Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


BY AND BETWEEN


DIGITAL EQUIPMENT CORPORATION,


ON THE ONE HAND,


AND


INTEL CORPORATION,


ON THE OTHER HAND


DATED MARCH 6, 1998


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TABLE OF CONTENTS


PAGE
----


ARTICLE I DEFINITIONS............................................................................................1


1.01. Definitions.......................................................................................1


1.02. Index of Other Defined Terms......................................................................7


ARTICLE II PURCHASE AND SALE.....................................................................................8


2.01. Purchased Assets..................................................................................8


2.02. Excluded Assets...................................................................................9


2.03. Assumption of Liabilities........................................................................10


2.04. Excluded Liabilities.............................................................................10


2.05. Assignment of Contracts and Rights...............................................................11


2.06. Purchase Price...................................................................................11


2.07. Closing..........................................................................................12


2.08. Adjustment to Initial Purchase Price.............................................................13


2.09. Reimbursement for Losses on Disposition of Purchased Assets......................................13


2.10. Dual Use Assets..................................................................................14


ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER............................................................15


3.01. Existence and Good Standing......................................................................15


3.02. Authorization and Enforceability.................................................................15


3.03. Governmental or Other Authorization by Seller's Subsidiaries.....................................15


3.04. Non-Contravention................................................................................15


3.05. Undisclosed Liabilities; Books and Records.......................................................16


3.06. Absence of Certain Changes.......................................................................16


3.07. Properties: Material Leases; Tangible Assets.....................................................16


3.08. Additional Capital Equipment.....................................................................17


3.09. Inventories......................................................................................17


3.10. Litigation.......................................................................................17
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3.11. Material Contracts...............................................................................17


3.12. Permits; Required Consents.......................................................................18


3.13. Compliance with Applicable Laws..................................................................18


3.14. Intellectual Property............................................................................18


3.15. Environmental Compliance.........................................................................21


3.16. Insurance........................................................................................21


3.17. Tax Matters......................................................................................22


3.18. Sufficiency of and Title to the Purchased Assets.................................................22


3.19. Product Warranties...............................................................................22


3.20. Backlog..........................................................................................23


3.21. Supplier Relationships...........................................................................23


3.22. Representations Regarding Real Property..........................................................23


3.23. Full Disclosure..................................................................................24


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................24


4.01. Existence and Good Standing......................................................................24


4.02. Authorization and Enforceability.................................................................24


4.03. Governmental or Other Authorization..............................................................24


4.04. Non-Contravention................................................................................24


4.05. Litigation.......................................................................................25


4.06. Compliance with Applicable Laws..................................................................25


4.07. Projections......................................................................................25


ARTICLE V COVENANTS OF SELLER...................................................................................25


5.01. Operation of Business Prior to Closing...........................................................25


5.02. No Continuing Negotiations.......................................................................27


5.03. Notices of Certain Events........................................................................27


5.04. Supplier Customer Introductions..................................................................27


5.05. Transfer of Permits..............................................................................28
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5.06. Certificate of Performance by Seller.............................................................28


5.07. Transfer of Tangible Media.......................................................................28


5.08. Release of Moral Rights..........................................................................28


ARTICLE VI COVENANTS OF PURCHASER...............................................................................29


6.01. Notices of Certain Events........................................................................29


6.02. Use of Name......................................................................................29


6.03. Certificate of Performance by Purchaser..........................................................29


ARTICLE VII COVENANTS OF ALL PARTIES............................................................................30


7.01. Efforts to Close; Certain Filings................................................................30


7.02. Further Assurances...............................................................................30


7.03. Public Announcements.............................................................................31


7.04. Tax Matters......................................................................................31


7.05. Allocation of Purchase Price.....................................................................32


7.06. Confidentiality..................................................................................32


7.07. Access to Information............................................................................32


7.08. Lease Agreement and Transition Services Agreement................................................33


7.09. Knowing Misrepresentation or Omission............................................................33


7.10. Environmental Matters............................................................................33


ARTICLE VIII CONDITIONS TO CLOSING..............................................................................34


8.01. Conditions to Obligations of Purchaser...........................................................34


8.02. Conditions to Obligations of Seller..............................................................34


ARTICLE IX INDEMNIFICATION......................................................................................35


9.01. Agreement to Indemnify...........................................................................35


9.02. Indemnification Payments and Survival............................................................36


9.03. Claims for Indemnification.......................................................................37


9.04. Defense of Claims................................................................................37


ARTICLE X TERMINATION...........................................................................................38
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10.01. Grounds for Termination.........................................................................38


10.02. Effect of Termination...........................................................................38


ARTICLE XI MISCELLANEOUS........................................................................................38


11.01. Notices.........................................................................................38


11.02. Amendments; Waivers.............................................................................40


11.03. Expenses........................................................................................40


11.04. Successors and Assigns..........................................................................40


11.05. Governing Law...................................................................................40


11.06. Counterparts; Effectiveness.....................................................................40


11.07. Entire Agreement; Survival of Settlement Agreement..............................................41


11.08. Captions........................................................................................41


11.09. Severability....................................................................................41


11.10. Construction....................................................................................41


11.11. Dispute Resolution..............................................................................41


11.12. Submission to Jurisdiction; Agent for Service...................................................41


11.13. Meaning of Include and Including................................................................42


11.14. Third Party Beneficiaries.......................................................................42


11.15. Confidentiality.................................................................................42


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EXHIBITS
--------


Exhibit 1.01A Form of Assignment of Assumption Agreement Exhibit 1.01B Form of Bill of Sale Exhibit 1.01C Form of Human Resources Agreement Exhibit 1.01D(1) Form of Asset Purchase Agreement Exhibit 1.01D(2) Form of Real Estate Purchase Agreement Exhibit 1.01E Form of License Agreement Exhibit 1.01F Form of Sales Agreement Exhibit 1.01G Form of Supply Agreement


SCHEDULES
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Schedule 1.01 Permitted Liens Schedule 2.01(a) Real Property Legal Description Schedule 2.01(b) Inventory Schedule 2.01(d) Equipment Schedule 2.01(f) Prepaid Expenses Schedule 2.01(h) Assumed Contracts Schedule 2.01(l) Software Tools Used in Business Schedule 2.02(b) Excluded Contracts Schedule 2.06(a)(1) Seller's Application of GAAP Schedule 2.06(a)(2) Purchaser's Inventory Valuation Practices Schedule 2.06(a)(3) Unaudited Statement as of December 26, 1997 Schedule 3.01 Location of Purchased Assets Schedule 3.03 Governmental Authorizations Schedule 3.04 Non-Contravention Exceptions Schedule 3.05(a) Liabilities of Seller Schedule 3.06 Absence of Certain Changes Schedule 3.07(c) Personal Property Leases Schedule 3.08 Capital Equipment or Order at 10/27/97 Schedule 3.10 Litigation Schedule 3.11(a) Material Contracts Schedule 3.11(c) Largest Suppliers Schedule 3.12(a) Permits Schedule 3.12(b) Required Consents Schedule 3.14(b) Trademarks Schedule 3.14(c) Patents Schedule 3.14(d) Copyrights and Mask Work Rights Schedule 3.14(f) Intellectual Property Assets Contracts Schedule 3.14(h) Infringement Generally Schedule 3.14(i) Software Tools Schedule 3.15(a) Environmental Permits Schedule 3.15(c) Environmental Events or Reports


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Schedule 3.16 Insurance Policies Schedule 3.17 Tax Matters Schedule 3.19 Product Warranties Schedule 3.20 Backlog Schedule 3.21 Material Disagreement or Change with Material Customers Schedule 3.22(b) Representations Regarding Real Property Schedule 3.22(f)(1) Hudson, Massachusetts Title Commitment Schedule 4.03 Governmental Authorizations Schedule 4.04 Required Consents Schedule 7.10 Summary of Identified Environmental Contamination


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ASSET PURCHASE AGREEMENT


THIS ASSET PURCHASE AGREEMENT, dated as of March 6, 1998 (the "Agreement"), is by and between Digital Equipment Corporation, a Massachusetts corporation, ("Seller"), and Intel Corporation, a Delaware corporation ("Purchaser"). All capitalized terms have the meanings ascribed to such terms in Article I or as otherwise defined herein.


W I T N E S S E T H:


WHEREAS, Purchaser and Seller entered into a Settlement Agreement dated October 27, 1997 (the "Settlement Agreement"); and


WHEREAS, pursuant to the Settlement Agreement,


(i) Seller has agreed to sell to Purchaser, and Purchaser has agreed to
purchase from Seller, substantially all of the assets used in the Business;
and


(ii) Purchaser has agreed to assume certain Liabilities relating to the
Business in connection with such purchase of such assets; and


(iii) Purchaser has agreed to license from Seller, and Seller has agreed to
license to Purchaser, certain Intellectual Property Rights not included in
such assets to be sold to Purchaser;


(iv) Seller has agreed to lease from Purchaser, and Purchaser has agreed to
lease to Seller, certain real property and improvements included in such
assets to be sold to Purchaser; and


WHEREAS, the Settlement Agreement provides for Purchaser and Seller to further document the above;


NOW, THEREFORE, in consideration of the foregoing premises, the mutual representations, warranties, covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


1.01. DEFINITIONS. The following terms, as used herein, have the following meanings:


"Acquisition Documents" means this Agreement, the Bill of Sale, the Real Property Deeds, the Assumption Agreement, the License Agreement, the Lease Agreement, the Human Resources Agreement, the Transition Services Agreement, the Israeli Asset Purchase Agreements and any other document or agreement executed in connection with any of the foregoing, together with any Exhibits and Schedules thereto, and in each case as modified, amended, supplemented, restated or renewed from time to time.


"Affiliate" means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under direct or indirect common control with such other Person.


"Alpha" means the semiconductor product family owned by Seller and branded under the trade name Alpha, which is designed, developed, manufactured and marketed by Seller. 9


"Alpha Assets" means the assets of Seller used in the Alpha Operations including, but not limited to, all Alpha Products, all Alpha Products finished goods inventory, all hardware and software tools principally relating to Alpha or used principally by Alpha Employees, all Alpha IP Assets, and all other intangible property principally relating to Alpha Products and all other assets principally relating to the Alpha Operations.


"Alpha IP Assets" means the Intellectual Property Rights (as defined in Section 3.14(a)(i)) relating to Alpha.


"Alpha Operations" means the business of designing, developing and marketing Alpha Products as conducted by Seller.


"Alpha Product" means any semiconductor product or device previously or currently manufactured and marketed or currently under development by Seller that is part of Alpha, together with associated software and packaging.


"Ancillary Agreements" means the Patent Cross License between Seller and Purchaser attached as Exhibit C to the Settlement Agreement, the Purchaser Release attached as Exhibit D to the Settlement Agreement, the Seller Release attached as Exhibit E to the Settlement Agreement, the Supply Agreement and the Sales Agreement.


"Applicable Law" means, with respect to any Person, any federal, state, local or foreign statute, law, ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment or decree of any Governmental Authority (including any Environmental Law) applicable to such Person or any of its Affiliates or Plan Affiliates or any of their respective properties, assets, officers, directors, employees, consultants or agents.


"Associate" or "Associated With" means, when used to indicate a relationship with any Person, (a) any other Person of which such first Person is an officer, director or partner or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities, partnership or membership interests or other comparable ownership interests issued by such other Person, (b) any trust or other estate in which such first Person has a ten percent (10%) or more beneficial interest or as to which such first Person serves as trustee or in a similar fiduciary capacity and (c) any relative or spouse of such first Person who has the same home as such first Person.


"Assumption Agreement" means that certain Assignment and Assumption Agreement dated as of the Closing Date, to be executed by Purchaser, and, as Seller shall reasonably request, by appropriate subsidiaries of Purchaser in favor of Seller, in substantially the form attached hereto as EXHIBIT 1.01A.


"Bill of Sale" means that certain Bill of Sale dated as of the Closing Date, to be executed by Seller, and, as Purchaser shall reasonably request, by appropriate subsidiaries of Seller, in favor of Purchaser, in substantially the form attached hereto as EXHIBIT 1.01B.


"Books and Records" means with respect to any Person, all files, documents, instruments, papers, books and records of such Person's operations, affairs, financial condition, results of operations, prospects, assets or Liabilities, including financial statements, letters from accountants and auditors, budgets, pricing guidelines, journals, deeds, title policies, contracts, licenses, customer lists, Permits, computer files and programs, retrieval programs, operating data and plans, projections, forecasts and environmental studies and plans but excludes personnel records, including, without limitation, employees' medical records and information, and information relating to employees' job performance.


"Business" means the semiconductor manufacturing business as currently conducted by Seller, including all products and aspects of such business under current research or development, but excluding the Alpha Operations and all Alpha Assets.


"Business Day" means each day other than a Saturday, Sunday or other day on which commercial banks in New York City, New York are authorized or required by law to close.


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"Closing Date" means the date of the Closing.


"Contracts" means all written contracts, agreements, options, leases, licenses, sales and purchase orders, warranties, commitments and other instruments of any kind, to which either Seller is a party or is otherwise bound and which relate to the Business or the Purchased Assets.


"Damages" means all demands, claims, actions or causes of action, assessments, losses, damages, costs, expenses, Liabilities, judgments, awards, fines, response costs, sanctions, Taxes, penalties, charges and amounts paid in settlement, including (a) interest on cash disbursements in respect of any of the foregoing at the Reference Rate in effect from time to time, plus two percent (2%), compounded quarterly, from the date each such cash disbursement is made until the date the Person incurring such cash disbursement shall have been indemnified in respect thereof and (b) reasonable out-of-pocket costs, fees and expenses (including costs, fees and expenses of attorneys, accountants and auditors and other agents of, or other Persons retained by, such Person).


"Environmental Law" means any federal, state, interstate or local law, regulation, rule, requirement, administrative interpretation, directive, judgment, decree, order, permit, license or Applicable Law pertaining to the protection of human health, safety or the environment, including, but not limited to, the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Air Act, the Water Pollution Control Act, the Safe Drinking Water Act and the Toxic Substances Control Act ("TSCA").


"Equipment" means all machinery, equipment, furniture, office equipment, communications equipment, computer equipment, vehicles, spare and replacement parts, fuel and other tangible personal property (and interests in any of the foregoing), of the Business.


"GAAP" means generally accepted accounting principles in the United States of America applied on a consistent basis.


"Governmental Approval" means an authorization, consent, approval, permit or license issued by, or a required registration or filing with, any Governmental Authority.


"Governmental Authority" means any foreign or domestic federal, state or local governmental authority, or any political or other subdivision, department or branch of any of the foregoing , or any regulatory, administrative or governmental agency, or any court or the New York Stock Exchange or the National Association of Securities Dealers.


"Hazardous Substance" means any substance or material (a) the presence or potential presence of which requires reporting, the preparation of a plan, an investigation or remediation under any Environmental Law, (b) that is defined as a "hazardous waste", "hazardous material" or "hazardous substance" under any Environmental Law, (c) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or otherwise hazardous and is regulated by any Governmental Authority having or asserting jurisdiction over Seller, the Business, or (d) that contains gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls (PCBs) or asbestos.


"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


"HSR Filings" means the filings made under the HSR Act by Seller and Purchaser in respect of Seller's sale and Purchaser's purchase of the Purchased Assets.


"Human Resources Agreement" means that certain Human Resources Agreement dated as of the Closing Date between Purchaser and Seller, in the form attached hereto as EXHIBIT 1.01C.


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"Indemnifying Party" means (a) with respect to any Purchaser Indemnitee asserting a claim under this Agreement, Seller and (b) with respect to any Seller Indemnitee asserting a claim under this Agreement, Purchaser.


"Indemnitee" means (a) with respect to any Seller Indemnitee asserting a claim under Article IX of this Agreement, such Seller Indemnitee and (b) with respect to any Purchaser Indemnitee asserting a claim under this Agreement, such Purchaser Indemnitee.


"Intellectual Property Claims" means all claims by Purchaser with respect to an inaccuracy or misrepresentation in the representations and warranties of Section 3.14 or a breach of the License Agreement.


"IRS" means the Internal Revenue Service.


"Israeli Asset Purchase Agreements" means that certain Asset Purchase Agreement dated as of the Closing Date and that certain Real Estate Purchase Agreement dated as of the Closing Date between Digital Equipment (DEC) Technical Center (Israel) Ltd. and Intel Israel (74) Ltd., in substantially the forms attached hereto as EXHIBIT 1.01D(1) and EXHIBIT 1.01D(2), respectively.


"Knowledge" means, with respect to any Person, the actual knowledge of such Person, after reasonable inquiry. Without limiting the generality of the foregoing, with respect to any Person that is a corporation, limited liability company, partnership or other business entity, actual knowledge shall be deemed to include the actual knowledge of the management e ...