provision of Seller's charter documents or any judgment, order, writ or decree applicable to Seller, (b) constitute a default (or event which with the giving of notice or lapse of time, or both, would become a breach, violation or default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any of the Seller Contracts or (c) result in the creation of any material Encumbrance on any of the Business Assets.


SECTION 3.4. Consents. No consent, approval, order or authorization of or registration, qualification, designation, declaration or filing with, any governmental entity on the part of Seller is required in connection with the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, except for compliance with the requirements of the HSR Act. SCHEDULE 9 sets forth a true and complete list of each and every Business Asset with respect to which the consent or approval ...