\n 13.3 Treatment of Indemnity Payments……………………………….79
\n 13.4 Indemnity for Taxes………………………………………….79
\n 13.5 Other Tax Matters……………………………………………80
\n 13.6 Seagate Transaction Items…………………………………….84<\/p>\n14. MISCELLANEOUS……………………………………………………….85<\/p>\n
14.1 Governing Law……………………………………………….85
\n 14.2 Assignment; Binding Upon Successors and Assigns…………………86
\n 14.3 Severability………………………………………………..86
\n 14.4 Counterparts………………………………………………..86
\n 14.5 Other Remedies………………………………………………86
\n 14.6 Amendment and Waivers………………………………………..86
\n 14.7 Expenses……………………………………………………87
\n 14.8 Attorneys’ Fees……………………………………………..87
\n 14.9 Notices…………………………………………………….87
\n 14.10 Construction of Agreement…………………………………….88
\n 14.11 No Joint Venture…………………………………………….88
\n 14.12 Further Assurances…………………………………………..88
\n 14.13 Absence of Third Party Beneficiary Rights………………………88
\n 14.14 Public Announcement………………………………………….89
\n 14.15 Certain Defined Terms………………………………………..89
\n<\/c><\/s><\/caption>\n<\/table>\n
Exhibit A – Certificate of Merger<\/p>\n
Exhibit A-1 – Restated Certificate of Incorporation<\/p>\n
Seagate Disclosure Letter<\/p>\n
Veritas Disclosure Letter<\/p>\n
Exhibit 4.13 – Term Sheet for Transition Services and Facilities Use Agreement<\/p>\n
Exhibit 4.14A – Development Agreement<\/p>\n
Exhibit 4.14B – Cross License and OEM Agreement<\/p>\n
Exhibit 4.17 – Management Employment Contracts<\/p>\n
Exhibit 4.18- Rights Agreement<\/p>\n
Exhibit 4.18B – Stockholders Agreement<\/p>\n
-vi-
\n 8<\/p>\n
Exhibit 5.3(g) – Veritas Holding Corporation Certificate of Incorporation and
\nBylaws<\/p>\n
Exhibit 5.15A – Voting Agreement<\/p>\n
Exhibit 5.15B – Veritas Affiliates who Executed Voting Agreements<\/p>\n
Exhibit 5.16 – Management Employment Contracts<\/p>\n
Exhibit 14.15D – Group Products<\/p>\n
-vii-<\/p>\n
9
\n AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
THIS AGREEMENT AND PLAN OF REORGANIZATION (this “AGREEMENT”) is entered
\ninto as of October 5, 1998, by and among VERITAS Software Corporation, a
\nDelaware corporation including for all purposes VERITAS Surviving Corporation,
\n(“VERITAS”), VERITAS Holding Corporation, a Delaware corporation (“NEWCO”),
\nSeagate Technology, Inc., a Delaware corporation (“STI”), Seagate Software,
\nInc., a Delaware corporation and majority owned subsidiary of STI (“SSI”) and
\nSeagate Software Network & Storage Management Group, Inc., a Delaware
\ncorporation and wholly owned subsidiary of SSI (“NSMG”). The terms defined in
\nSection 14.15 of this Agreement shall have the meanings therein specified in
\nthis Agreement.<\/p>\n
RECITALS<\/p>\n
A. The parties intend that, subject to the terms and conditions of this
\nAgreement, (i) a new Delaware corporation referred to herein as Newco has been
\nformed by VERITAS solely for the purpose of the transactions contemplated
\nhereunder; (ii) a newly formed, wholly owned subsidiary of Newco (“MERGER SUB”)
\nwill be merged with and into VERITAS, with VERITAS being the surviving
\ncorporation of such merger (the “MERGER”), and all outstanding VERITAS
\nsecurities will be converted, on a share for share basis, into Newco securities
\nhaving identical rights, preferences and privileges, with Newco assuming all
\noutstanding options, warrants, convertible debentures and other rights to
\npurchase shares of capital stock of VERITAS (with all such Newco securities
\nissued to former VERITAS security holders initially representing the VERITAS
\nPercentage Interest in Newco), all on the terms set out in this Agreement and in
\nthe Certificate of Merger substantially in the form of Exhibit A hereto (the
\n“CERTIFICATE OF MERGER”) and the applicable provisions of the Delaware General
\nCorporation Law (the “DELAWARE LAW”); and (iii) the contribution by SSI, STI and
\ncertain of their subsidiaries as herein specified to Newco, all on the terms
\nherein specified, of all Contributed Stock of the Contributed Companies (with
\neach of the Contributed Companies thereby becoming a wholly owned subsidiary of
\nNewco) and the Contributed Assets in consideration for the issuance by Newco to
\nSSI of shares of Common Stock of Newco, $0.001 par value (“NEWCO COMMON STOCK”),
\nand the offer by Newco to grant to Employees who are holders of options in SSI
\nat the Effective Time (herein “OPTIONEES”) options to purchase Newco Common
\nStock (“NEWCO OPTIONS”) in exchange for cancellation of their respective options
\nto purchase Common Stock of SSI (“NEWCO EXCHANGE OFFER”), which Newco Common
\nStock issued to SSI and Newco Options will represent in the aggregate a fully
\ndiluted equity interest in Newco equal to the difference between 100% and the
\nVERITAS Percentage Interest. The transactions described in subpart (iii) of the
\nforegoing sentence are collectively the “SEAGATE TRANSACTION.”<\/p>\n
B. The Newco Common Stock issued in the Merger and in the Seagate
\nTransaction and the offered exchange of Newco Options for Exchanged SSI Options
\nin the Seagate Transaction will be registered under the Securities Act of 1933,
\nas amended (the “SECURITIES ACT”), pursuant to a Newco registration statement.<\/p>\n
C. For federal income tax purposes, it is intended that (i) the Merger
\nqualify as a reorganization under the provisions of Section 368(a) of the
\nInternal Revenue Code and\/or as an <\/p>\n
10<\/p>\n
exchange under the provisions of Section 351(a) of the Internal Revenue Code,
\nand (ii) that the Seagate Transaction, when taken together with the Merger,
\nqualify as an exchange under the provisions of Section 351 of the Internal
\nRevenue Code.<\/p>\n
NOW, THEREFORE, the parties hereto hereby agree as follows:<\/p>\n
1. PLAN OF REORGANIZATION<\/p>\n
1.1 The Organization of Newco and Merger Sub. VERITAS has formed Newco
\nunder the laws of the State of Delaware for the purposes of the transactions
\ncontemplated by the Merger and in accordance with the terms of this Agreement.
\nNewco currently has no outstanding securities and has conducted no business and,
\nprior to the Effective Time, will not issue any securities prior to the
\nEffective Time, will conduct no business or operations, will have no assets and
\nwill enter into no agreements nor incur any obligations or Liabilities, except
\nas required or contemplated by this Agreement or necessary to perform its
\nobligations hereunder. As soon as practicable after the date of this Agreement,
\nNewco shall form the Merger Sub as a wholly-owned subsidiary, which will conduct
\nno business prior to Closing except as expressly contemplated hereunder.<\/p>\n
1.2 The Merger. Subject to the terms and conditions of this Agreement,
\nat the Effective Time, VERITAS will cause Merger Sub to execute and deliver, and
\nVERITAS will execute and deliver, a Certificate of Merger providing for the
\nMerger of Merger Sub with and into VERITAS, with VERITAS being the surviving
\ncorporation upon the effectiveness of the Merger and thereby becoming a
\nwholly-owned subsidiary of Newco, pursuant to this Agreement, the Certificate of
\nMerger and in accordance with applicable provisions of the Delaware Law as
\nfollows:<\/p>\n
(a) Conversion of VERITAS Common Stock. Each share of the
\nCommon Stock of VERITAS (“VERITAS COMMON STOCK”), that is issued and outstanding
\nimmediately prior to the Effective Time will by virtue of the Merger and at the
\nEffective Time, and without any further action on the part of VERITAS, Newco or
\nany holder of VERITAS Common Stock, be converted into one share (the “VERITAS
\nEXCHANGE RATIO”) of validly issued, fully paid and nonassessable Newco Common
\nStock.<\/p>\n
(b) Conversion of VERITAS Options, Warrants and other
\nConvertible Securities.<\/p>\n
(i) Conversion. At the Effective Time, each of
\nthe then outstanding options to purchase shares of VERITAS Common Stock
\n(collectively, the “VERITAS OPTIONS”) (consisting of all outstanding options
\ngranted under VERITAS’ or VERITAS’ predecessors’ option plans, including but not
\nlimited to its 1985 Stock Option Plan, 1991 Executive Stock Option Plan, 1992
\nStock Plan, 1993 Equity Incentive Plan, 1993 Director Stock Option Plan and 1996
\nDirector Option Plan (collectively the “VERITAS PLANS”)), and each of the then
\noutstanding warrants to purchase VERITAS Common Stock (the “VERITAS WARRANTS”)
\nand any individual non-Plan options, and any convertible debenture or other
\nconvertible debt instrument convertible into VERITAS Common Stock (“VERITAS
\nDEBENTURES”), will, by virtue of the Merger, and without <\/p>\n
-2-
\n 11<\/p>\n
any further action on the part of any holder thereof, be assumed and converted
\ninto an option, warrant, convertible debenture, or other convertible debt
\ninstrument, as the case may be, to purchase an equivalent number of shares of
\nNewco Common Stock, at an exercise price per share equal to the per share
\nexercise price of such VERITAS Option or VERITAS Warrant, or at a conversion
\nprice per share equal to the conversion price per share of such VERITAS
\nDebenture, as the case may be in effect at the Effective Time, but with VERITAS
\nremaining the obligor on any such convertible debenture or other convertible
\ndebt instrument. The term, exercisability, vesting schedule, status as an
\n“incentive stock option” under Section 422 of the Internal Revenue Code, if
\napplicable, and all other terms and conditions of the VERITAS Options and
\nVERITAS Warrants and VERITAS Debentures will be unchanged and all references in
\nany option or warrant or debenture agreement governing such option or warrant or
\ndebenture to VERITAS shall be deemed to refer to Newco, where appropriate.
\nContinuous service as an employee or consultant with VERITAS or any of the
\nVERITAS Subsidiaries (as hereinafter defined) or VERITAS predecessors will be
\ncredited to an optionee of VERITAS for purposes of determining the number of
\nshares of Newco Common Stock subject to exercise under a converted VERITAS
\nOption after the Closing.<\/p>\n
(ii) Stock Rights. At the Effective Time, each of
\nthe then outstanding rights to purchase shares of VERITAS Common Stock
\n(collectively, the “VERITAS STOCK PURCHASE PLAN RIGHTS”), consisting of all
\noutstanding options to purchase shares under VERITAS’ 1993 Employee Stock
\nPurchase Plan and 1996 Employee Stock Purchase Plan (the “VERITAS STOCK PURCHASE
\nPLAN”), will by virtue of the Merger, and without any further action on the part
\nof any holder thereof, be assumed and converted into a right to purchase the
\nsame number of shares of Newco Common Stock on the next “Purchase Date” (as such
\nterm is defined in the VERITAS Stock Purchase Plan) following the Effective Time
\nat a purchase price per share determined in accordance with the VERITAS Stock
\nPurchase Plan.<\/p>\n
(c) Cancellation of VERITAS-Owned Shares. Each share of
\nVERITAS Common Stock held in the treasury of VERITAS or any of which are owned
\nby Newco, VERITAS, or any direct or indirect wholly-owned subsidiary of Newco,
\nVERITAS immediately prior to the Effective Time shall be canceled and
\nextinguished without any conversion thereof.<\/p>\n
1.3 Seagate Transaction.<\/p>\n
(a) Issuance of Newco Common Stock. At the Effective Time and
\nsubject to the terms and conditions of this Agreement, Newco will, in
\nconsideration for the contribution and transfer of the Contributed Stock and
\nAssets to Newco as contemplated by this Agreement, perform the following:<\/p>\n
(i) SSI Stock. Issue to SSI that number of
\nvalidly issued, fully paid and nonassessable shares of Newco Common Stock which
\nrepresents the SSI Percentage Interest less the number of shares of Newco Common
\nStock issuable upon exercise of the Newco Options issued in exchange for
\nExchanged SSI Options under clause (ii) below.<\/p>\n
-3-
\n 12<\/p>\n
(ii) Exchange of Newco Options for Exchanged SSI
\nOptions. Newco shall offer to issue Newco Options (each representing the right
\nto purchase validly issued, fully paid and nonassessable Newco Common Stock) to
\nthe Optionees in exchange for cancellation of their Exchanged SSI Options at the
\nEffective Time, all on the terms specified in this Agreement. At the Effective
\nTime, each of the options to purchase SSI Common Stock held by any of the
\nOptionees that elects to exchange for a Newco Option in response to Newco’s
\noption exchange offer made pursuant hereto (“EXCHANGED SSI OPTIONS”), will be
\nexchanged for a Newco Option to purchase that number of shares of Newco Common
\nStock determined by multiplying the number of shares of SSI Common Stock subject
\nto such Exchanged SSI Option at the Effective Time by the “SSI Exchange Ratio”
\n(as defined below) at an exercise price per share of Newco Common Stock equal to
\nthe exercise price per share of such Exchanged SSI Option immediately prior to
\nthe Effective Time divided by the SSI Exchange Ratio, rounded up to the nearest
\ncent. The “SSI EXCHANGE RATIO” shall mean the quotient arrived at by dividing
\nthe SSI Per Share Value by the Newco Per Share Value. The “SSI PER SHARE VALUE”
\nshall equal (A) the product obtained by multiplying (x) the number of validly
\nissued, fully paid and nonassessable shares of Newco Common Stock which
\nrepresents the SSI Percentage Interest by (y) the VERITAS Closing Price plus (B)
\nthe value of IMG (as determined by the Board of Directors of SSI upon advice of
\nMorgan Stanley & Co. (“Morgan”)) all divided by (C) the total number of
\noutstanding shares of common stock of SSI on a fully diluted as converted basis
\nimmediately prior to the Effective Time. Newco Per Share Value shall equal the
\nVERITAS Closing Price. The “VERITAS CLOSING PRICE” shall mean the average
\nclosing price of one share of VERITAS Common Stock for the five (5) most recent
\ndays that VERITAS Common Stock has traded ending on the trading day three (3)
\nbusiness days prior to the Effective Time, as reported by the Nasdaq Stock
\nMarket. The SSI Exchange Ratio, collectively with the VERITAS Exchange Ratio
\nshall be referred to herein as the “EXCHANGE RATIOS”. If the foregoing
\ncalculation results in a Newco Option issued in exchange for an Exchanged SSI
\nOption being exercisable for a fraction of a share of Newco Common Stock, then
\nthe number of shares of Newco Common Stock subject to such option will be
\nrounded down to the nearest whole number of shares, with no cash being payable
\nfor such resulting fractional share. The term, exercisability, vesting schedule,
\nstatus as an “incentive stock option” under Section 422 of the Internal Revenue
\nCode, if applicable, and all other terms and conditions of each Newco Option
\nshall be the same as that of the Exchanged SSI Option exchanged therefor.
\nContinuous service as an employee or consultant with SSI, STI or any of their
\ndirect or indirect subsidiaries will be credited to each Optionee for purposes
\nof determining the number of shares of Newco Common Stock vested and exercisable
\nunder such exchanged Newco Option after the Effective Time.<\/p>\n
1.4 Contribution and Transfer of Contributed Stock and Assets.<\/p>\n
(a) Contribution and Transfer. Subject to the terms and
\nconditions of this Agreement and in consideration for the issuance by Newco of
\nNewco Common Stock as provided above, the Contributing Companies shall at the
\nEffective Time, for good and valuable consideration receipt and sufficiency of
\nwhich is hereby acknowledged on behalf of each of the Contributing Companies
\nother than SSI, contribute and transfer and deliver to Newco or cause to be
\ncontributed, <\/p>\n
-4-
\n 13<\/p>\n
transferred and delivered to Newco, and at the Effective Time Newco shall accept
\nthe contribution and transfer from the Contributing Companies, all right, title
\nand interest in and to the Contributed Stock and Assets. Specifically, SSI will
\ntransfer and contribute to Newco the Contributed Stock and the Contributing
\nCompanies will transfer and contribute to Newco the Contributed Assets. All
\nContributed Assets of STI shall be deemed first contributed by STI to SSI and
\nonly then by SSI to Newco. Notwithstanding the preceding, the parties hereto
\nagree to transfer the Contributed Assets which are located outside of the United
\nStates in a mutually agreeable manner. For example, SSI contemplates the
\nformation of a new entity in Australia (which would become a Contributed
\nCompany) which would acquire the Australian Contributed Assets from Seagate
\nSoftware Pty. Ltd. Seagate Software Limited, a company organized under the laws
\nof the United Kingdom and Delaware, will register branches in the countries of
\nSouth Africa, Spain and Dubai. Additionally, with respect to Contributed Assets
\nlocated in France, Japan, Sweden, and the Netherlands, such Assets may be
\npurchased and sold by and among the VERITAS and Seagate entities located in such
\ncountries in exchange for the consideration contributed to Newco by SSI (for
\nwhich SSI would receive no additional Newco Common Stock beyond the amounts
\ncontemplated by this Agreement). Furthermore, the parties shall cooperate to
\nfacilitate the transfer, to the extent so desired, of employees related to Group
\nBusiness in the countries of Singapore and Malaysia.<\/p>\n
(b) Assumption and Exclusion of Liabilities.<\/p>\n
(i) Assumed Liabilities. As a result of the
\ntransfer to Newco of the Contributed Stock as aforesaid, Newco will as a matter
\nof law own all of the outstanding equity capital of the Contributed Companies,
\nwhich Contributed Companies in turn shall remain liable for their respective
\nLiabilities. In addition, subject to the terms and conditions of this Agreement,
\nNewco (or a subsidiary of Newco designated by Newco and acceptable to SSI)
\nshall, at the Effective Time, assume, and thereafter pay, perform and discharge
\nwhen due those (and only those) Liabilities of the Contributing Companies and\/or
\ntheir direct and indirect subsidiaries (excluding the Liabilities of the
\nContributed Company Group which are governed by the first sentence of this
\nSection 1.4(b)) that are expressly listed in the following subparagraphs of this
\nSection 1.4(b)(i) (collectively, the “ASSUMED LIABILITIES”) and no other
\nLiabilities of the Contributing Companies whatsoever:<\/p>\n
(A) all Liabilities of the Contributing
\nCompanies under all Contributed Contracts;<\/p>\n
(B) all Liabilities of the Contributing
\nCompanies that are included in the 1998 Group Balance Sheet or that are listed
\non Schedule 1.4(b) (i) (B);<\/p>\n
(C) any and all Liabilities of STI, SSI, and
\nof their respective direct and indirect subsidiaries with respect to Employees
\nwho accept an offer of employment by Newco excluding liabilities subject to
\nindemnity under Section 11.1(a); and<\/p>\n
(D) those Tax liabilities for which Newco is
\nresponsible pursuant to Section 13, below.<\/p>\n
-5-
\n 14<\/p>\n
(ii) Excluded Liabilities Not Assumed. Except for
\nthe Liabilities of the Contributed Company Group (which will remain the sole
\nresponsibility of the applicable member of the Contributed Company Group) and
\nexcept for the Assumed Liabilities expressly described above in Section 1.4(b),
\nNewco shall not assume, pay, perform or discharge, or otherwise have any
\nobligation, responsibility or liability whatsoever for, any and all Liabilities
\nof SSI (including IMG), STI or their respective direct and indirect subsidiaries
\n(whether now existing or hereafter arising), and said companies shall retain,
\nand shall be solely responsible and liable for paying, performing and
\ndischarging when due, all such Liabilities (collectively, the “EXCLUDED
\nLIABILITIES”).<\/p>\n
(c) Asset Contribution. Seagate will take all actions and will
\nsign and deliver any and all instruments and documents (including the Bill of
\nTransfer) reasonably necessary or appropriate to fully effect and perfect the
\ntransfer to Newco (or if Newco so elects, any applicable Newco Subsidiary) of
\nany and all of the Contributed Stock and Assets held by it and any Contributed
\nContracts to which it is a Party. This Section 1.4(c) shall survive Closing for
\ntwo years.<\/p>\n
(d) Unassignable Assets. Notwithstanding any other provision
\nof this Agreement or any of the Ancillary Agreements, to the extent that any of
\nthe Contributed Assets are not assignable or otherwise transferable by the
\nContributing Companies to Newco without the consent, approval or waiver of
\nanother party thereto or any third party (including any governmental agency), or
\nif such assignment or transfer would constitute a breach thereof or of any other
\nmaterial contract binding upon the transferor or any of its affiliates, or a
\nviolation of any applicable law, then neither this Agreement nor such Ancillary
\nAgreements shall constitute an assignment or transfer (or an attempted
\nassignment or transfer) thereof until such consent, approval or waiver of such
\nparty or parties has been duly obtained. With respect to each such Contributed
\nAsset, whose assignment or transfer to Newco requires the consent, approval or
\nwaiver of another party thereto or any third party, Newco and SSI shall
\ncooperate and use their mutual reasonable, commercial efforts to obtain such
\nconsent, approval or waiver of such other party or parties or such third party
\nto such assignment or transfer as promptly as practicable prior to the Effective
\nTime; and each agrees to supply relevant information to such party or parties or
\nsuch third party in order to facilitate such objective. Notwithstanding the
\nforegoing, nothing contained herein shall obligate Newco or any Contributing
\nCompany to expend or pay any amount to third parties to obtain any consents,
\napprovals or waivers, or to make alternative arrangements available; provided
\nthat where the Contributing Companies are unable to effectively assign to Newco
\nany Contributed Contract without breaching same due to such lack of third party
\nconsent, the Contributing Companies shall make available to Newco the economic
\nbenefits (such as inbound royalty payments), if any, received by the
\nContributing Companies from and after the Effective Time with respect to any
\nsuch Contributed Contract.<\/p>\n
(e) No Fraudulent Conveyance. The Contributing Companies are
\nnot entering into this Agreement or any Ancillary Agreement with the intent to
\ndefraud, delay or hinder their respective creditors and the consummation of the
\ntransactions contemplated by this Agreement, and the Ancillary Agreements
\nreferenced in this Agreement will not have any such effect. The transfer of the
\nContributed Stock and Assets pursuant hereto will not give rise to any right of
\nany creditor of <\/p>\n
-6-
\n 15
\nthe Contributing Companies to assert any claim whatsoever against Newco or any
\nof the Contributed Stock and Assets in the hands of Newco or any of Newco’s
\nrespective successors and assigns following the Effective Time which would have
\na Material Adverse Effect on Newco. SSI and its consolidated subsidiaries, taken
\nas a group are Solvent, and will continue to be Solvent immediately following
\nthe transfer of the Contributed Stock and Assets pursuant to this Agreement.
\nNeither SSI nor any of its consolidated subsidiaries nor any of the Contributed
\nStock and Assets is subject to, or the subject of, any Insolvency Proceeding or
\nInsolvency Action. No writ of attachment, execution or similar process has been
\nordered, executed or filed against any of the Contributed Stock and Assets. To
\nSeagate’s Knowledge (i) there is not any reason to expect that any of the
\naforementioned actions, or any similar action, will take place or be taken, and
\n(ii) there are no grounds for any of the aforementioned actions or like action.
\nThe parties agree that the securities issued by Newco to SSI and the Optionees
\nand the other obligations on Newco’s part to be performed under the terms of
\nthis Agreement and the Ancillary Agreements constitute full and fair equivalent
\nconsideration for the Contributed Stock and Assets exchanged therefor and the
\ncovenants, agreements and performances of the Contributing Companies under this
\nAgreement and the Ancillary Agreements.<\/p>\n
1.5 Dissenter’s Rights. It shall be the sole responsibility of SSI to
\ndisclose any dissenter’s rights which SSI shareholders have with respect to the
\nSeagate Transaction.<\/p>\n
1.6 Newco Plans. Newco shall assume, effective as of the Closing, the
\nVERITAS 1993 Equity Incentive Plan, 1993 Director Stock Option Plan and 1993
\nEmployee Stock Purchase Plan and other VERITAS plans and non-plan grants and
\nawards. as amended through the Effective Time (collectively, the “NEWCO PLANS”).
\nNewco shall reserve a sufficient number of shares of Newco Common Stock for
\nissuance pursuant to the exchange of Newco Options for Exchanged SSI Options, as
\nprovided for herein.<\/p>\n
1.7 Registration. Newco will cause the Newco Common Stock issuable upon
\nexercise of outstanding awards under the Newco Plans or upon exercise of the
\nNewco Options issued to the Optionees in exchange for their Exchanged SSI
\nOptions (collectively, the “STOCK RIGHTS”) and the shares reserved for issuance
\npursuant to future awards under the Newco Plans to be registered on Form S-8
\n(the “FORM S-8”) promulgated by the Securities and Exchange Commission (the
\n“SEC”) within 10 days after the Effective Time and Newco will use its reasonable
\nbest efforts to maintain the effectiveness of such registration statement or
\nregistration statements for so long as any such Stock Rights shall remain
\noutstanding. With respect to those individuals who subsequent to the Merger will
\nbe subject to the reporting requirements of Section 16(a) of the Exchange Act
\n(as hereinafter defined), Newco shall administer the Stock Rights (including the
\nNewco Options issued in exchange for any Exchanged SSI Option) in a manner that
\ncomplies with Rule 16b-3 promulgated by the SEC under the Exchange Act.<\/p>\n
1.8 Effects of the VERITAS Merger. At the Effective Time: (a) the
\nseparate existence of Merger Sub will cease and Merger Sub will be merged with
\nand into VERITAS, with VERITAS being the surviving corporation of the Merger
\n(the “VERITAS SURVIVING CORPORATION”), pursuant to the terms of this Agreement
\nand the Certificate of Merger; (b) the Certificate of Incorporation of the<\/p>\n
-7-
\n 16<\/p>\n
VERITAS Surviving Corporation shall be in the form attached as Exhibit A-1 to
\nthe Certificate of Merger; (c) the Bylaws of VERITAS immediately prior to the
\nEffective Time will be the Bylaws of the VERITAS Surviving Corporation; (d) the
\ndirectors and officers of VERITAS immediately prior to the Effective Time will
\nbe the directors and officers of the VERITAS Surviving Corporation; (e) each
\nshare of the Common Stock of Merger Sub outstanding immediately prior to the
\nEffective Time will be converted into one share of Common Stock of the VERITAS
\nSurviving Corporation; (f) each share of VERITAS Common Stock and each VERITAS
\nOption, VERITAS Warrant, VERITAS Debenture and VERITAS Stock Purchase Plan Right
\noutstanding immediately prior to the Effective Time will be converted, and each
\nExchanged SSI Option elected to be exchanged shall be exchanged, as provided
\nabove in this Section 1; and (g) the Merger will, from and after the Effective
\nTime, have all of the effects provided by applicable law, including, without
\nlimitation, the Delaware Law.<\/p>\n
1.9 Tax Free Reorganization. The parties adopt this Agreement (to the
\nextent it relates to the Merger) as a plan of reorganization and intend the
\nMerger to be a tax-free reorganization under Section 368(a)(1)(A) of the
\nInternal Revenue Code by virtue of the provisions of Section 368(a)(2)(E) of the
\nInternal Revenue Code . The Newco Common Stock issued in the Merger will be
\nissued solely in exchange for the VERITAS Common Stock, and no other transaction
\nother than the Merger represents, provides for or is intended to be an
\nadjustment to the consideration paid for the VERITAS Common Stock. No
\nconsideration that could constitute “other property” within the meaning of
\nSection 356(b) of the Internal Revenue Code is being transferred by Newco for
\nthe VERITAS Common Stock in the Merger. The parties shall not take a position on
\nany tax return inconsistent with this Section 1.9. In addition, Newco hereby
\nrepresents, and will represent as of the Effective Time, that it intends to
\ncontinue VERITAS’ historic businesses or use a significant portion of VERITAS’
\nbusiness assets in a trade or business.<\/p>\n
1.10 Tax-Free Section 351 Transaction. The contribution and transfer of
\nthe Contributed Stock and Assets to Newco in exchange for Newco Common Stock
\nwhen taken together with the Merger as contemplated by this Agreement are
\nintended to constitute a tax-free exchange within the meaning of Section 351(a)
\nof the Internal Revenue Code and the Newco Common Stock issued therein will be
\nissued solely in exchange for the Contributed Stock and Assets transferred in
\nthe Seagate Transaction and no consideration that could constitute other
\nproperty within the meaning of Internal Revenue Code Section 351(b) is being
\ntransferred by Newco to SSI. The parties shall not take a position on any tax
\nreturn inconsistent with this Section 1.10.<\/p>\n
1.11 Hart-Scott-Rodino Filings. VERITAS, STI, and Newco will, and
\nVERITAS shall use its reasonable best efforts to cause Warburg, Pincus
\nInvestors, L.P. (“WARBURG”) and Mark Leslie to, as promptly as practicable
\nprepare and file the applicable notices and forms (if any) required to be filed
\nby them under the HSR Act or comparable laws of non-U.S. governmental entities,
\nand comply promptly with any appropriate requests from the Federal Trade
\nCommission, the United States Department of Justice or any other Governmental
\nAntitrust Authority for additional information and documentary material. The
\nparties hereto will not take any action that will have the effect of <\/p>\n
-8-
\n 17
\ndelaying, impairing or impeding the termination of any waiting period or the
\nreceipt of any required approvals of a Government Antitrust Authority. Without
\nlimiting the generality of the parties’ undertakings pursuant to this Section
\n1.11, the parties shall use their reasonable best efforts to prevent the entry
\nin a judicial or administrative proceeding brought under any antitrust law by
\nany Governmental Antitrust Authority or any other party of any permanent or
\npreliminary injunction or other order that would make consummation of the
\nSeagate Transaction or the Merger in accordance with the terms of this Agreement
\nunlawful under appropriate anti-trust laws or that would prevent or delay such
\nconsummation as a consequence of such laws. Each party hereto shall promptly
\ninform the other of any material communication between such party and the
\nFederal Trade Commission, the Department of Justice or any other Governmental
\nAntitrust Authority regarding any of the transactions contemplated hereby. If
\nany party or any affiliate of such party receives a request for additional
\ninformation or for documents or any material from any such Governmental
\nAntitrust Authority with respect to the transactions contemplated hereby, then
\nsuch party shall endeavor in good faith to make or cause to be made, as soon as
\nreasonably practicable and after consultation with the other parties, an
\nappropriate response in compliance with such request. Further, no written
\nmaterials shall be submitted by any party to the Federal Trade Commission, the
\nDepartment of Justice or any other Governmental Antitrust Authority in
\nconnection with HSR Act compliance or the merger control regulations of any
\nother state or country, nor shall any oral communications be initiated with such
\ngovernmental entities by any party, without prior disclosure to and coordination
\nwith the other parties and their counsel. Each party hereto will cooperate in
\nconnection with reaching any understandings, undertakings or agreements (oral or
\nwritten) involving the Federal Trade Commission, the Department of Justice or
\nany other Governmental Antitrust Authority in connection with the transactions
\ncontemplated hereby.<\/p>\n
1.12 Adoption of Stockholders Rights Plan. Newco will prior to the
\nEffective Time have adopted a mutually agreed Stockholders Right Agreement.<\/p>\n
1.13 Board of Directors and Officers of Newco.<\/p>\n
(a) At the Effective Time, Newco will have a staggered Board
\nof Directors, consisting of three classes, A, B and C, consisting of three, four
\nand three directors, respectively, with initial terms ending at the annual
\nmeeting of Stockholders held in 1999, 2000 and 2001, respectively. At the
\nEffective Time, the directors of Newco shall consist of the current VERITAS
\ndirectors plus Stephen J. Luczo and Gregory B. Kerfoot, nominees of SSI. In
\naddition Terence R. Cunningham as an employee of Newco shall also be appointed
\nto the Board. At the Effective Time, Mark Leslie shall be the Chairman of the
\nBoard of Newco. At the Effective Time, the Class A Directors shall consist of
\nGregory B. Kerfoot, Geoffrey Squire and Roel Pieper, the Class B Directors shall
\nconsist of Mark Leslie, Joseph Rizzi, William Janeway and Terence R. Cunningham
\nand the Class C Directors shall consist of Steven Brooks, Fred van den Bosch and
\nStephen J. Luczo.<\/p>\n
(b) Officers. At the Effective Time, Mark Leslie shall be the
\nCEO and Terence Cunningham shall be the President and Chief Operating Officer of
\nNewco.<\/p>\n
-9-
\n 18<\/p>\n
1.14 Registration on Form S-4. The Newco Common Stock to be issued in
\nthe Merger to VERITAS stockholders and the Newco Common Stock to be issued in
\nthe Seagate Transaction to SSI and the exchange of Newco Options for Exchanged
\nSSI Options shall be registered under the Securities Act on Form S-4 (as
\nhereinafter defined). As promptly as practicable after the date of this
\nAgreement, Newco, with the cooperation of VERITAS and SSI, shall prepare and
\nfile with the SEC a Form S-4 registration statement (the “FORM S-4”), together
\nwith the prospectus\/joint proxy statement to be included therein (the
\n“PROSPECTUS\/PROXY STATEMENT”) and any other documents required by the Securities
\nAct or the Securities Exchange Act of 1934, as amended (the “EXCHANGE ACT”), in
\nconnection with the Merger and the Seagate Transaction. The transactions
\ndescribed in the Form S-4 shall be closed as promptly as practicable following
\nthe effective date of the Form S-4, subject to Sections 7 and 8 hereof.<\/p>\n
2. REPRESENTATIONS AND WARRANTIES OF SSI AND STI<\/p>\n
Except as set forth in the respectively referenced provisions of the
\nSSI Disclosure Letter delivered by SSI and STI on behalf of themselves and any
\nother Contributing Companies (collectively, “REPRESENTING SEAGATE ENTITIES”) to
\nVERITAS concurrently herewith and certified by an officer of SSI and STI, on
\nbehalf of all of the Representing Seagate Entities, respectively, to be true,
\naccurate and complete to the best of his\/her knowledge (the “SSI DISCLOSURE
\nLETTER”), SSI and STI, on behalf of each and all of the Representing Seagate
\nEntities, hereby represent and warrant to VERITAS that:<\/p>\n
2.1 Organization; Good Standing; Qualification and Power. The
\nContributed Subsidiaries are all of the subsidiaries of the Contributed
\nCompanies or any of their direct or indirect subsidiaries. Each of the
\nContributed Companies and each of the Contributed Subsidiaries and each of the
\nContributing Companies is a corporation duly organized, validly existing and in
\ngood standing under the laws of the jurisdiction of its formation, has all
\nrequisite corporate power and authority to own, lease and operate any and all of
\nthe Group Assets held by such company and for the Conduct of the Group Business
\nas now being conducted by such company, and is duly qualified and in good
\nstanding to do business in each jurisdiction in which the nature of its business
\nor the ownership or leasing of its properties makes such qualification
\nnecessary, other than in such jurisdictions where the failure so to qualify
\nwould not have a Material Adverse Effect on the Group Business. SSI has
\ndelivered to VERITAS or its counsel complete and correct copies of the charter
\ndocuments of the Contributed Companies and SSI will deliver to VERITAS or its
\ncounsel prior to the Effective Time the equivalent charter documents of the
\nContributed Subsidiaries, in each case as amended through Closing. Except for
\nthe Contributed Subsidiaries, none of the Contributed Companies nor any of the
\nContributed Subsidiaries owns, directly or indirectly, any capital stock or
\nother equity interest of any corporation or has any direct or indirect equity or
\nownership interest in any other business, whether organized as a corporation,
\npartnership, joint venture or otherwise.<\/p>\n
-10-
\n 19<\/p>\n
2.2 Capital Structure.<\/p>\n
(a) Stock and Options. The authorized, issued and as of the
\ndate of September 9, 1998, the outstanding capital stock of SSI, the Contributed
\nCompanies and the Contributed Subsidiaries is set forth in Section 2.2(a) of the
\nSSI Disclosure Letter. Except as specified in Section 2.2(a) of the SSI
\nDisclosure Letter no shares of the capital stock of the Contributed Companies or
\nof any of the Contributed Subsidiaries are held by any of them in their treasury
\nor reserved for issuance upon the exercise of options or warrants. Except as
\nspecified in Section 2.2(a) of the SSI Disclosure Schedule, all outstanding
\nshares of the capital stock of the Contributed Companies on the date hereof are
\nset forth in Section 2.2(a) of the SSI Disclosure Letter and are validly issued,
\nfully paid and nonassessable and free and clear of any Encumbrances and not
\nsubject to preemptive rights under any statute, pursuant to the Certificate of
\nIncorporation or Bylaws of the Contributed Companies, or pursuant to any
\nagreement or document to which any of them is a party or by which any of them is
\nbound. All outstanding shares of the capital stock of each of the Contributed
\nSubsidiaries are validly issued, fully paid and nonassessable and are owned by a
\nContributed Company, or one of the Contributed Subsidiaries, free and clear of
\nany Encumbrances. SSI has provided VERITAS with a correct and complete list of
\neach of the options to purchase SSI Common Stock (“SSI OPTIONS”) as of September
\n9, 1998, including the name of the optionees, the plan pursuant to which such
\nSSI Options were issued (if applicable), the number of shares covered by such
\nSSI Options, the per share exercise price of such SSI Options, and the vesting
\nschedule applicable to such SSI Options, including the number of shares vested
\nas of such date. SSI will provide Newco with an update to such optionee list ten
\n(10) days prior to the Closing that will reflect any option grants, exercises or
\ncancellations occurring after the date of signing this Agreement and as of such
\ndate.<\/p>\n
(b) No Other Commitments. Except as set forth in Section
\n2.2(b) of the SSI Disclosure Letter there are no options, warrants, calls,
\nrights, commitments, conversion rights or agreements of any character to which
\nthe Contributed Companies is a party or by which any of them is bound obligating
\nthem to issue, deliver or sell, or cause to be issued, delivered or sold, any
\nshares of their capital stock, or securities convertible into or exchangeable
\nfor shares of their capital stock, or obligating any of them to grant, extend or
\nenter into any such option, warrant, call, right, commitment, conversion right
\nor agreement. There is no voting trust, proxy or other agreement or
\nunderstanding to which STI, SSI, or any of their respective direct or indirect
\nsubsidiaries is a party with respect to the voting of the capital stock of any
\nmember of the Contributed Company Group. All shares of capital stock of any
\nmember of the Contributed Company Group are held free and clear of any
\nEncumbrances.<\/p>\n
(c) Registration Rights. Neither the Contributed Companies nor
\nthe Contributing Companies is under any obligation to register under the
\nSecurities Act any of the presently outstanding securities of the Contributed
\nCompanies, any securities of the Contributed Companies that may be subsequently
\nissued, which offering would have a Material Adverse Effect on Newco, except as
\ndisclosed in the SSI Disclosure Letter.<\/p>\n
-11-
\n 20<\/p>\n
(d) No VERITAS Ownership. None of STI, SSI or any of their
\ndirect or indirect subsidiaries owns, or will own immediately prior to the
\nEffective Time, any VERITAS Common Stock.<\/p>\n
2.3 Authority.<\/p>\n
(a) Corporate Action. Subject to approval of this Agreement
\nand the Ancillary Agreements by SSI’s stockholders, each of STI, SSI and NSMG
\nhave all requisite corporate power and authority to enter into this Agreement
\nand the Ancillary Agreements, to perform their respective obligations hereunder
\nand thereunder, and to consummate the transactions contemplated by this
\nAgreement and the Ancillary Agreements. This Agreement and the Ancillary
\nAgreements have been duly approved by the Boards of Directors of each of them
\nContributing Companies and have been duly executed and delivered by STI, SSI and
\nNSMG and are the valid and binding obligations of STI, SSI and NSMG enforceable
\nagainst STI, SSI and NSMG in accordance with their respective terms, except as
\nenforceability may be limited by bankruptcy and other similar laws and general
\nprinciples of equity.<\/p>\n
(b) No Conflict. Neither the execution, delivery and
\nperformance of this Agreement and the Ancillary Agreements nor the consummation
\nof the transactions contemplated hereby or thereby, nor compliance with the
\nprovisions hereof, will (i) conflict with, or result in any violations of, or
\ncause a default (with or without notice or lapse of time, or both) under, or
\ngive rise to a right of termination, amendment, cancellation or acceleration of
\nany obligation contained in, or the loss of any material benefit under, or
\nresult in the creation of any Encumbrance upon any of the Group Assets or
\nContributed Stock under, any term, condition or provision of (x) the Certificate
\nof Incorporation or Bylaws or equivalent organizational documents of any of the
\nContributing Companies or the Contributed Companies or any of the Contributed
\nSubsidiaries or (y) any of the Contributed Contracts or any other loan or credit
\nagreement, note, bond, mortgage, indenture, lease or other material agreement,
\njudgment, order, decree, statute, law, ordinance, rule or regulation applicable
\nto the Contributed Companies, the Contributed Companies’ Property, the
\nContributed Stock or the Contributed Assets, other than any such conflicts,
\nviolations, defaults, rights or Encumbrances which, individually or in the
\naggregate, would not have a Material Adverse Effect on the Group Business; or
\n(ii) require the affirmative vote of the holders of greater than a majority of
\nthe issued and outstanding capital stock of any member of the Contributing
\nCompanies or any member of the Contributed Company Group.<\/p>\n
(c) Consents. Except (i) as set forth in Section 2.3(c) of the
\nSSI Disclosure Letter; (ii) such filings, authorizations, orders and approvals
\nas may be required under state takeover laws; (iii) such filings and
\nnotifications as may be necessary under the HSR Act; (iv) the filings,
\nauthorizations, orders, notifications, and approvals contemplated by this
\nAgreement or the Ancillary Agreements; and (v) such other governmental or third
\nparty consents, filings, authorizations, orders and approvals which if not
\nobtained or made, would not have a Material Adverse Effect on Newco or have a
\nmaterial adverse effect on the ability of the Contributing Companies to
\nconsummate the transactions contemplated by this Agreement or the Ancillary
\nAgreements, no consent, approval, <\/p>\n
-12-
\n 21<\/p>\n
order or authorization of, or registration, declaration or filing with, any
\ngovernmental entity is required to be obtained by the Contributing Companies or
\nany member of the Contributed Company Group in connection with the execution and
\ndelivery of this Agreement or the Ancillary Agreements by SSI, STI and NSMG or
\nthe performance of the Contributing Companies and the Contributed Companies of
\nthe respective obligations herein pertaining to such company.<\/p>\n
2.4 SEC Documents.<\/p>\n
(a) SEC Reports. SSI and STI have delivered to VERITAS or its
\ncounsel correct and complete copies of the final version of each report,
\nschedule, registration statement and definitive proxy statement filed by SSI
\nand\/or STI with the SEC on or after June 27, 1997 with respect to the Group
\nBusiness or the Group Assets (the “SEAGATE SEC DOCUMENTS”), which are the
\nmaterial documents (other than preliminary material) that SSI and STI were
\nrequired to file with the SEC on or after June 27, 1997 with respect to the
\nGroup Business or the Group Assets. As of their respective dates or, in the case
\nof registration statements, their effective dates, and except as disclosed in
\nthe Seagate SEC Documents, none of the Seagate SEC Documents (including all
\nexhibits and schedules thereto and documents incorporated by reference therein)
\ncontained any untrue statement of a material fact or omitted to state a material
\nfact required to be stated therein or necessary in order to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading as of such time of filing, and there is no requirement under the
\nSecurities Act or the Exchange Act, as the case may be, to have amended any such
\nfiling, except for such requirements as were fulfilled by the filing of such
\nSeagate SEC Documents, the Seagate SEC Documents complied, when filed, in all
\nmaterial respects with the then applicable requirements of the Securities Act or
\nthe Exchange Act, as the case may be, and the rules and regulations promulgated
\nby the SEC thereunder, and SSI and STI have filed in all material respects all
\ndocuments and agreements that were required to be filed as exhibits to the
\nSeagate SEC Documents.<\/p>\n
(b) SSI Financial Statements; Absence of Undisclosed
\nLiabilities. The consolidated financial statements dated as of and for the
\nperiod ending July 3, 1998 of SSI and its consolidated subsidiaries (the “SSI
\nCONSOLIDATED FINANCIAL STATEMENTS”) complied as to form in all material respects
\nwith the then applicable accounting requirements and the published rules and
\nregulations of the SEC with respect thereto, were prepared in accordance with
\nGAAP applied on a consistent basis during the periods involved (except as may
\nhave been indicated in the notes thereto) and fairly present (subject, in the
\ncase of the unaudited statements, to normal year-end audit adjustments) the
\nconsolidated financial position of SSI and its respective consolidated
\nsubsidiaries as at the respective dates thereof and the consolidated results of
\ntheir operations and cash flows for the respective periods then ended. SSI has
\nno liabilities or obligations of any nature (matured or unmatured, fixed or
\ncontingent) which are, individually or in the aggregate, of a nature required to
\nbe disclosed on the face of a consolidated balance sheet for SSI and its
\nconsolidated subsidiaries prepared in accordance with GAAP and which would have
\na Material Adverse Effect on the Group Business, except for such liabilities or
\nobligations as (i) were accrued or provided for in the consolidated balance
\nsheet at July 3, 1998, included in the SSI Consolidated Financial Statements as<\/p>\n
-13-
\n 22<\/p>\n
of the date thereof (the “SSI CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEET
\nDATE”) or (ii) are of a normally recurring nature and were incurred after the
\nSSI Consolidated Financial Statements Balance Sheet Date in the ordinary course
\nof business consistent with past practice. All liabilities and valuation
\naccounts established and reflected in the STI\/SSI Consolidated Financial
\nStatements are, to Seagate’s Knowledge, reasonably adequate. At the SSI
\nConsolidated Financial Statements Balance Sheet Date, there were no material
\nloss contingencies (as such term is used in Statement of Financial Accounting
\nStandards No. 5 (“STATEMENT NO. 5”) issued by the Financial Accounting Standards
\nBoard in March 1975) arising from the conduct of the business of SSI and its
\nconsolidated subsidiaries which are required to be provided for or disclosed,
\nbut are not provided for or disclosed, in the SSI Consolidated Financial
\nStatements in accordance with Statement No. 5.<\/p>\n
(c) Group Financial Statements; Absence of Undisclosed
\nLiabilities. Attached hereto as Schedule 2.4(c)(1) are the audited combined
\nfinancial statements of the Group Business dated as of July 3, 1998, including a
\ncombined balance sheet as of July 3, 1998 (the “1998 GROUP BALANCE SHEET”) and a
\ncombined balance sheet for June 27, 1997, together with combined statements of
\noperations, cash flows, and Group Business equity for the three years in the
\nperiod ended July 3, 1998 (collectively the “GROUP FINANCIAL STATEMENTS”). The
\nGroup Financial Statements comply in all material respects with the then
\napplicable accounting requirements and rules and regulations of the Securities
\nand Exchange Commission with respect thereto, and present fairly, in all
\nmaterial respects, the combined financial position of the Group Business as of
\nJuly 3, 1998 and June 27, 1997, and the combined results of its operations and
\nits cash flows for each of the three years in the period ended July 3, 1998, in
\nconformity with GAAP. The Contributed Company Group and the Contributing
\nCompanies (with respect to the Group Business) have no Liabilities of any nature
\n(matured or unmatured, fixed or contingent) which (i) are related to or arose in
\nconnection with the Group Business; (ii) individually or in the aggregate, are
\nof a nature required to be recorded on the face of or disclosed in the notes to
\nthe Group Financial Statements; and (iii) are material to the Group Business
\ntaken as a whole, except for such Liabilities as (A) were accrued , provided for
\nor disclosed in the Group Financial Statements or (B) are of a normally
\nrecurring nature and were incurred after July 3, 1998, the date of the 1998
\nGroup Balance Sheet (the “GROUP FINANCIAL STATEMENTS BALANCE SHEET DATE”), in
\nthe ordinary course of business consistent with past practice. All liabilities
\nand valuation accounts established and reflected in the Group Financial
\nStatements are, to Seagate’s Knowledge, reasonably adequate. At the Group
\nFinancial Statements Balance Sheet Date, there were no material loss
\ncontingencies (as such term is defined in Statement No. 5) which are not
\nproperly provided for or disclosed in the Group Financial Statements as required
\nby Statement No. 5.<\/p>\n
2.5 Disclosure; Information Supplied. No representation or warranty
\nmade by SSI or STI in this Agreement, nor any financial statement, certificate
\nor exhibit prepared and furnished or to be prepared and furnished by them, or
\ntheir respective representatives pursuant hereto or in connection with the
\ntransactions contemplated hereby, or in any Seagate SEC Document filed by them,
\nwhen taken together, contains any untrue statement of a material fact, or omits
\nto state a material fact necessary to make the statements or facts contained
\nherein or therein, taken as a whole, not <\/p>\n
-14-
\n 23<\/p>\n
misleading in light of the circumstances under which they were furnished. None
\nof the information supplied or to be supplied by STI or SSI for inclusion or
\nincorporation by reference in the Form S-4 and Prospectus\/Proxy Statement will,
\nat the time the information is supplied contain, after giving effect to any
\nsupplement or amendment thereto, any untrue statement of a material fact or omit
\nto state any material fact required to be stated therein or necessary to make
\nthe statements therein in light of the circumstances under which they are made,
\nnot materially misleading.<\/p>\n
2.6 Compliance with Applicable Laws. Except as disclosed in the Seagate
\nSEC Documents filed prior to the date of this Agreement, the Group Business is
\nnot being conducted in violation of any law, ordinance, regulation, rule or
\norder of any governmental entity where such violation would have a Material
\nAdverse Effect on the Group Business. Except as disclosed in the Seagate SEC
\nDocuments filed prior to the date of this Agreement, neither SSI, STI, any
\nContributing NSMG Company, nor any member of the Contributed Company Group has
\nbeen notified in writing by any governmental entity that any investigation or
\nreview with respect to the Contributed Companies or any of the Contributed
\nSubsidiaries, any of the Group Assets or the Group Business is pending or
\nthreatened, nor has any governmental entity notified any of them in writing of
\nits intention to conduct the same, which investigation or review could
\nreasonably be expected to have a Material Adverse Effect on the Group Business.
\nThe Group Assets include all permits, licenses and franchises from governmental
\nentities required for the Conduct of the Group Business, except for those whose
\nabsence would not have a Material Adverse Effect on the Group Business and then
\nwhich would terminate as a consequence of the Seagate Transaction.<\/p>\n
2.7 Litigation. Except as would not reasonably be expected to have a
\nMaterial Adverse Effect on the Group Business or as set forth in Section 2.7 of
\nthe SSI Disclosure Letter or as disclosed in the Seagate SEC Documents, there is
\nno suit, action, arbitration, demand, claim or proceeding pending or, to
\nSeagate’s Knowledge, threatened against the Contributed Company Group, the
\nContributing Companies or the Group Assets; nor is there any judgment, decree,
\ninjunction, ruling or order of any governmental entity or arbitrator or
\nsettlement agreement outstanding against the Contributed Company Group or any of
\nthe Contributing Companies or the Group Assets. SSI has delivered or made
\navailable to VERITAS or its counsel correct and complete copies of all material
\ncorrespondence prepared by its counsel for SSI auditors in connection with the
\nlast two completed audits of SSI’s Financial Statements and the audit of the
\nGroup Financial Statements and any such correspondence since the date of the
\nlast such audit. No member of the Contributed Company Group and none of the
\nContributing Companies is a party to any decree, order or arbitration award (or
\nagreement entered into in any administrative, judicial or arbitration proceeding
\nwith any governmental authority) with respect to the Group Assets, Employees, or
\nGroup Business that could reasonably be expected to have a Material Adverse
\nEffect on the Group Business. Except for violations as would not have a Material
\nAdverse Effect on the Group Business, none of the Contributing Companies nor any
\nmember of the Contributed Company Group is in violation of any decree, order or
\narbitration award that names such company, or any of such companies, as a party
\nor that otherwise, to Seagate’s Knowledge, involves such company or any of the
\nGroup Assets, or of any law, ordinance, statute, or governmental authority to
\nwhich the Group <\/p>\n
-15-
\n 24<\/p>\n
Assets or the Contributed Stock are subject, including, without limitation,
\nlaws, rules and regulations relating to occupational health and safety, equal
\nemployment opportunities, fair employment practices, and sex, race, religious
\nand age discrimination. To Seagate’s Knowledge, there is no claim, action, suit,
\narbitration, mediation, investigation or other proceeding of any nature pending
\nor, threatened, at law or in equity, by way of arbitration or before any court,
\ngovernmental department, commission, board or agency that: (i) may adversely
\naffect, contest or challenge any party’s authority, right or ability to perform
\nits obligations under this Agreement or any of the Ancillary Agreements; (ii)
\nchallenges or contests the Contributing Companies’ or the Contributed Companies’
\nright, title or ownership of any of the Group Assets or the Contributed Stock or
\nseeks to impose an Encumbrance (other than a Permitted Encumbrance) on, or a
\ntransfer of title or ownership of, any of the Group Assets or the Contributed
\nStock; (iii) asserts that any action taken by any employee, consultant or
\ncontractor of the Contributed Companies or Contributing Companies in connection
\nwith the Group Business infringes or misappropriates any Intellectual Property
\nRights of any third party; (iv) seeks to enjoin, prevent or hinder operation of
\nthe Group Business; (v) seeks to enjoin, prevent, or hinder the consummation of
\nany of the transactions contemplated by this Agreement or any of the Ancillary
\nAgreements; (vi) would impair or have an adverse affect on Newco’s right or
\nability to use or exploit any of the Group Assets; (vii) involves or relates to
\nany potentially material claim against Contributing Companies or the Group
\nAssets by any creditor thereof; or (viii) involves any claim of fraudulent
\nconveyance or any similar claim, except in cases (ii), (iii), (iv), (vi) and
\n(vii) where such proceeding could not reasonably be expected to have a Material
\nAdverse Effect on Newco.<\/p>\n
2.8 ERISA and Other Compliance.<\/p>\n
(a) Section 2.8 of the SSI Disclosure Letter lists each
\nemployment, severance, compensation or other similar contract, arrangement or
\npolicy and each plan or arrangement (written or oral) providing for insurance
\ncoverage (including any self-insured arrangements), workers’ benefits, vacation
\nbenefits, severance benefits, disability benefits, death benefits,
\nhospitalization benefits, retirement benefits, deferred compensation,
\nprofit-sharing, bonuses, stock options, stock purchase, phantom stock, stock
\nappreciation or other forms of incentive compensation or post-retirement
\ninsurance, compensation or benefits for employees, consultants or directors
\n(other than workers compensation, unemployment compensation and other government
\nmandated programs) which both (A) is entered into, maintained or contributed to,
\nas the case may be, by any member of the Contributed Company Group or any of the
\nContributing Companies, and (B) covers any Employee (collectively as the “GROUP
\nBENEFIT ARRANGEMENTS”). Each Group Benefit Arrangement maintained by any member
\nof the Contributed Company Group has been maintained in substantial compliance
\nwith its terms and with the requirements prescribed by any and all statutes,
\norders, rules and regulations which are applicable to such Group Benefit
\nArrangement except as would not have a Material Adverse Effect on the Group
\nBusiness. Section 2.8(a) of the SSI Disclosure Letter also identifies each
\n“employee benefit plan,” as defined in Section 3(3) of the Employee Retirement
\nIncome Security Act of 1974, as amended (“ERISA”) (“EMPLOYEE BENEFIT PLAN”), in
\nwhich any of the Employees participate (collectively, the “GROUP EMPLOYEE
\nPLANS”). Copies of all Group Benefit <\/p>\n
-16-
\n 25<\/p>\n
Arrangements have been made available to VERITAS or its counsel. All
\ncontributions or premiums currently due and payable with respect to any of the
\nGroup Employee Plans have been made as required under ERISA or have been accrued
\non the 1998 Group Balance Sheet or will be made prior to the Effective Time.<\/p>\n
(b) None of the Employee Benefit Plans maintained by any of
\nthe Contributing Companies or any member of the Contributed Company Group (i) is
\na multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA
\n(a “MULTIEMPLOYER PLAN”), or a single employer pension plan, within the meaning
\nof Section 4001(a)(15) of ERISA, for which Newco could incur liability under
\nSection 4063 or 4064 of ERISA (a “MULTIPLE EMPLOYER PLAN”), or (ii) provides or
\npromises to provide retiree medical or life insurance benefits except in
\nconnection with (a) benefit coverage mandated by applicable law, including
\nwithout limitation, coverage provided pursuant to Section 4980B of the Code; (b)
\ndeath or disability benefits under any of the Group Benefit Arrangements; (c)
\nbenefits arising in connection with a separation or severance program, plan or
\narrangement; and (d) life insurance benefits for any employee who dies while in
\nservice with any of the Contributing Companies or any member of the Contributed
\nCompany Group. None of the Contributing Companies or any member of the
\nContributed Company Group has incurred or will incur prior to or as of the
\nEffective Time any material liability under, arising out of or by operation of
\nTitle IV of ERISA (other than liability for premiums to the Pension Benefit
\nGuaranty Corporation arising in the ordinary course), including any liability in
\nconnection with (i) the termination or reorganization of any employee pension
\nbenefit plan subject to Title IV of ERISA or (ii) with withdrawal from any
\nMultiemployer Plan or Multiple Employer Plan.<\/p>\n
(c) The appropriate Contributing Company or Contributed
\nCompany has timely provided, or will have provided prior to the Effective Time,
\nto Employees entitled thereto all required notices and made coverage available
\npursuant to Section 4980B of the Internal Revenue Code and the Consolidated
\nOmnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), with respect to
\nany “qualifying event” (as defined in Section 4980B(f)(3) of the Internal
\nRevenue Code). The appropriate Contributing Company or Contributed Company will
\ntimely provide to Employees entitled thereto all required notices and make
\ncoverage available pursuant to Internal Revenue Code Section 4980B and COBRA
\nwith respect to any “qualifying event” (as defined in Section 4980B(f)(3) of the
\nInternal Revenue Code) occurring prior to and including the Effective Time. No
\nmaterial Tax payable on account of Section 4980B of the Internal Revenue Code
\nhas been incurred by the Contributing Companies or any of the Contributed
\nCompanies with respect to any current Employees (or their beneficiaries).<\/p>\n
(d) No benefit payable or which may become payable by any of
\nthe Contributed Companies or by any of the Contributing Companies with respect
\nto any Employee shall constitute a “parachute payment” (as defined in Section
\n280G(b)(2) of the Internal Revenue Code).<\/p>\n
(e) The Contributed Companies Group and the Contributing
\nCompanies are in compliance with all applicable laws, agreements and contracts
\nrelating to employment, employment practices, wages, hours, and terms and
\nconditions of employment (including, but not limited to, <\/p>\n
-17-
\n 26<\/p>\n
employee compensation matters) with respect in all such cases to the Employees,
\nexcept where the failure to be in compliance would not have a Material Adverse
\nEffect on Newco.<\/p>\n
(f) The Contributed Company Group and the Contributing
\nCompanies have, to Seagate’s Knowledge, good labor relations and to Seagate’s
\nKnowledge there are no facts indicating that the consummation of the
\ntransactions contemplated hereby will have a Material Adverse Effect on labor
\nrelations with Employees or that any of the Employees intends to leave its or
\ntheir employ, where the same would have a Material Adverse Effect on the Group
\nBusiness.<\/p>\n
(g) To Seagate’s Knowledge, no Employee who is a key developer
\nof a Group Product is subject to any agreement, obligation, order or other legal
\nhindrance that impedes or might impede such executive or key employee from
\ndevoting his or her full business time to the affairs of Newco after the
\nEffective Time.<\/p>\n
(h) The Contributed Companies Group and the Contributing
\nCompanies have, to Seagate’s Knowledge and with respect only to the Employees,
\ncomplied with all laws, rules and regulations relating to the employment of
\nlabor, including provisions thereof relating to wages, hours, equal opportunity,
\ncollective bargaining and the payment of social security and other Taxes, except
\nwhere non-compliance would not have a Material Adverse Effect on the Group
\nBusiness.<\/p>\n
(i) The Contributed Companies are not indebted to any
\nexecutive officer or director of such Contributed Company, whether by loan,
\nadvance or otherwise, other than for salaries accrued but not yet payable and
\nreimbursable out-of-pocket expenses incurred in the ordinary course of business
\nconsistent with past practice and not yet payable, nor, except as described on
\nSchedule 2.8(i) to the SSI Disclosure Letter is any officer, director, employee
\nor shareholder so indebted to any of SSI or any of the Contributed Companies,
\nexcept as disclosed in the 1998 Group Balance Sheet or the Seagate SEC
\nDocuments, nor does any Employee have any right to force SSI or any Contributing
\nCompany to repurchase any stock.<\/p>\n
2.9 Absence of Certain Changes or Events. Except as disclosed in the
\nSeagate SEC Documents filed prior to the date of this Agreement, since the Group
\nBalance Sheet Date (i.e., July 3, 1998) there has not occurred:<\/p>\n
(a) any change or event which could reasonably be expected to
\nhave a Material Adverse Effect on the Group Business;<\/p>\n
(b) any amendments or changes in the Certificate of
\nIncorporation or Bylaws of any member of the Contributed Company Group;<\/p>\n
(c) any damage, destruction or loss to or of the Group Assets
\nnot covered by insurance, which would have a Material Adverse Effect on the
\nGroup Business;<\/p>\n
-18-
\n 27<\/p>\n
(d) any redemption, repurchase or other acquisition of shares
\nof any member of the Contributed Company Group, or any declaration, setting
\naside or payment of any dividend or other distribution by any Contributing
\nCompany or any member of the Contributed Company Group to any entity other than
\na member of the Contributed Company Group (whether in cash, stock or property)
\nof the Group Assets or any proceeds generated by the conduct of the Group
\nBusiness;<\/p>\n
(e) any material increase in or modification of the
\ncompensation or benefits payable, or to become payable, by the Contributed
\nCompanies to the Employees, except in the ordinary course of the business,
\nconsistent with past practice and except as necessary to respond to third party
\nsolicitation of Employees;<\/p>\n
(f) other than as required by applicable statute or
\ngovernmental regulation, any material increase in or modification of any Group
\nBenefit Arrangement (including, but not limited to, the granting of stock
\noptions, restricted stock awards or stock appreciation rights) that will become
\nbinding upon Newco upon consummation of the transactions contemplated herein,
\nfor or with respect to any of the Employees, other than (i) in the ordinary
\ncourse of the business, consistent with past practice, or to respond to third
\nparty solicitation of Employees and (ii) if after the date of this Agreement,
\nwhich is authorized, if required, pursuant to Section 4.3 below;<\/p>\n
(g) any sale of a material amount of the Group Assets, or any
\nacquisition by any member of the Contributed Company Group of a material amount
\nof assets, other than in the ordinary course of the business, consistent with
\npast practice;<\/p>\n
(h) any alteration in any term of any outstanding capital
\nstock or rights to acquire capital stock of SSI or any member of the Contributed
\nCompany Group, including, but not limited to, acceleration of the vesting or any
\nchange in the terms of any outstanding stock options;<\/p>\n
(i) other than in the ordinary course of business, consistent
\nwith past practice, (A) any incurrence, assumption or guarantee by any member of
\nthe Contributed Company Group of any debt of any person, other than any member
\nof the Contributed Company Group, for borrowed money in an amount exceeding
\n$2,500,000 in the aggregate; (B) issuance or sale by any member of the
\nContributed Company Group of any securities convertible into or exchangeable for
\ntheir respective debt securities; or (C) issuance or sale of options or other
\nrights to acquire from SSI, STI, or the Contributed Company Group, directly or
\nindirectly, debt securities of any member of the Contributed Company Group, or
\nany securities convertible into or exchangeable for any such debt securities;<\/p>\n
(j) any creation or assumption by a Contributing Company or a
\nmember of the Contributed Company Group of any Encumbrance (other than Permitted
\nEncumbrances) on any Group Asset in excess of $2,500,000 individually or in the
\naggregate, other than to refinance a liability reflected in the SSI Financial
\nStatements or the Group Financial Statements in the ordinary course of business;<\/p>\n
-19-
\n 28<\/p>\n
(k) any making by any member of the Contributed Company Group
\nof any loan, advance or capital contribution to or investment in any person
\nother than to refinance a liability reflected in the SSI Financial Statements or
\nthe Group Financial Statements and other than (i) loans, advances or capital
\ncontributions made in the ordinary course of the business, and (ii) other loans
\nand advances, where the aggregate amount of any such items outstanding at any
\ntime does not exceed $2,500,000;<\/p>\n
(l) any amendment of, relinquishment, termination or
\nnon-renewal by the Contributing Companies or the Contributed Company Group of
\nany Contributed Contract, other than in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(m) any transfer or grant of a right under Intellectual
\nProperty Rights included in the Group Assets, other than those transferred or
\ngranted in the ordinary course of business, consistent with past practice,
\nexcept for any grant of a right to source code or grant of any exclusive rights
\nto any Intellectual Property Rights included in the Group Assets, each of which
\nshall be set forth in Section 2.09(m) of the SSI Disclosure Letter;<\/p>\n
(n) any labor dispute with, or charge of unfair labor practice
\nby, SSI (relating to Employees) or any member of the Contributed Company Group
\n(other than routine individual grievances), any activity or proceeding by a
\nlabor union or representative thereof to organize any Employees or, to Seagate’s
\nKnowledge, any campaign being conducted to solicit authorization from Employees
\nto be represented by such labor union, where such dispute, practice, activity,
\nproceeding, or campaign would have a Material Adverse Effect on the Group
\nBusiness; or<\/p>\n
(o) any agreement by any member of the Contributed Company
\nGroup to take any of the actions described in the preceding clauses (a) through
\n(n) (other than the transactions contemplated by this Agreement or the Ancillary
\nAgreements); or any change to accounting methods.<\/p>\n
2.10 Full Force and Effect. Each of the Contributed Contracts and Group
\nGovernmental Permits is in full force and effect and is not subject to any
\nbreach or default thereunder by any Contributing Company or any member of the
\nContributed Company Group or, to Seagate’s Knowledge, any other party thereto,
\nexcept for those Contributed Contracts and Group Governmental Permits, the
\nabsence of which would not have a Material Adverse Effect on the Group Business.<\/p>\n
2.11 Agreements. Section 2.11 of the SSI Disclosure Letter lists all
\nthe contracts as of the date of this Agreement of the type described below to
\nwhich any member of the Contributed Company Group is a party and which is
\nmaterial to the Group Business (herein, the “MATERIAL CONTRIBUTED CONTRACTS”)
\n(and copies of all such Material Contributed Contracts have been identified to
\nand made available for review by VERITAS or its counsel):<\/p>\n
-20-
\n 29<\/p>\n
(a) contract with or commitment to any labor union which would
\nhave a Material Adverse Effect on the Group Business;<\/p>\n
(b) continuing contract for the future purchase, sale or
\nmanufacture of products, material, supplies, equipment or services requiring
\npayment to or from any member of the Contributed Company Group or any
\nContributing Company, the non-continuance of which would have a Material Adverse
\nEffect on the Group Business, or in which any member of the Contributed Company
\nGroup or any Contributing Company has granted or received manufacturing rights,
\nmost favored nations pricing provisions or exclusive marketing rights relating
\nto the Group Products, other than purchase contracts with vendors who are not
\nthe top ten (10) vendors of any member of the Contributed Company Group or of
\nany Contributing Companies (as measured by purchases from them in the most
\nrecently ended fiscal year);<\/p>\n
(c) contract providing for the development of technology used
\nor incorporated in any Group Products currently distributed in connection with
\nthe Group Business or which requires any member of the Contributed Company Group
\nto perform specified development work for a third party, the non-continuance of
\nwhich would have a Material Adverse Effect on the Group Business;<\/p>\n
(d) joint venture contract or agreement or other agreement
\nwhich is reasonably expected to involve a sharing of profits or losses in any
\none year in excess of $2,500,000 individually or in the aggregate from any joint
\nenterprise with any party (other than any member of the Contributed Company
\nGroup);<\/p>\n
(e) indenture, mortgage, promissory note, loan agreement,
\nguarantee or other agreement or commitment for the borrowing of money, for a
\nline of credit or for a leasing transaction of a type required to be capitalized
\nin accordance with Statement of Financial Accounting Standards No. 13 of the
\nFinancial Accounting Standards Board (other than those reflected in the SSI
\nFinancial Statements or the Group Financial Statements, or those pursuant to
\nwhich payments by any member of the Contributed Company Group will not exceed
\n$2,500,000 in the aggregate);<\/p>\n
(f) agreement or arrangement for the sale of any Group Assets
\nhaving a value individually or in the aggregate exceeding $2,500,000 (other than
\nthose entered into in the ordinary course of business consistent with past
\npractice);<\/p>\n
(g) agreement which would restrict Newco from engaging in any
\nmaterial aspect of the Group Business or from selling any of the material Group
\nProducts in any material geographic area (including any agreement pursuant to
\nwhich any of them has granted exclusive rights in the Group Products to a third
\nparty);<\/p>\n
(h) Seagate IP Rights Agreement (as defined in Section 2.15
\nbelow), other than agreements entered into with customers in the ordinary course
\nof business, and, in any event, any agreement that grants rights or access to
\nany source code for the Seagate IP Rights required for the Conduct of the Group
\nBusiness, the unavailability of which would have a Material Adverse Effect on<\/p>\n
-21-
\n 30<\/p>\n
the Group Business, excluding commercially available, non-customized software
\nsold at retail or sold at less than $5,000 per license or per seat; or<\/p>\n
(i) agreement between or among STI, SSI and any member of the
\nContributed Company Group regarding inter-company loans, revenue or cost or Tax
\nsharing, ownership or license of Seagate IP Rights for Group Products, or
\nintercompany royalties or dividends.<\/p>\n
2.12 No Defaults. Except as disclosed in the Seagate SEC Documents
\nfiled prior to the date of this Agreement, to Seagate’s Knowledge, there exists
\nno event (including closing of the transactions contemplated by this Agreement),
\ncondition or occurrence which, after notice or lapse of time, or both, would
\nconstitute a default by under any Contributed Contract in an manner which would
\nhave a Material Adverse Effect on the Group Business.<\/p>\n
2.13 Certain Agreements. Neither the execution and delivery of this
\nAgreement or the Ancillary Agreements, nor the consummation of the transactions
\ncontemplated hereby and thereby, will, (i) result in any payment in an amount
\nexceeding $250,000 individually or $2,500,000 in the aggregate (including,
\nwithout limitation, severance, unemployment compensation, golden parachute,
\nbonus or otherwise) becoming due by any member of the Contributed Company Group
\n(or by any Contributing Company, with respect to the Group Business) or to any
\nEmployee(s) under any Group Benefit Arrangement or otherwise, (ii) increase any
\nbenefits otherwise payable by Newco under any Group Benefit Arrangement by more
\nthan $250,000 individually or $2,500,000 in the aggregate, or (iii) result in
\nthe acceleration of the time of payment or vesting of any such benefits.<\/p>\n
2.14 Taxes. The Contributed Companies and, with respect to the Group
\nBusinesses, the Contributing Companies, have filed, or caused to be filed, all
\nTax returns required to be filed by them and have paid, or caused to be paid,
\nall Taxes that are shown on such Tax returns as due and payable, other than such
\nTaxes as are being contested in good faith and for which adequate liabilities
\nhave been established on the 1998 Group Balance Sheet, other than where the
\nfailure to so file, pay or withhold would not have a Material Adverse Effect on
\nthe Group Business. All Taxes required to have been paid or accrued by the
\nContributed Companies and, with respect to the Group Businesses, the
\nContributing Companies for all periods prior to the 1998 Group Balance Sheet
\nhave been fully paid (except for Taxes that are adequately provided for or
\nreflected in the 1998 Group Balance Sheet) except where a failure to do so would
\nnot have a Material Adverse Effect on the Group Business. Since the date of the
\n1998 Group Balance Sheet, no material Tax liability relating to the Group
\nBusiness has been assessed, or is, to Seagate’s Knowledge, proposed to be
\nassessed, incurred or accrued (other than liabilities for Taxes arising in the
\nordinary course of business). To Seagate’s Knowledge, Seagate has not received
\nany notification that any material issues have been raised (or are currently
\npending) by the Internal Revenue Service or any other taxing authority,
\nincluding, without limitation, any sales tax authority, in connection with any
\nof the Tax returns referred to in the first sentence of this Section 2.14, and
\nno waivers of statutes of limitations have been given or requested with respect
\nto Tax returns or Taxes related to the Group Business or SSI and its
\nconsolidated subsidiaries. No taxing authority is currently conducting an audit
\nof any of the aforesaid Tax returns or to Seagate’s Knowledge is about to
\nconduct such an audit with respect to the <\/p>\n
-22-
\n 31<\/p>\n
Group Business. Any deficiencies asserted or assessments (including interest and
\npenalties) made as a result of any examination by the Internal Revenue Service
\nor by appropriate national, state or departmental authorities of the Tax returns
\nwith respect to the Group Business or the Contributed Companies have been fully
\npaid or are adequately provided for in the 1998 Group Balance Sheet, except
\nwhere a failure to do so would not have a Material Adverse Effect on the Group
\nBusiness, and, to Seagate’s Knowledge, no material proposed (but unassessed)
\nadditional Taxes have been asserted and no Tax liens have been filed with
\nrespect to the Group Business or the Contributed Companies or against any of the
\nGroup Assets other than for Taxes not yet due and payable. None of the members
\nof the Contributed Company Group (i) has made an election to be treated as a
\n“consenting corporation” under Section 341(f) of the Internal Revenue Code or
\n(ii) is a “personal holding company” within the meaning of Section 542 of the
\nInternal Revenue Code. This representation does not apply to Taxes or Tax
\nmatters relating to Taxes for which Newco and its affiliates are entitled to
\nindemnification under Section 13 hereof.<\/p>\n
2.15 Intellectual Property.<\/p>\n
(a) The Contributed Companies and, insofar as it relates to
\nthe Group Business, the Contributing Companies own, or have the right to use,
\nsell or license such Intellectual Property Rights as are necessary or required
\nfor the Conduct of the Group Business (such Intellectual Property Rights being
\nhereinafter collectively referred to as the “SEAGATE IP RIGHTS”) and such
\nownership or rights to use, sell or license are reasonably sufficient for such
\nconduct of the Group Business, except for any failure to own or have the right
\nto use, sell or license that would not have a Material Adverse Effect on the
\nGroup Business.<\/p>\n
(b) All Seagate IP Rights are owned free and clear of any
\nEncumbrances (other than Permitted Encumbrances).<\/p>\n
(c) The execution, delivery and performance of this Agreement
\nand the consummation of the transactions contemplated hereby will not constitute
\na material breach of any material instrument or material agreement in respect of
\nany Seagate IP Rights licensed by or to any Contributing Company or Contributed
\nCompany (the “SEAGATE IP RIGHTS AGREEMENTS”), will not cause the forfeiture or
\ntermination or give rise to a right of forfeiture or termination of any Seagate
\nIP Right or materially impair the right of Newco to use, sell or license any
\nSeagate IP Right or portion thereof (except where such breach, forfeiture,
\ntermination or impairment would not have a Material Adverse Effect on the Group
\nBusiness);<\/p>\n
(d) There are no royalties, honoraria, fees or other payments
\npayable by any member of the Contributed Company Group or any Contributing
\nCompany to any person by reason of the ownership, use, license, purchase, sale
\nor disposition or acquisition of any of the Seagate IP Rights in an amount
\nexceeding $100,000 in any one year;<\/p>\n
(e) To Seagate’s Knowledge, no third party is infringing or
\nmisappropriating any of the Seagate IP Rights.<\/p>\n
-23-
\n 32<\/p>\n
(f) To Seagate’s Knowledge, (i) neither the manufacture,
\nmarketing, license, sale or intended use of any Group Product violates any
\nlicense or agreement relating thereto or infringes any Intellectual Property
\nRight of any other party, (ii) there is no pending or threatened claim or
\nlitigation contesting the validity, ownership or right to use, sell, license or
\ndispose of any Seagate IP Right, and (iii) no third party has notified the
\nContributing Companies or the Contributed Company Group that any Seagate IP
\nRight, or the proposed use, sale, license or disposition thereof, conflicts or
\nwill conflict with the rights of any other party, nor is there any basis
\ntherefor, except for any violations, infringements, claims or litigation that
\nwould not have a Material Adverse Effect on the Group Business.<\/p>\n
(g) The Contributing Companies and the Contributed Company
\nGroup have taken reasonable and practicable steps designed to safeguard and
\nmaintain the secrecy and confidentiality of, and its proprietary rights in, all
\nmaterial trade secrets or other confidential information constituting Seagate IP
\nRights. To Seagate’s Knowledge, no current or prior officers, employees or
\nconsultants of the Contributing Companies or the Contributed Company Group claim
\nan ownership interest in any Seagate IP Rights as a result of having been
\ninvolved in the development of such property while so employed, or retained, or
\notherwise. To Seagate’s Knowledge, all development employees of the Seagate IP
\nRights, and all other officers, employees and consultants of the Contributed
\nCompany Group have executed and delivered an agreement regarding the protection
\nof proprietary information and the assignment to his\/her employer or principal
\nof the Seagate IP Rights arising from the services performed by such persons,
\nexcept where this absence of such agreement would not have a Material Adverse
\nEffect on the Group Business.<\/p>\n
(h) Section 2.15(h) of the SSI Disclosure Letter sets forth
\nand summarizes each of the Seagate IP Rights as of the date of this Agreement
\nthe absence of which would have a Material Adverse Effect on the Group Business
\nthat a third party owns and that SSI or the Contributed Business Group uses
\npursuant to a license, sublicense, agreement or other permission, and describes
\nand identifies such license, sublicense, agreement or other permission
\n(excluding shrink wrap licenses to commercially available software sold at
\nretail). Such license, sublicense, agreement or permission covering the item is
\nlegal, valid, binding, enforceable and in full force and effect and will
\ncontinue to be legal, valid, binding, enforceable and in full force and effect
\non identical terms to Newco’s benefit immediately following the Effective Time,
\nexcept where it would not have a Material Adverse Effect on Newco, and such
\nlicense, sublicense, agreement or permission does not restrict the ability to
\nmarket any material Group Product in any material jurisdiction or with respect
\nto any material market or industry, and neither SSI nor the Contributed Company
\nGroup is in breach or default of any such license, sublicense, agreement or
\npermission in a manner which would have a Material Adverse Effect on the Group
\nBusiness. No person other than the Contributing Companies holds any license or
\nother right to manufacture, modify, or create derivative works of any of the
\nGroup Products, other than OEM agreements that would not have a Material Adverse
\nEffect on the Group Business. No person (other than Newco) will be or become
\nentitled to receive a copy of source code of any software included among the
\nGroup Assets as a result of this Agreement, any Ancillary Agreement or any other
\nagreement or transaction contemplated by this Agreement. To <\/p>\n
-24-
\n 33<\/p>\n
Seagate’s Knowledge, no person holds or has been granted access to any copy of
\nsource code of any software included among the Group Assets unless such person
\nhas agreed in writing (i) to hold such source code in confidence and take
\nreasonable steps to preserve the secrecy of such source code, and (ii) not to
\nuse such source code for any purpose except (A) to support such person’s
\ninternal use of such source code or (B) to modify such source code solely for
\nthe purpose of internally using such modifications. None of SSI or the
\nContributed Companies have knowingly taken or knowingly failed to take any
\naction that, directly or indirectly, has caused any Intellectual Property Rights
\nin source code of material Group Products to enter the public domain, such as
\nwould have a Material Adverse Effect on the Group Business.<\/p>\n
2.16 Fees and Expenses. Except for the fees and expenses set forth in
\nSSI’s engagement letter with Morgan, a copy of which has been provided to
\nVERITAS (the “MORGAN STANLEY ENGAGEMENT LETTER), no member of the Contributed
\nCompany Group and none of the Contributing Companies has paid or become
\nobligated to pay any fee or commission to any broker, finder or intermediary in
\nconnection with the transactions contemplated by this Agreement and the
\nAncillary Agreements.<\/p>\n
2.17 Insurance. The members of the Contributed Company Group maintain
\nfire and casualty, general liability, business interruption, directors and
\nofficers, product liability and sprinkler and water damage insurance that they
\nbelieve to be reasonably prudent for their respective businesses.<\/p>\n
2.18 Ownership of Property. Except for Permitted Encumbrances, the
\nContributed Company Group and the Contributing Companies own, or at the
\nEffective Time will own, the Contributed Company Assets, free and clear of all
\nEncumbrances. All real and personal property included in the Group Assets is
\noperational and suitable for its intended use, subject to ordinary wear and
\ntear. To Seagate’s Knowledge, no member of the Contributed Company Group is in
\nviolation in any material respect with any zoning, building or safety ordinance,
\nregulation or requirement or other law or regulation applicable to the operation
\nof its respective owned or leased properties (the violation of which would have
\na Material Adverse Effect on the Group Business ).<\/p>\n
2.19 Environmental Matters.<\/p>\n
(a) During the period that the Contributed Companies and the
\nContributing Companies (with respect to the Group Assets or any real estate
\nleased thereunder) have leased or owned their respective properties or owned or
\noperated their respective facilities, there have been, to Seagate’s Knowledge,
\nno disposals, releases or threatened releases of Hazardous Materials on, from,
\nunder or about such properties or facilities which would cause a Material
\nAdverse Effect on Newco. To Seagate’s Knowledge there is no presence, disposals,
\nreleases or threatened releases of Hazardous Materials on, from, under or about
\nany of such properties or facilities, which may have occurred prior to said
\nMember of the Contributed Company Group or the Contributing Companies (with
\nrespect to the Group Assets or any real estate leased thereunder) having taken
\npossession of any of <\/p>\n
-25-
\n 34
\nsuch properties or facilities, where such Hazardous Materials would cause a
\nMaterial Adverse Effect on the Newco.<\/p>\n
(b) None of the properties or facilities which are Group
\nAssets is or has been the subject of an Environmental Violation, which would
\ncause a Material Adverse Effect on Newco. During the time that a Member of the
\nContributed Company Group or the Contributing Companies (with respect to the
\nGroup Assets or any real estate leased thereunder) owned or leased its
\nrespective properties and facilities, none of said companies and, to Seagate’s
\nKnowledge, no third party, used, generated, manufactured or stored on, under or
\nabout such properties or facilities or transported to or from such properties or
\nfacilities any Hazardous Materials (except those Hazardous Materials associated
\nwith general office use or janitorial supplies) in a manner which would result
\nin a Material Adverse Effect on Newco.<\/p>\n
(c) During the time that any member of the Contributed Company
\nGroup and the Contributing Companies (with respect to the Group Assets or any
\nreal estate leased thereunder) owned or leased its respective properties and
\nfacilities, to Seagate’s Knowledge, there has been no litigation brought or
\nthreatened against any such Company, or any settlement reached by any such
\nCompany with, any party or parties concerning the presence, disposal, release or
\nthreatened release of any Hazardous Materials on, from or under any of such
\nproperties or facilities or relating to any alleged Environmental Violation,
\nexcept for litigation or settlement which would not have a Material Adverse
\nEffect on Newco.<\/p>\n
2.20 Interested Party Transactions. Except as disclosed in the Seagate
\nSEC Documents filed prior to the date of this Agreement, no officer or director
\nof a Contributing Company, or any “affiliate” or “associate” (as those terms are
\ndefined in Rule 405 promulgated under the Securities Act) of a Contributing
\nCompany has, either directly or indirectly, a material interest in: (i) any
\nperson or entity which purchases from or sells, licenses or furnishes to the
\nContributed Company Group in connection with the Group Business, any goods,
\nproperty, technology or intellectual or other property rights or services; or
\n(ii) any Contributed Contract; which, in the case of either subpart (i) or (ii)
\nwould have a Material Adverse Effect on the Group Business.<\/p>\n
2.21 Fairness Opinion. SSI’s Board of Directors has received an opinion
\ndated as of the date hereof from Morgan to the effect that, as of the date
\nhereof, the terms of the transactions contemplated by this Agreement and the
\nAncillary Agreements are fair to SSI’s stockholders from a financial point of
\nview.<\/p>\n
2.22 Title to and Condition and Sufficiency of Group Assets. A Member
\nof the Contributed Company Group and\/or a Contributing Company owns or at the
\nClosing will own the Group Assets and have good and marketable title thereto,
\nfree and clear of all Encumbrances whatsoever, other than the Permitted
\nEncumbrances. The Group Assets transferred to Newco constitute all assets,
\nproperties, rights, contracts and Intellectual Property Rights that are
\nnecessary or required for the Conduct of the Group Business, without (i) the
\nneed to purchase, license or acquire any other material asset or property; (ii)
\nviolating any contractual rights of any third party; or <\/p>\n
-26-
\n 35
\n(iii) infringing, misappropriating or misusing any software or Intellectual
\nProperty Rights of any third party, except for such assets, properties, rights,
\ncontracts, software and Intellectual Property Rights, the absence of which would
\nnot have a Material Adverse Effect on the Group Business. Title to all Group
\nAssets is freely transferable to, and will be transferred to, Newco free and
\nclear of all Encumbrances, other than Permitted Encumbrances. Such transfer can
\noccur without obtaining the consent or approval of any person, except where the
\nfailure to transfer the Group Asset would not have a Material Adverse Effect on
\nNewco. To the extent that VERITAS is assuming obligations that have an
\nassociated deferred revenue on the 1998 Group Balance Sheet, the cash associated
\nwith such deferred revenue shall be transferred to Newco. At the Closing, the
\nContributing Companies will contribute, transfer and deliver to Newco all right,
\ntitle and interest in and to all Group Assets, free and clear of all
\nEncumbrances, other than Permitted Encumbrances. The Group Products includes all
\nsoftware under development by the Group Business.<\/p>\n
2.23 No Restrictive Agreements. Other than this Agreement and the
\nAncillary Agreements, neither any Member of the Contributed Company Group nor
\nSSI nor any of the Group Assets is bound, or materially and adversely affected
\nby, any judgment, injunction, order, decree, contract, covenant or agreement
\n(noncompete or otherwise) that restricts or prohibits (or purports to restrict
\nor prohibit) the Conduct of the Group Business or from competing for the sale of
\nthe Group Products anywhere in the world (including without limitation any
\ncontracts, covenants or agreements restricting the geographic area in which the
\nGroup Business may sell, license, market, distribute or support any Group
\nProducts or restricting the markets, customers or industries that Newco may
\naddress after the Closing in the Conduct of the Group Business (collectively,
\n“RESTRICTIVE AGREEMENTS”), in a manner, in any of the foregoing cases, which
\nwill have a Material Adverse Effect upon Newco.<\/p>\n
2.24 Supplier and Customer Relationships. To Seagate’s Knowledge, (i)
\nthe Contributed Company Group has good commercial working relationships with the
\ncustomers for the Group Business, and (ii) since January 1, 1998, no customer
\nof, or supplier to the Group Business has canceled or otherwise terminated any
\nmaterial relationship concerning the Group Business with the Contributed Company
\nGroup or SSI (with respect to the Group), or materially decreased or limited its
\npurchases or provision of materials supplied to the Group Business or under any
\nMaterial Contributed Contract from the corresponding period in 1997, where any
\nof the foregoing actions would cause a Material Adverse Effect on the Group
\nBusiness, and to Seagate’s Knowledge, no customer or supplier has threatened to
\ntake any such action.<\/p>\n
2.25 Product and Inventory Status.<\/p>\n
(a) Product Quality, Warranty Claims. All Group Products
\nmanufactured, sold, licensed, leased or delivered in connection with the Group
\nBusiness conform in all material respects to applicable contractual commitments,
\nexpress and implied warranties, and, to Seagate’s Knowledge, there is no
\nmaterial Liability (nor any basis for any present or future action, suit,
\nproceeding, hearing, investigation, charge, complaint, claim or demand giving
\nrise to any material <\/p>\n
-27-
\n 36
\nLiability) for replacement or repair thereof or other damages in connection
\ntherewith, except for such conformance as would not have a Material Adverse
\nEffect on Newco.<\/p>\n
(b) Inventory. To Seagate’s Knowledge, its inventories
\nrecorded on the 1998 Group Balance Sheet consist primarily of materials used in
\nsoftware products, related supplies and packaging materials, all of which are
\nmerchantable, fit for the purpose for which they were procured or manufactured,
\nand are in a condition and quantity usable in the ordinary course of business
\nand to Seagate’s Knowledge, none of these inventories are obsolete, damaged or
\ndefective, except in each case where the failure of these inventories to be so
\nwould not have a Material Adverse Effect on Newco or where a sufficient
\nprovision with respect to the possibility of such failure is included in the
\n1998 Group Balance Sheet.<\/p>\n
3. REPRESENTATIONS AND WARRANTIES OF VERITAS AND NEWCO<\/p>\n
Except as set forth in the respectively referenced provisions of the
\nVERITAS Disclosure Letter, delivered by VERITAS on behalf of VERITAS and each
\nVERITAS Subsidiary (collectively, the “VERITAS GROUP”), to SSI and STI
\nconcurrently herewith and certified by an officer of VERITAS, on behalf of the
\nVERITAS Group, respectively, to be true, accurate and complete to the best of
\nhis knowledge (the “VERITAS DISCLOSURE LETTER”), VERITAS, on behalf of the
\nVERITAS Group, hereby represents and warrants to SSI and STI that:<\/p>\n
3.1 Organization; Good Standing; Qualification and Power. The VERITAS
\nSubsidiaries are all of the subsidiaries of VERITAS or any of its direct or
\nindirect subsidiaries. VERITAS and each of the VERITAS Subsidiaries is a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the jurisdiction of its formation, has all requisite corporate power and
\nauthority to own, lease and operate the VERITAS Assets and for the Conduct of
\nthe VERITAS Business as now being conducted, and is duly qualified and in good
\nstanding to do business in each jurisdiction in which the nature of its business
\nor the ownership or leasing of its properties makes such qualification
\nnecessary, other than in such jurisdictions where the failure so to qualify
\nwould not have a Material Adverse Effect on VERITAS. VERITAS has delivered to
\nSSI or its counsel complete and correct copies of the Certificate of
\nIncorporation and Bylaws of VERITAS and will deliver to SSI or its counsel prior
\nto the Effective Time the equivalent charter documents of each VERITAS
\nSubsidiary, in each case as amended to the date of this Agreement. Except for
\nthe VERITAS Subsidiaries, none of VERITAS nor any of the VERITAS Subsidiaries
\nowns, directly or indirectly, any capital stock or other equity interest of any
\ncorporation or has any direct or indirect equity or ownership interest in any
\nother business, whether organized as a corporation, partnership, joint venture
\nor otherwise.<\/p>\n
3.2 Capital Structure.<\/p>\n
(a) Stock and Options. The authorized and issued and
\noutstanding capital stock of VERITAS, the VERITAS Subsidiaries and Newco is set
\nforth in Section 3.2(a) of the VERITAS Disclosure Letter. Except as specified in
\nSection 3.2(a) of the VERITAS Disclosure Letter, no <\/p>\n
-28-
\n 37<\/p>\n
shares of the capital stock of VERITAS or of any of the VERITAS Subsidiaries was
\nheld by any of them in their treasury or reserved for issuance upon the exercise
\nof options or warrants. All outstanding shares of the capital stock of VERITAS
\nare set forth in Section 3.2(a) of the VERITAS Disclosure Letter and are validly
\nissued, fully paid and nonassessable and not subject to preemptive rights
\npursuant to any statute, pursuant to the Certificate of Incorporation or Bylaws
\nof VERITAS, or pursuant to any agreement or document to which any of them is a
\nparty or by which any of them is bound. All outstanding shares of the capital
\nstock of each of the VERITAS Subsidiaries are validly issued, fully paid and
\nnonassessable and are owned by VERITAS, or one of the VERITAS Subsidiaries, free
\nand clear of any Encumbrances. Section 3.2(a) of the VERITAS Disclosure Letter
\ncontains a correct and complete list of each of the VERITAS Options, VERITAS
\nWarrants and VERITAS Debentures, including the name of the holders of such
\nVERITAS Options and VERITAS Warrants, the plan pursuant to which such VERITAS
\nOptions were issued (if applicable), the number of shares covered by such
\nVERITAS Options, VERITAS Warrants and VERITAS Debentures (or into which it is
\nconvertible), the per share exercise price of such VERITAS Options, VERITAS
\nWarrants and VERITAS Debentures, and the vesting schedule applicable to such
\nVERITAS Options, including the number of shares vested as of the date of this
\nAgreement.<\/p>\n
(b) No Other Commitments. Except as set forth in Section
\n3.3(a) of the VERITAS Disclosure Letter, there are no options, warrants, calls,
\nrights, commitments, conversion rights or agreements of any character to which
\nVERITAS or any of its respective direct and indirect subsidiaries, is a party or
\nby which any of them is bound obligating them to issue, deliver or sell, or
\ncause to be issued, delivered or sold, any shares of their capital stock, or
\nsecurities convertible into or exchangeable for shares of their capital stock,
\nor obligating any of them to grant, extend or enter into any such option,
\nwarrant, call, right, commitment, conversion right or agreement. There is no
\nvoting trust, proxy or other agreement or understanding to which VERITAS or any
\nof its respective direct or indirect subsidiaries is a party with respect to the
\nvoting of the capital stock of any member of the VERITAS Group. All shares of
\ncapital stock of any member of the VERITAS Group are held free and clear of any
\nEncumbrances.<\/p>\n
(c) Registration Rights. Neither VERITAS nor any of their
\nrespective subsidiaries is under any obligation to register under the Securities
\nAct any of its presently outstanding securities or any securities that may be
\nsubsequently issued which offering would have a Material Adverse Effect on
\nNewco, except as disclosed in the VERITAS Disclosure Letter.<\/p>\n
3.3 Authority.<\/p>\n
(a) Corporate Action. Subject to approval of this Agreement
\nand the Ancillary Agreements by the stockholders of VERITAS, VERITAS has all
\nrequisite corporate power and authority to enter into this Agreement and the
\nAncillary Agreements, to perform its obligations hereunder and thereunder, and
\nto consummate the transactions contemplated by this Agreement and the Ancillary
\nAgreements. This Agreement and the Ancillary Agreements have been duly executed
\nand delivered by VERITAS and are the valid and binding obligation of VERITAS
\nenforceable <\/p>\n
-29-
\n 38<\/p>\n
against VERITAS in accordance with their terms, except as enforceability may be
\nlimited by bankruptcy and other similar laws and general principles of equity.<\/p>\n
(b) No Conflict. Neither the execution, delivery and
\nperformance of this Agreement and the Ancillary Agreements nor the consummation
\nof the transactions contemplated hereby or thereby nor compliance with the
\nprovisions hereof will (i) conflict with, or result in any violations of, or
\ncause a default (with or without notice or lapse of time, or both) under, or
\ngive rise to a right of termination, amendment, cancellation or acceleration of
\nany obligation contained in, or the loss of any material benefit under, or
\nresult in the creation of any Encumbrance upon the any of the VERITAS Assets
\nunder, any term, condition or provision of (x) the Certificate of Incorporation
\nor Bylaws of VERITAS or the equivalent organizational documents of any of the
\nVERITAS Subsidiaries or (y) any loan or credit agreement, note, bond, mortgage,
\nindenture, lease or other material agreement, judgment, order, decree, statute,
\nlaw, ordinance, rule or regulation applicable to VERITAS, VERITAS’ property or
\nthe VERITAS Assets, other than any such conflicts, violations, defaults, rights
\nor Encumbrances which, individually or in the aggregate, would not have a
\nMaterial Adverse Effect on VERITAS; or (ii) require the affirmative vote of the
\nholders of greater than a majority of the issued and outstanding capital stock
\nof VERITAS.<\/p>\n
(c) Governmental Consents. Except (i) as set forth in Section
\n3.3(c) of the VERITAS Disclosure Letter; (ii) such filings, authorizations,
\norders and approvals as may be required under State Takeover Laws; (iii) such
\nfilings and notifications as may be necessary under the HSR Act; (iv) the
\nfilings, authorizations, orders, notifications, and approvals contemplated by
\nthis Agreement or the Ancillary Agreements; and (v) such other filings,
\nauthorizations, orders and approvals which if not obtained or made, would not
\nhave a Material Adverse Effect on Newco or have a material adverse effect on the
\nability of VERITAS to consummate the transactions contemplated by this Agreement
\nor the Ancillary Agreements, no consent, approval, order or authorization of, or
\nregistration, declaration or filing with, any governmental entity is required to
\nbe obtained by the VERITAS Group in connection with the execution and delivery
\nof this Agreement or the Ancillary Agreements by VERITAS, Newco, and the Merger
\nSub or the performance by them of their respective obligations hereunder or
\nthereunder.<\/p>\n
3.4 SEC Documents.<\/p>\n
(a) SEC Reports. VERITAS has delivered to SSI or its counsel
\ncorrect and complete copies of the final version of each report, schedule,
\nregistration statement and definitive proxy statement filed by VERITAS with the
\nSEC on or after June 27, 1997 (the “VERITAS SEC DOCUMENTS”), which are the
\nmaterial documents (other than preliminary material) that VERITAS was required
\nto file with the SEC on or after June 27, 1997 with respect, in whole or in
\npart, to VERITAS or the VERITAS Assets. As of their respective dates or, in the
\ncase of registration statements, their effective dates and except as disclosed
\nin the VERITAS SEC Documents, none of the VERITAS SEC Documents (including all
\nexhibits and schedules thereto and documents incorporated by reference therein)
\ncontained any untrue statement of a material fact or omitted to state a material
\nfact required to be stated therein or necessary in order to make the statements
\ntherein, <\/p>\n
-30-
\n 39
\nin light of the circumstances under which they were made, not misleading, and
\nthere is no requirement under the Securities Act or the Exchange Act, as the
\ncase may be, to have amended any such filing. The VERITAS SEC Documents
\ncomplied, when filed, in all material respects with the then applicable
\nrequirements of the Securities Act or the Exchange Act, as the case may be, and
\nthe rules and regulations promulgated by the SEC thereunder. VERITAS has filed
\nall documents and agreements that were required to be filed as exhibits to the
\nVERITAS SEC Documents.<\/p>\n
(b) VERITAS Financial Statements; Absence of Undisclosed
\nLiabilities. The audited consolidated financial statements, dated as of and for
\nthe period ended, December 31, 1997, and the unaudited consolidated financial
\nstatements, dated as of and for the period ending June 30, 1998, of VERITAS and
\nits consolidated subsidiaries (“VERITAS FINANCIAL STATEMENTS”) complied as to
\nform in all material respects with the then applicable accounting requirements
\nand the published rules and regulations of the SEC with respect thereto, were
\nprepared in accordance with GAAP applied on a consistent basis during the
\nperiods involved (except as may have been indicated in the notes thereto) and
\nfairly present in all material respects (subject, in the case of the unaudited
\nstatements, to normal year-end audit adjustments) the consolidated financial
\nposition of the VERITAS Group as at the respective dates thereof and the
\nconsolidated results of their operations and cash flows for the respective
\nperiods then ended. VERITAS has no liabilities or obligations of any nature
\n(matured or unmatured, fixed or contingent) which are, individually or in the
\naggregate, of a nature required to be disclosed on the face of a consolidated
\nbalance sheet for VERITAS and its consolidated subsidiaries prepared in
\naccordance with GAAP and which are material to the VERITAS Business, except for
\nsuch liabilities or obligations as (i) were accrued or were provided for in the
\nconsolidated balance sheet dated June 30, 1998, included in the VERITAS
\nFinancial Statements as of the date thereof (the “VERITAS FINANCIAL STATEMENTS
\nBALANCE SHEET DATE”) or (ii) are of a normally recurring nature and were
\nincurred after the VERITAS Financial Statements Balance Sheet Date in the
\nordinary course of business consistent with past practice. All liabilities and
\nvaluation accounts established and reflected in the VERITAS Financial Statements
\nare to VERITAS’ Knowledge adequate. At the VERITAS Financial Statements Balance
\nSheet Date, there were no material loss contingencies (as such term is used in
\nStatement No. 5) which are not adequately provided for in the VERITAS Financial
\nStatements as required by Statement No. 5.<\/p>\n
3.5 Disclosure; Information Supplied. No representation or warranty
\nmade by VERITAS in this Agreement, nor any financial statement, certificate or
\nexhibit prepared and furnished or to be prepared and furnished by VERITAS or
\ntheir respective representatives pursuant hereto or in connection with the
\ntransactions contemplated hereby, or in any VERITAS SEC Document filed by it,
\nwhen taken together, contains any untrue statement of a material fact, or omits
\nto state a material fact necessary to make the statements or facts contained
\nherein or therein, taken as a whole not misleading in light of the circumstances
\nunder which they were furnished. None of the information supplied or to be
\nsupplied by VERITAS for inclusion or incorporation by reference in the Form S-4
\nand Prospectus\/Proxy Statement will, at the time the information is supplied
\ncontain, after giving effect to any supplement or amendment thereto, no untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary to make the statements therein, in <\/p>\n
-31-
\n 40<\/p>\n
light of the circumstances under which they are made, not materially misleading.
\nThe Prospectus\/Proxy Statement will in all material respects comply as to form
\nwith the provisions of the Exchange Act and the rules and regulations
\npromulgated by the SEC thereunder.<\/p>\n
3.6 Compliance with Applicable Laws. Except as disclosed in the VERITAS
\nSEC Documents filed prior to the date of this Agreement, the VERITAS Business is
\nnot being conducted in violation of any law, ordinance, regulation, rule or
\norder of any governmental entity where such violation would have a Material
\nAdverse Effect on VERITAS. Except as disclosed in the VERITAS SEC Documents
\nfiled prior to the date of this Agreement, VERITAS has not been notified in
\nwriting by any governmental entity that any investigation or review with respect
\nto VERITAS or any of the VERITAS Subsidiaries or any of the VERITAS Assets is
\npending or threatened, nor has any governmental entity notified any of them in
\nwriting of its intention to conduct the same, which investigation or review
\ncould reasonably be expected to have a Material Adverse Effect on VERITAS. The
\nmembers of the VERITAS Group have all material permits, licenses and franchises
\nfrom governmental entities required for the Conduct of the VERITAS Business,
\nexcept for those whose absence would not have a Material Adverse Effect on
\nVERITAS.<\/p>\n
3.7 Litigation. Except as disclosed in the VERITAS SEC Documents filed
\nprior to the date of this Agreement, or as would not reasonably be expected to
\nhave a Material Adverse Effect on VERITAS, there is no suit, action,
\narbitration, demand, claim or proceeding pending or, to VERITAS’ Knowledge,
\nthreatened against VERITAS or the VERITAS Assets; nor is there any judgment,
\ndecree, injunction, ruling or order of any governmental entity or arbitrator or
\nsettlement agreement outstanding against VERITAS or any of the VERITAS Assets.
\nVERITAS has delivered or made available to SSI or its counsel correct and
\ncomplete copies of all correspondence prepared by its counsel for VERITAS’
\nauditors in connection with the last two completed audits of VERITAS’ financial
\nstatements and any such correspondence since the date of the last such audit. No
\nmember of the VERITAS Group is a party to any decree, order or arbitration award
\n(or agreement entered into in any administrative, judicial or arbitration
\nproceeding with any governmental authority) with respect to the VERITAS Assets,
\nVERITAS Employees, or the VERITAS Business that could reasonably be expected to
\nhave a Material Adverse Effect on VERITAS. Except for violations as would not
\nhave a Material Adverse Effect on VERITAS, none of the members of the VERITAS
\nGroup is in violation of any decree, order or arbitration award that names such
\ncompany, or any of such companies, as a party or that otherwise, to VERITAS’
\nKnowledge, involves such company or any of such companies, or of any law,
\nordinance, statute, or governmental authority to which the VERITAS Assets are
\nsubject, including, without limitation, laws, rules and regulations relating to
\noccupational health and safety, equal employment opportunities, fair employment
\npractices, and sex, race, religious and age discrimination. There is no claim,
\naction, suit, arbitration, mediation, investigation or other proceeding of any
\nnature pending or, to VERITAS’ Knowledge, threatened, at law or in equity, by
\nway of arbitration or before any court, governmental department, commission,
\nboard or agency that: (i) may adversely affect, contest or challenge any party’s
\nauthority, right or ability to perform its obligations under this Agreement or
\nany of the Ancillary Agreements; (ii) challenges or contests VERITAS’ right,
\ntitle or ownership of <\/p>\n
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\n 41
\nany of the VERITAS Assets or seeks to impose an Encumbrance (other than a
\nPermitted Encumbrance) on, or a transfer of title or ownership of, any of the
\nVERITAS Assets; (iii) asserts that any action taken by any employee, consultant
\nor contractor of VERITAS in connection with the Group Business infringes or
\nmisappropriates any Intellectual Property Rights of any third party; (iv) seeks
\nto enjoin, prevent or hinder operation of the VERITAS Business or the
\nconsummation of any of the transactions contemplated by this Agreement or any of
\nthe Ancillary Agreements; (v) would impair or have an adverse affect on Newco’s
\nright or ability to use or exploit any of the VERITAS Assets; or (vi) involves
\nor relates to any potentially material claim against VERITAS by any creditor of
\nVERITAS or involves any claim of fraudulent conveyance or any similar claim,
\nexcept in cases (ii), (iii) and (v) where such proceeding could not reasonably
\nbe expected to have a Material Adverse Effect on Newco.<\/p>\n
3.8 ERISA and Other Compliance.<\/p>\n
(a) Section 3.8(a) of the VERITAS Disclosure Letter lists each
\nemployment, severance, compensation or other similar contract, arrangement or
\npolicy and each plan or arrangement (written or oral) providing for insurance
\ncoverage (including any self-insured arrangements), workers’ benefits, vacation
\nbenefits, severance benefits, disability benefits, death benefits,
\nhospitalization benefits, retirement benefits, deferred compensation,
\nprofit-sharing, bonuses, stock options, stock purchase, phantom stock, stock
\nappreciation or other forms of incentive compensation or post-retirement
\ninsurance, compensation or benefits for employees, consultants or directors
\n(other than workers compensation, unemployment compensation and other government
\nmandated programs) which both (A) is entered into, maintained or contributed to,
\nas the case may be, by any member of the VERITAS, and (B) covers any Employee or
\nformer employee of the VERITAS Business (collectively as the “VERITAS BENEFIT
\nArrangements.”) Each VERITAS Benefit Arrangement maintained by any member of the
\nVERITAS Group has been maintained in substantial compliance with its terms and
\nwith the requirements prescribed by any and all statutes, orders, rules and
\nregulations which are applicable to such VERITAS Group Benefit Arrangement
\nexcept as would not have a Material Adverse Effect on VERITAS. Section 3.8(a) of
\nthe VERITAS Disclosure Letter also identifies each “employee benefit plan,” as
\ndefined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
\nas amended (“ERISA”) (“EMPLOYEE BENEFIT PLAN”), in which any of the Employees
\nparticipate (collectively, the ” VERITAS GROUP EMPLOYEE Plans”). Copies of all
\nVERITAS Group Benefit Arrangements have been made available to SSI or its
\ncounsel. All contributions or premiums currently due and payable with respect to
\nany of the VERITAS Group Employee Plans have been made as required under ERISA
\nor have been accrued on the VERITAS Financial Statements as of the VERITAS
\nFinancial Statements Balance Sheet Date, or will be made prior to the Effective
\nTime.<\/p>\n
(b) None of the VERITAS Employee Benefit Plans maintained by
\nany member of the VERITAS Group (i) is a multiemployer plan, within the meaning
\nof Section 3(37) or 4001(a)(3) of ERISA (a “MULTIEMPLOYER PLAN”), or a single
\nemployer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
\nwhich Newco could incur liability under Section 4063 or 4064 of <\/p>\n
-33-
\n 42
\nERISA (a “MULTIPLE EMPLOYER PLAN”), or (ii) provides or promises to provide
\nretiree medical or life insurance benefits except in connection with (a) benefit
\ncoverage mandated by applicable law, including without limitation, coverage
\nprovided pursuant to Section 4980B of the Code; (b) death or disability benefits
\nunder any of the VERITAS Group Benefit Arrangements; (c) benefits arising in
\nconnection with a separation or severance program, plan or arrangement; and (d)
\nlife insurance benefits for any employee who dies while in service with VERITAS.
\nNo member of the VERITAS Group has incurred or will incur prior to or as of the
\nEffective Time any material liability under, arising out of or by operation of
\nTitle IV of ERISA (other than liability for premiums to the Pension Benefit
\nGuaranty Corporation arising in the ordinary course), including any liability in
\nconnection with (i) the termination or reorganization of any employee pension
\nbenefit plan subject to Title IV of ERISA or (ii) with withdrawal from any
\nMultiemployer Plan or Multiple Employer Plan.<\/p>\n
(c) The appropriate VERITAS entity has timely provided, or
\nwill have provided prior to the Effective Time, to VERITAS Employees entitled
\nthereto all required notices and made coverage available pursuant to Section
\n4980B of the Internal Revenue Code and the Consolidated Omnibus Budget
\nReconciliation Act of 1985, as amended (“COBRA”), with respect to any
\n“qualifying event” (as defined in Section 4980B(f)(3) of the Internal Revenue
\nCode). The appropriate VERITAS entity will timely provide to VERITAS Employees
\nentitled thereto all required notices and make coverage available pursuant to
\nInternal Revenue Code Section 4980B and COBRA with respect to any “qualifying
\nevent” (as defined in Section 4980B(f)(3) of the Internal Revenue Code)
\noccurring prior to and including the Effective Time. No material Tax payable on
\naccount of Section 4980B of the Internal Revenue Code has been incurred by any
\nmember of the VERITAS Group with respect to any current or former employees (or
\ntheir beneficiaries).<\/p>\n
(d) No benefit payable or which may become payable by any
\nmember of the VERITAS Group with respect to any VERITAS Employee shall
\nconstitute a “parachute payment” (as defined in Section 280G(b)(2) of the
\nInternal Revenue Code).<\/p>\n
(e) The VERITAS Group is in compliance with all applicable
\nlaws, agreements and contracts relating to employment, employment practices,
\nwages, hours, and terms and conditions of employment, including, but not limited
\nto, employee compensation matters, relating to VERITAS Employees, except where
\nthe failure to be in compliance would not have a Material Adverse Effect on
\nNewco.<\/p>\n
(f) The VERITAS Group has, to VERITAS’ Knowledge, good labor
\nrelations and to VERITAS’ Knowledge there are no facts indicating that the
\nconsummation of the transactions contemplated hereby will have a material
\nadverse effect on labor relations with VERITAS Employees or that any of the
\nVERITAS Employees intends to leave its or their employ, where the same would
\nhave a Material Adverse Effect on VERITAS.<\/p>\n
(g) To VERITAS’ Knowledge, no VERITAS employee who is a key
\ndeveloper of a VERITAS product is subject to any agreement, obligation, order or
\nother legal hindrance that <\/p>\n
-34-
\n 43
\nimpedes or might impede such executive or key employee from devoting his or her
\nfull business time to the affairs of Newco after the Effective Time.<\/p>\n
(h) The VERITAS Group has, to VERITAS’ Knowledge and with
\nrespect to the VERITAS Employees, complied with all laws, rules and regulations
\nrelating to the employment of labor, including provisions thereof relating to
\nwages, hours, equal opportunity, collective bargaining and the payment of social
\nsecurity and other Taxes, except where non-compliance would not have a Material
\nAdverse Effect on VERITAS.<\/p>\n
(i) VERITAS is not indebted to any executive, officer or
\ndirector, whether by loan, advance or otherwise, other than for salaries accrued
\nbut not yet payable and reimbursable out-of-pocket expenses incurred in the
\nordinary course of business consistent with past practice and not yet payable,
\nnor is any officer, director, employee or shareholder so indebted to VERITAS,
\nexcept as disclosed in the VERITAS Balance Sheet or the VERITAS SEC Documents.<\/p>\n
3.9 Absence of Certain Changes or Events. Except as disclosed in the
\nVERITAS SEC Documents filed prior to the date of this Agreement, since the
\nVERITAS Financial Statements Balance Sheet Date there has not occurred:<\/p>\n
(a) any change or event which could reasonably be expected to
\nhave a Material Adverse Effect on VERITAS; provided, however, that in no event
\nwill a change in the trading price of VERITAS Common Stock be deemed a Material
\nAdverse Effect on VERITAS;<\/p>\n
(b) any amendments or changes in the Certificate of
\nIncorporation or Bylaws of any member of the VERITAS Group;<\/p>\n
(c) any damage, destruction to or loss of VERITAS assets not
\ncovered by insurance, which would have a Material Adverse Effect on VERITAS;<\/p>\n
(d) any redemption, repurchase or other acquisition of shares
\nof any member of the VERITAS Group (other than pursuant to arrangements with
\nemployees or consultants), or any declaration, setting aside or payment of any
\ndividend or other distribution (whether in cash, stock or property) with respect
\nto the capital stock of any member of the VERITAS Group or, with respect to
\ndividends or other distributions of cash or property arising from the VERITAS
\nBusiness;<\/p>\n
(e) any material increase in or modification of the
\ncompensation or benefits payable by VERITAS or to become payable to the VERITAS
\nEmployees, except in the ordinary course of the business, consistent with past
\npractice and necessary to respond to third party solicitation of VERITAS
\nEmployees;<\/p>\n
(f) other than as required by applicable statute or
\ngovernmental regulation, any material increase in or modification of any VERITAS
\nGroup Benefit Arrangement (including, but not limited to, the granting of stock
\noptions, restricted stock awards or stock appreciation rights) that <\/p>\n
-35-
\n 44
\nwill become binding upon Newco upon consummation of the transactions
\ncontemplated herein, for or with respect to any of the VERITAS Employees, other
\nthan (i) in the ordinary course of the business, consistent with past practice,
\nor to respond to third party solicitation of VERITAS Employees, and (ii) if
\nafter the date of this Agreement, which is authorized, if required, pursuant to
\nSection 5.3 below;<\/p>\n
(g) any sale of a material amount of the VERITAS Assets, or
\nany acquisition by any member of the VERITAS Group of a material amount of
\nassets, other than in the ordinary course of the business, consistent with past
\npractice;<\/p>\n
(h) any alteration in any term of any outstanding capital
\nstock or rights to acquire capital stock of any member of the VERITAS Group,
\nincluding, but not limited to, acceleration of the vesting or any change in the
\nterms of any outstanding stock options;<\/p>\n
(i) other than in the ordinary course of business, consistent
\nwith past practice, (A) any incurrence, assumption or guarantee by any member of
\nthe VERITAS Group of any debt of any person, other than any member of the
\nVERITAS Group, for borrowed money in an amount exceeding $2,500,000; (B)
\nissuance or sale by any member of the VERITAS Group of any securities
\nconvertible into or exchangeable for their respective debt securities; or (C)
\nissuance or sale of options or other rights to acquire from the VERITAS Group,
\ndirectly or indirectly, debt securities of any member of the VERITAS Group, or
\nany securities convertible into or exchangeable for any such debt securities;<\/p>\n
(j) any creation or assumption by any member of the VERITAS
\nGroup of any Encumbrance (other than VERITAS Permitted Encumbrances) on any
\nVERITAS Asset in excess of $2,500,000 in the aggregate, other than to refinance
\na liability reflected in the VERITAS Financial Statements in the ordinary course
\nof business;<\/p>\n
(k) any making by any member of the VERITAS Group of any loan,
\nadvance or capital contribution to or investment in any person other than to
\nrefinance a liability reflected in the VERITAS Financial Statements and other
\nthan (i) loans, advances or capital contributions made in the ordinary course of
\nthe business, and (ii) other loans and advances, where the aggregate amount of
\nall such items outstanding at any time does not exceed $1,000,000;<\/p>\n
(l) any amendment of, relinquishment, termination or
\nnon-renewal by VERITAS of any of the VERITAS Contracts, other than in the
\nordinary course of business consistent with past practice;<\/p>\n
(m) any transfer or grant of a right under the VERITAS IP
\nRights, other than those transferred or granted in the ordinary course of
\nbusiness, consistent with past practice, except for any grant of a right to
\nsource code or grant of any exclusive rights to any VERITAS IP Rights, each of
\nwhich shall be set forth in Section 3.09(m) of the VERITAS Disclosure Letter;<\/p>\n
-36-
\n 45<\/p>\n
(n) any labor dispute with, or charge of unfair labor practice
\nby, any member of the VERITAS Group (other than routine individual grievances),
\nany activity or proceeding by a labor union or representative thereof to
\norganize any VERITAS Employees or, to VERITAS’ Knowledge, any campaign being
\nconducted to solicit authorization from VERITAS Employees to be represented by
\nsuch labor union, where such dispute, practice, activity, proceeding, or
\ncampaign would have a Material Adverse Effect on VERITAS; or<\/p>\n
(o) any agreement by any member of the VERITAS Group to take
\nany of the actions described in the preceding clauses (a) through (n) (other
\nthan the transactions contemplated by this Agreement or the Ancillary
\nAgreements).<\/p>\n
3.10 Full Force and Effect. Each of the VERITAS Contracts and
\nGovernmental Permits of VERITAS is in full force and effect and is not subject
\nto any breach or default thereunder by any member of the VERITAS Group or, to
\nVERITAS’ Knowledge, any other party thereto, except for those VERITAS Contracts
\nand Governmental Permits of VERITAS, the absence of which would not have a
\nMaterial Adverse Effect on VERITAS.<\/p>\n
3.11 Agreements. Section 3.11 of the VERITAS Disclosure Letter lists
\nall VERITAS contracts as of the date of this Agreement of the type described
\nbelow to which any member of the VERITAS Group is a party and which are material
\nto the VERITAS Business (the “MATERIAL VERITAS CONTRACTS”) (and copies of all
\nsuch VERITAS Contracts have been identified to and made available for review by
\nSSI or its counsel):<\/p>\n
(a) contract with or commitment to any labor union which would
\nhave a Material Adverse Effect on VERITAS;<\/p>\n
(b) continuing contract for the future purchase, sale or
\nmanufacture of products, material, supplies, equipment or services requiring
\npayment to or from any member of the VERITAS Group, the non-continuance of which
\nwould have a Material Adverse Effect on VERITAS, or in which any member of the
\nVERITAS Group has granted or received manufacturing rights, most favored nations
\npricing provisions or exclusive marketing rights relating to the Group Products,
\nother than purchase contracts with vendors who are not the top ten (10) vendors
\nof any member of the VERITAS Group (as measured by purchases from them in the
\nmost recently ended fiscal year);<\/p>\n
(c) contract providing for the development of technology used
\nor incorporated in any VERITAS Products currently distributed in connection with
\nthe VERITAS Business or which requires any member of the VERITAS Group to
\nperform specified development work for a third party, the non-continuance of
\nwhich would have a Material Adverse Effect on VERITAS;<\/p>\n
(d) joint venture contract or agreement or other agreement
\nwhich is reasonably expected to involve a sharing of profits or losses in any
\none year in excess of $2,500,000 individually or in the aggregate from any joint
\nenterprise with any party other than any member of the VERITAS Group;<\/p>\n
-37-
\n 46<\/p>\n
(e) indenture, mortgage, promissory note, loan agreement,
\nguarantee or other agreement or commitment for the borrowing of money, for a
\nline of credit or for a leasing transaction of a type required to be capitalized
\nin accordance with Statement of Financial Accounting Standards No. 13 of the
\nFinancial Accounting Standards Board (other than those reflected in the VERITAS
\nFinancial Statements or those pursuant to which payments by any member of the
\nVERITAS Group do not exceed $2,500,000 in the aggregate);<\/p>\n
(f) agreement or arrangement for the sale of any VERITAS
\nAssets having a value individually or in the aggregate of in excess of
\n$2,500,000 (other than in the ordinary course of business consistent with past
\npractice);<\/p>\n
(g) agreement which would restrict Newco from engaging in any
\nmaterial aspect of the VERITAS Business or from selling any material Group
\nProducts in any material geographic area; including any agreement pursuant to
\nwhich any of them has granted exclusive rights to a third party;<\/p>\n
(h) VERITAS IP Rights Agreement (as defined in Section 3.15
\nbelow), other than agreements entered into with VERITAS customers in the
\nordinary course of business, and, in any event, any agreement that grants rights
\nor access to any source code for the VERITAS IP Rights, the unavailability of
\nwhich would have a Material Adverse Effect on VERITAS; or<\/p>\n
(i) agreement between or among VERITAS and any member of the
\nVERITAS Group regarding inter company loans, revenue or cost or Tax sharing,
\nownership or license of VERITAS IP Rights for VERITAS Products, or intercompany
\nroyalties or dividends.<\/p>\n
3.12 No Defaults. Except as disclosed in the VERITAS SEC Documents
\nfiled prior to the date of this Agreement, to VERITAS’ Knowledge, there exists
\nno event (including closing of the transactions contemplated by this Agreement),
\ncondition or occurrence which, after notice or lapse of time, or both, would
\nconstitute a default by VERITAS under any VERITAS Contract in an manner which
\nwould have a Material Adverse Effect on VERITAS.<\/p>\n
3.13 Certain Agreements. Neither the execution and delivery of this
\nAgreement or the Ancillary Agreements, nor the consummation of the transactions
\ncontemplated hereby and thereby, will: (i) result in any payment in an amount
\nexceeding $250,000 individually or $2,500,000 in the aggregate (including,
\nwithout limitation, severance, unemployment compensation, golden parachute,
\nbonus or otherwise) becoming due by any member of the VERITAS Group or to any
\nVERITAS Employee(s) under any VERITAS Group Benefit Arrangement or otherwise,
\n(ii) increase any benefits otherwise payable under any VERITAS Group Benefit
\nArrangement by more than $250,000 individually or $2,500,000 in the aggregate,
\nor (iii) result in the acceleration of the time of payment or vesting of any
\nsuch benefits.<\/p>\n
3.14 Taxes. The VERITAS Group has filed, or caused to be filed, all Tax
\nreturns required to be filed by the VERITAS Group and has paid, or caused to be
\npaid, all Taxes that are shown on <\/p>\n
-38-
\n 47
\nsuch Tax returns as due and payable, other than such Taxes as are being
\ncontested in good faith and for which adequate liabilities have been established
\non the most recent balance sheet included in the VERITAS Financial Statements
\n(“VERITAS BALANCE SHEET”), other than where the failure to so file, pay or
\nwithhold would not have a Material Adverse Effect on VERITAS. All Taxes required
\nto have been paid or accrued by VERITAS for all periods prior to the VERITAS
\nBalance Sheet Date have been fully paid (except for Taxes on VERITAS that are
\nadequately provided for or reflected in the VERITAS Balance Sheet, as
\napplicable) except where a failure to do so would not have a Material Adverse
\nEffect on VERITAS. Since the date of the VERITAS Balance Sheet, no material Tax
\nliability has been assessed to VERITAS, incurred or accrued (other than
\nliabilities for Taxes arising in the ordinary course of business). To VERITAS’
\nKnowledge, (i) no material issues have been raised (or are currently pending) by
\nthe Internal Revenue Service or any other taxing authority, including, without
\nlimitation, any sales tax authority, in connection with any of the Tax returns
\nreferred to in the first sentence of this Section 3.14, and no waivers of
\nstatutes of limitations have been given or requested with respect to Tax returns
\nor Taxes related to the VERITAS Business, (ii) no taxing authority is currently
\nconducting an audit of any of the aforesaid Tax returns of VERITAS or is about
\nto conduct such an audit with respect to the VERITAS Business. Any deficiencies
\nasserted or assessments (including interest and penalties) made as a result of
\nany examination by the Internal Revenue Service or by appropriate national,
\nstate or departmental authorities of the Tax returns of or with respect to
\nVERITAS have been fully paid or are adequately provided for in the VERITAS
\nBalance Sheet except where a failure to do so would not have a Material Adverse
\nEffect on VERITAS and to VERITAS’ Knowledge no material proposed to VERITAS (but
\nunassessed) additional Taxes have been asserted and no material Tax liens have
\nbeen filed against VERITAS or any of the VERITAS Assets other than for Taxes not
\nyet due and payable. None of the members of the VERITAS Group (i) has made an
\nelection to be treated as a “consenting corporation” under Section 341(f) of the
\nInternal Revenue Code or (ii) is a “personal holding company” within the meaning
\nof Section 542 of the Internal Revenue Code. This representation does not apply
\nto Taxes or Tax Matters relating to Taxes for which STI or SSI or any member of
\nthe Contributed Company Group is entitled to indemnification under Section 13
\nhereto.<\/p>\n
3.15 Intellectual Property.<\/p>\n
(a) VERITAS owns, or has the right to use, sell or license
\nsuch Intellectual Property Rights (as defined below) as are necessary or
\nrequired for the Conduct of the VERITAS Business (such Intellectual Property
\nRights being hereinafter collectively referred to as the “VERITAS IP RIGHTS”)
\nand such ownership or rights to use, sell or license are reasonably sufficient
\nfor the Conduct of the VERITAS Business, except for any failure to own or have
\nthe right to use, sell or license that would not have a Material Adverse Effect
\non VERITAS.<\/p>\n
(b) All VERITAS IP Rights are owned free and clear of any
\nEncumbrances.<\/p>\n
(c) The execution, delivery and performance of this Agreement
\nand the consummation of the transactions contemplated hereby will not constitute
\na material breach of any material instrument or material agreement in respect of
\nany VERITAS IP Rights (the “VERITAS IP <\/p>\n
-39-
\n 48<\/p>\n
RIGHTS AGREEMENTS”), will not cause the forfeiture or termination or give rise
\nto a right of forfeiture or termination of any VERITAS IP Right or materially
\nimpair the right of Newco to use, sell or license any VERITAS IP Right or
\nportion thereof (except where such breach, forfeiture, termination or impairment
\nwould not have a Material Adverse Effect on VERITAS).<\/p>\n
(d) There are no royalties, honoraria, fees or other payments
\npayable by any member of the VERITAS Group to any person by reason of the
\nownership, use, license, purchase, sale or disposition or acquisition of any of
\nthe VERITAS IP Rights in an amount exceeding $100,000 in any one year.<\/p>\n
(e) To VERITAS’ Knowledge, no third party is infringing or
\nmisappropriating any of the VERITAS IP Rights.<\/p>\n
(f) To VERITAS’ Knowledge, (i) neither the manufacture,
\nmarketing, license, sale or intended use of any product currently licensed or
\nsold by VERITAS or any of the VERITAS Subsidiaries or currently under
\ndevelopment by VERITAS or any of the VERITAS Subsidiaries violates any license
\nor agreement relating thereto between VERITAS or any of the VERITAS Subsidiaries
\nand any third party or infringes any Intellectual Property Right of any other
\nparty, (ii) there is no pending or threatened claim or litigation contesting the
\nvalidity, ownership or right to use, sell, license or dispose of any VERITAS IP
\nRight and (iii) no third party has notified VERITAS that any VERITAS IP Right or
\nthe proposed use, sale, license or disposition thereof, conflicts or will
\nconflict with the rights of any other party, nor is there any basis therefor
\nexcept for any violations, infringements, claims or litigation that would not
\nhave a Material Adverse Effect on VERITAS.<\/p>\n
(g) VERITAS has taken reasonable and practicable steps
\ndesigned to safeguard and maintain the secrecy and confidentiality of, and its
\nproprietary rights in, all material trade secrets or other confidential
\ninformation constituting VERITAS IP Rights. To VERITAS’ Knowledge, no current or
\nprior officers, employees or consultants of VERITAS claim an ownership interest
\nin any VERITAS IP Rights as a result of having been involved in the development
\nof such property while so employed, or retained, or otherwise. To VERITAS’
\nKnowledge, all development employees of the VERITAS IP Rights, and all other
\nofficers, employees and consultants of VERITAS have executed and delivered to
\nVERITAS or the VERITAS Subsidiary an agreement regarding the protection of
\nproprietary information and the assignment to VERITAS or the VERITAS Subsidiary
\nof all Intellectual Property Rights arising from the services performed for
\nVERITAS or the VERITAS Subsidiary by such persons, except where the absence of
\nsuch an agreement would not have a Material Adverse Effect on VERITAS.<\/p>\n
(h) Section 3.15(h) of the VERITAS Disclosure Letter sets
\nforth and summarizes each of the VERITAS IP Rights, the absence of which would
\nhave a Material Adverse Effect on VERITAS, that a third party owns and that
\nVERITAS uses pursuant to a license, sublicense, agreement or other permission
\nand describes and identifies such license, sublicense, agreement or other
\npermission (excluding shrink wrap licenses to commercially available software
\nsold at retail). Such license, sublicense, agreement or permission covering the
\nitem is legal, valid, binding, <\/p>\n
-40-
\n 49
\nenforceable and in full force and effect and will continue to be legal, valid,
\nbinding, enforceable and in full force and effect on identical terms to Newco’s
\nbenefit immediately following the Effective Time, except where it would not have
\na Material Adverse Effect on Newco, and such license, sublicense, agreement or
\npermission does not restrict VERITAS’ ability to market any material VERITAS
\nProduct in any material jurisdiction or with respect to any market or industry,
\nand VERITAS is not in breach or default of any such license, sublicense,
\nagreement or permission. No person other than VERITAS holds any license or other
\nright to manufacture, modify, or create derivative works based on any of the
\nVERITAS Products, other than OEM agreements that would not have a Material
\nAdverse Effect on VERITAS. No person (other than Newco) will be or become
\nentitled to receive a copy of source code of any software included among the
\nVERITAS Assets as a result of this Agreement, any Ancillary Agreement or any
\nother agreement or transaction contemplated by this Agreement. To VERITAS’
\nKnowledge, no person holds or has been granted access to any copy of source code
\nof any software included among the VERITAS Assets unless such person has agreed
\nin writing (i) to hold such source code in confidence and take reasonable steps
\nto preserve the secrecy of such source code; and (ii) not to use such source
\ncode for any purpose except to support such person’s internal use of such source
\ncode or to modify such source code solely for the purpose of internally using
\nsuch modifications. VERITAS has not knowingly taken or knowingly failed to take
\nany action that, directly or indirectly, has caused any Intellectual Property
\nRights in source code of material VERITAS Products to enter the public domain
\nsuch as would have a Material Adverse Effect on VERITAS.<\/p>\n
3.16 Fees and Expenses. Except for the fees and expenses set forth in
\nVERITAS’ engagement letter with Donaldson, Lufkin & Jenrette Securities
\nCorporation (“DLJ”), a copy of which has been provided to STI and SSI, neither
\nVERITAS, Newco nor any of the VERITAS Subsidiaries has paid or become obligated
\nto pay any fee or commission to any broker, finder or intermediary in connection
\nwith the transactions contemplated by this Agreement and the Ancillary
\nAgreements.<\/p>\n
3.17 Insurance. The members of the VERITAS Group maintain fire and
\ncasualty, general liability, business interruption, directors and officers,
\nproduct liability and sprinkler and water damage insurance that they believe to
\nbe reasonably prudent for their respective businesses.<\/p>\n
3.18 Ownership of Property. Except for VERITAS Permitted Encumbrances,
\nthe VERITAS Group owns, or at the Effective Time will own, the VERITAS Assets,
\nfree and clear of all Encumbrances. All real and personal property included in
\nthe VERITAS Assets is operational and suitable for its intended use, subject to
\nordinary wear and tear. To VERITAS’ Knowledge, no member of the VERITAS Group is
\nin violation in any material respect with any zoning, building or safety
\nordinance, regulation or requirement or other law or regulation applicable to
\nthe operation of its respective owned or leased properties (the violation of
\nwhich would have a Material Adverse Effect on VERITAS).<\/p>\n
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\n 50<\/p>\n
3.19 Environmental Matters.<\/p>\n
(a) During the period that VERITAS has leased or owned its
\nrespective properties or owned or operated their respective facilities, there
\nhave been, to VERITAS’ Knowledge, no disposals, releases or threatened releases
\nof Hazardous Materials on, from, under or about such properties or facilities
\nwhich would cause a Material Adverse Effect on Newco. To VERITAS’ Knowledge
\nthere is no presence, disposals, releases or threatened releases of Hazardous
\nMaterials on, from, under or about any of such properties or facilities, which
\nmay have occurred prior to VERITAS having taken possession of any of such
\nproperties or facilities which would cause a Material Adverse Effect on the
\nNewco.<\/p>\n
(b) None of the properties or facilities of VERITAS is or has
\nbeen the subject of an Environmental Violation, which would cause a Material
\nAdverse Effect on Newco. During the time that VERITAS has owned or leased its
\nrespective properties and facilities, none of VERITAS nor, to VERITAS’
\nKnowledge, any third party, has used, generated, manufactured or stored on,
\nunder or about such properties or facilities or transported to or from such
\nproperties or facilities any Hazardous Materials (except those Hazardous
\nMaterials associated with general office use or janitorial supplies) in a manner
\nwhich would result in a Material Adverse Effect on Newco.<\/p>\n
(c) During the time that any members of the VERITAS Group have
\nowned or leased their respective properties and facilities, there has been no
\nlitigation brought or, to VERITAS’ Knowledge, threatened against any of them by,
\nor any settlement reached by any of them with, any party or parties concerning
\nthe presence, disposal, release or threatened release of any Hazardous Materials
\non, from or under any of such properties or facilities or relating to any
\nalleged Environmental Violation, except for litigation or settlement which would
\nnot have a Material Adverse Effect on Newco.<\/p>\n
3.20 Interested Party Transactions. Except as disclosed in the VERITAS
\nSEC Documents filed prior to the date of this Agreement, no officer or director
\nof VERITAS, or any “affiliate” or “associate” (as those terms are defined in
\nRule 405 promulgated under the Securities Act) of VERITAS has, either directly
\nor indirectly, a material interest in: (i) any person or entity which purchases
\nfrom or sells, licenses or furnishes to the VERITAS Group in connection with the
\nVERITAS Business, any goods, property, technology or intellectual or other
\nproperty rights or services; or (ii) any VERITAS Contract, which in the case of
\neither subpart (i) or (ii) would have a Material Adverse Effect on VERITAS.<\/p>\n
3.21 Fairness Opinion. VERITAS’ Board of Directors has received an
\nopinion dated as of the date hereof from DLJ to the effect that, as of the date
\nhereof, the VERITAS Exchange Ratio is fair to VERITAS from a financial point of
\nview.<\/p>\n
3.22 Title to and Condition and Sufficiency of VERITAS Assets. The
\nVERITAS Group owns, or at the Effective Time will own, all of the VERITAS Assets
\nand has good and marketable title in and to all of the VERITAS Assets, free and
\nclear of all Encumbrances whatsoever, other than <\/p>\n
-42-
\n 51<\/p>\n
the VERITAS Permitted Encumbrances. The VERITAS Assets constitute all assets,
\nproperties, rights, VERITAS Contracts and Intellectual Property Rights that are
\nnecessary or required for the Conduct of the VERITAS Business without (i) the
\nneed to purchase, license or acquire any other material asset or property; (ii)
\nviolating any contractual rights of any third party; or (iii) infringing,
\nmisappropriating or misusing any software or Intellectual Property Rights of any
\nthird party in a manner, except for such assets, properties, rights, contracts,
\nsoftware and Intellectual Property Rights, the absence of which would not have a
\nMaterial Adverse Effect on VERITAS. Except for the consents and approvals
\nidentified on Section 3.22 of the VERITAS Disclosure Letter, title to all
\nVERITAS Assets is freely transferable to VERITAS free and clear of all
\nEncumbrances, other than VERITAS Permitted Encumbrances, and without obtaining
\nthe consent or approval of any person, except where the failure to transfer the
\nVERITAS Asset would not have a Material Adverse Effect on Newco.<\/p>\n
3.23 No Restrictive Agreements. Other than this Agreement and the
\nAncillary Agreements Neither VERITAS nor any of the VERITAS Assets is bound or
\nmaterially and adversely affected by, any judgment, injunction, order, decree,
\ncontract, covenant or agreement (noncompete or otherwise) that restricts or
\nprohibits (or purports to restrict or prohibit) the Conduct of the VERITAS
\nBusiness or from competing for the sale of VERITAS Products anywhere in the
\nworld (including without limitation any contracts, covenants or agreements
\nrestricting the geographic area in which the VERITAS Business may sell, license,
\nmarket, distribute or support any VERITAS Products or restricting the markets,
\ncustomers or industries that Newco may address after the Effective Time in the
\nConduct of the VERITAS Business) (collectively, “RESTRICTIVE AGREEMENTS”), in a
\nmanner which will have a Material Adverse Effect upon Newco.<\/p>\n
3.24 Supplier and Customer Relationships. To VERITAS’ Knowledge,
\nVERITAS has good commercial working relationships with the customers for the
\nVERITAS Business, and since January 1, 1998, no customer or supplier has
\ncanceled or otherwise terminated any material relationship with VERITAS, or
\nmaterially decreased or limited its purchases or provision of materials supplied
\nto VERITAS from the corresponding period in 1997, where any of the foregoing
\nactions would cause a Material Adverse Effect on VERITAS, and to VERITAS’
\nKnowledge, no customer or supplier has threatened to take any such action.<\/p>\n
3.25 Product and Inventory Status.<\/p>\n
(a) Product Quality, Warranty Claims. All VERITAS Products
\nmanufactured, sold, licensed, leased or delivered in connection with the VERITAS
\nBusiness conform in all material respects to applicable contractual commitments,
\nexpress and implied warranties, and to VERITAS’ Knowledge, there is no material
\nLiability (nor any basis for any present or future action, suit, proceeding,
\nhearing, investigation, charge, complaint, claim or demand giving rise to any
\nmaterial Liability) for replacement or repair thereof or other damages in
\nconnection therewith, except for such conformance as would not have a Material
\nAdverse Effect on Newco.<\/p>\n
-43-
\n 52<\/p>\n
(b) Inventory. To VERITAS’ Knowledge, its inventories recorded
\non the VERITAS Financial Statements consist primarily of materials used in
\nsoftware products, related supplies and packaging materials, all of which are
\nmerchantable, fit for the purpose for which they were procured or manufactured,
\nand are in a condition of quantity usable in the ordinary course of business and
\nto VERITAS’ Knowledge, none of these inventories are obsolete, damaged or
\ndefective, except in each case where the failure of these inventories to be so
\nwould not have a Material Adverse Effect on Newco or where a sufficient
\nprovision with respect to the possibility of such failure is included in the
\nVERITAS Financial Statements.<\/p>\n
3.26 Tax Representations. VERITAS and Newco are aware of no plan or
\nintention by VERITAS or Newco or any corporation related to VERITAS immediately
\nafter the Effective Time to repurchase any Newco capital stock issued pursuant
\nto this Agreement from any person or entity that is or will become a Newco
\nstockholder by reason of the transactions contemplated by this Agreement.
\nVERITAS has not redeemed any shares of its capital stock or paid any
\nextraordinary dividend in contemplation of the Merger.<\/p>\n
4. STI AND SSI COVENANTS<\/p>\n
4.1 Advice of Changes. During the period from the date of this
\nAgreement until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, SSI will promptly advise VERITAS in
\nwriting, (a) of any event occurring subsequent to the date of this Agreement
\nthat would reasonably be likely to render any representation or warranty
\ncontained in Section 2 of this Agreement, if made on or as of the date of such
\nevent or the Effective Time, untrue or inaccurate in any material respect, (b)
\nof any event that would reasonably be likely to have a Material Adverse Effect
\non the Group Business, and (c) of any material breach by STI or SSI of any
\ncovenant or agreement contained in this Agreement; provided, however, that the
\ndelivery of, or failure to deliver, any notice pursuant to this Section 4.1
\nshall not limit or otherwise affect the remedies available hereunder.<\/p>\n
4.2 Maintenance of Business. During the period from the date of this
\nAgreement until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, the Contributed Company Group and the
\nContributing Companies will use reasonable efforts to carry on and preserve the
\nGroup Business and relationships with customers, suppliers, employees and others
\nrelated to Group Business in substantially the same manner as it has prior to
\nthe date hereof.<\/p>\n
4.3 Conduct of Business. During the period from the date of this
\nAgreement until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, the Contributed Company Group and SSI
\nwill continue to conduct the Group Business and maintain business relationships
\nrelated to the Group Business in the ordinary and usual course consistent with
\npast practice and, except as otherwise disclosed herein or in the SSI Disclosure
\nLetter, they will not, without the prior written consent of VERITAS, which
\nconsent shall not be unreasonably withheld or delayed, take any of the following
\nactions where it would cause a Material Adverse Effect on the Group Business:<\/p>\n
-44-
\n 53<\/p>\n
(a) cause any of the Contributed Companies to borrow any money
\nexcept for (A) working capital (including for Taxes) obtained from SSI or STI
\npursuant to the Intercompany Revolving Loan Agreement or (B) amounts that are
\nnot in the aggregate material to the financial condition of the Group Business,
\ntaken as a whole or (C) pursuant to existing credit facilities;<\/p>\n
(b) cause any of the Group Assets to become subject to any
\nEncumbrance, except for Permitted Encumbrances and except for Encumbrances
\narising under existing credit facilities;<\/p>\n
(c) dispose of any of Group Assets except in the ordinary
\ncourse of business, consistent with past practice;<\/p>\n
(d) grant any exclusive license to any of the Seagate IP
\nRights or grant any other license to Seagate IP Rights except in the ordinary
\ncourse of business, consistent with past practice;<\/p>\n
(e) materially amend or terminate any of the Material
\nContributed Contracts except those amended or terminated in the ordinary course
\nof its business, consistent with past practice.<\/p>\n
(f) cause any of the Contributed Companies to declare, set
\naside or pay any cash or stock dividend or other distribution in respect of
\ncapital stock, or redeem or otherwise acquire any of its capital stock (other
\nthan repurchases of unvested shares of SSI Common Stock pursuant to arrangements
\nwith terminated employees or consultants in the ordinary course of business,
\nconsistent with past practice).<\/p>\n
(g) cause any of the Contributed Companies to make any loans
\nor grant any guarantees, except (A) loans in the ordinary course of business,
\nconsistent with past practice, (B) advances that are not material in amount or
\n(C) loans pursuant to any Section 401(a) Plan;<\/p>\n
(h) waive or release any of the material Claim Assets;<\/p>\n
(i) cause any member of the Contributed Companies Group to
\nmerge, consolidate or reorganize with or acquire any entity that is not a member
\nof the Contributed Companies Group, except as set forth in the SSI Disclosure
\nLetter, except for transactions that are not material and except for any
\ndivestiture, spin off or other merger involving SSI’s IMG group and as otherwise
\nset forth in the last sentence of Section 4.11(a);<\/p>\n
(j) amend the Certificate of Incorporation or Bylaws of any of
\nthe Contributed Companies;<\/p>\n
(k) implement any layoffs or reductions in force involving a
\nmaterial number of Employees such as will trigger WARN Act responsibilities or
\nliabilities;<\/p>\n
(l) fail to pay or withhold any material Tax related to the
\nGroup Business when due to be paid or withheld;<\/p>\n
-45-
\n 54<\/p>\n
(m) change accounting methods; or<\/p>\n
(n) agree to take, or permit any of their subsidiaries to take
\nor agree to take, or enter into negotiations with respect to, any of the actions
\ndescribed in the preceding clauses in this Section 4.3.
\n Notwithstanding the foregoing, nothing in this Section 4.3
\nhereof shall restrict or limit the conduct of any business of SSI, STI or their
\ndirect or indirect subsidiaries other than the Group Business and other than
\nwith respect to the Group Assets and nothing herein shall restrict or limit the
\nconduct of any business of the Contributed Company Group or with respect to the
\nGroup Assets other than as set forth in this Section 4.3.<\/p>\n
4.4 SSI Corporate Approvals. STI agrees to vote in favor of the Seagate
\nTransaction at the meeting of SSI stockholders held to approve the Seagate
\nTransaction. STI and SSI agree to vote in favor of the contribution to Newco of
\nthe Contributed Stock and Assets at each meeting of stockholders of the
\nContributing Companies. Without limiting the foregoing, STI and SSI shall vote
\nin favor of the Seagate Transaction at each and every stockholders meeting, or
\nwith respect to any written consent in lieu thereof, at which any proposal
\nregarding any such transactions, including the contribution and transfer of the
\nContributed Stock and Assets, is considered. The respective Boards of Directors
\nof each of STI, SSI, the Contributing Companies and the Contributed Company
\nGroup have approved the Seagate Transaction and this Agreement.<\/p>\n
4.5 Letter of SSI’s Accountants. SSI shall use its reasonable best
\nefforts to cause to be delivered to VERITAS a letter of Ernst & Young LLP dated
\na date within two business days before the date on which the Form S-4 shall
\nbecome effective and addressed to VERITAS, in form and substance reasonably
\nsatisfactory to VERITAS and customary in scope and substance for letters
\ndelivered by independent public accountants in connection with registration
\nstatements similar to the Form S-4 (“COMFORT LETTER”).<\/p>\n
4.6 Prospectus\/Proxy Statement. SSI will mail to its stockholders and
\noption holders in a timely manner, for the purpose of evaluating the Seagate
\nTransaction, the Prospectus\/Proxy Statement in the Form S-4. SSI, VERITAS and
\nNewco will prepare and file the Proxy Statement\/Prospectus with the SEC as
\npromptly as practicable, and each will use its respective best reasonable
\nefforts to cause the Form S-4 to become effective as soon after such filing as
\npracticable. In this regard, SSI, VERITAS and Newco will advise each other
\npromptly as to the time at which the Form S-4 becomes effective and of the
\nissuance by the SEC of any stop order suspending the effectiveness of the Form
\nS-4 or the initiation of any proceedings for such purpose and each will use its
\nrespective reasonable best efforts to prevent the issuance of any stop order and
\nto obtain as soon as possible the lifting thereof, if issued. Until the
\nEffective Time, SSI will advise VERITAS and Newco promptly of any requirement of
\nthe SEC for any amendment or supplement of the Form S-4 or for additional
\ninformation, and will not at any time file any amendment of or supplement to the
\nprospectus contained therein (or to the prospectus filed pursuant to Rule 424(b)
\nof the SEC) which shall not have been previously submitted to SSI in reasonable
\ntime prior to the proposed filing thereof or to which SSI shall reasonably
\nobject or which is not in compliance in all material respects <\/p>\n
-46-
\n 55
\nwith the Securities Act and the rules and regulations issued by the SEC
\nthereunder. None of the information relating to SSI (or, to Seagate’s Knowledge,
\nany other person, contained in any document, certificate or other writing
\nfurnished or to be furnished by SSI) included in (i) the Prospectus\/Proxy
\nStatement at the time the Prospectus\/Proxy Statement is mailed or at the
\nEffective Time, as then amended or supplemented, or (ii) the Form S-4 at the
\ntime the Form S-4 becomes effective or at the Effective Time, as then amended or
\nsupplemented, will contain any untrue statement of a material fact or will omit
\nto state any material fact required to be stated therein or necessary to make
\nthe statements therein, in light of the circumstances in which they were made,
\nnot misleading or necessary to correct any statement which has become false or
\nmisleading in any earlier communication. From and after the date the Form S-4
\nbecomes effective and until the Effective Time, if any event known to SSI occurs
\nas a result of which the Prospectus would include an untrue statement of a
\nmaterial fact or omit to state a material fact required to be stated therein or
\nnecessary to make the statements therein not misleading, or if it is necessary
\nat any time to amend the Form S-4 or the Prospectus\/Proxy Statement to comply
\nwith the Securities Act, SSI will promptly notify VERITAS and Newco and an
\namended or supplemented Form S-4 or Prospectus\/Proxy Statement will be prepared
\nby VERITAS and Newco which will correct such statement or omission and will use
\nits reasonable best efforts to cause any such amendment to become effective as
\npromptly as possible. The Prospectus\/Proxy Statement, as it relates to SSI and
\ninformation relating to the Group Business, will comply as to form in all
\nmaterial respects with the requirements of the Exchange Act and the rules and
\nregulations thereunder in effect at the time the Prospectus\/Proxy Statement is
\nmailed.<\/p>\n
4.7 Regulatory Approvals. As promptly as reasonably practicable, STI
\nand SSI will themselves, and will cause each member of the Contributed Company
\nGroup, to execute and file, or join in the execution and filing, of any
\napplication or other document that may be necessary in order to obtain the
\nauthorization, approval or consent of any governmental body, federal, state,
\nlocal or foreign, which may be reasonably required, or which VERITAS or Newco
\nmay reasonably request, in connection with the consummation of the transactions
\ncontemplated by this Agreement. STI and SSI will themselves, and will cause each
\nmember of the Contributed Company Group, to use its reasonable efforts to
\npromptly obtain all such authorizations, approvals and consents and will
\ncooperate fully with the other parties in promptly seeking to obtain the same.<\/p>\n
4.8 Necessary Consents. SSI will itself, and will cause each
\nContributing Company and each member of the Contributed Company Group to, use
\nits reasonable efforts to obtain those consents required in connection with the
\nMaterial Contributed Contracts, and to take such other actions as may be
\nnecessary or appropriate for the consummation of the transactions contemplated
\nhereby and to allow Newco to Conduct the Group Business after the Effective
\nTime.<\/p>\n
4.9 Access to Information. From the date of this Agreement until the
\nEffective Time, each of STI and SSI will themselves, and will cause the
\nContributed Company Group, to allow VERITAS and its agents reasonable access to
\nthe files, books, records, technology and offices of SSI and the Contributed
\nCompany Group reasonably requested by VERITAS, but only to the extent <\/p>\n
-47-
\n 56
\nnecessary and relating to the Group Business, including, without limitation, any
\nand all information relating to Contributed Company Group’s Taxes, commitments,
\ncontracts, leases, licenses and real, personal, intellectual and intangible
\nproperty and financial condition. Each of STI and SSI shall use its reasonable
\nefforts to cause its accountants to cooperate with VERITAS and its agents in
\nmaking available to VERITAS all financial information reasonably requested,
\nincluding, without limitation, the right to examine all working papers
\npertaining to all Tax returns and financial statements prepared or audited by
\nsuch accountants. No information or knowledge obtained by any party hereto in
\nany investigation pursuant to this Section 4.9 will affect or be deemed to
\nmodify any representation or warranty contained herein or the conditions to the
\nobligations of the parties to consummate the Merger. All information obtained by
\nVERITAS and its agents pursuant to this Section 4.9 shall be kept confidential
\nin accordance with the confidentiality agreement, between VERITAS, STI, and SSI
\n(the “NONDISCLOSURE AGREEMENT”).<\/p>\n
4.10 Satisfaction of Conditions Precedent. STI and SSI will themselves,
\nand will cause the Contributing Companies and the Contributed Company Group, to
\nuse reasonable efforts to satisfy or cause to be satisfied all the conditions
\nprecedent that are set forth in Section 8 and to cause the Merger, the Seagate
\nTransaction and the other transactions contemplated by this Agreement to be
\nconsummated. Without limiting the foregoing, in connection with the agreements
\nto be reached by the parties subsequent to the date of this Agreement and prior
\nto the Effective Time, the parties agree to negotiate in good faith to reach
\nagreement on all matters to be included in such agreements promptly after the
\nsigning of this Agreement.<\/p>\n
4.11 No Other Negotiations.<\/p>\n
(a) STI and SSI shall, and shall cause each Contributing
\nCompany and each member of the Contributed Company Group and their respective
\nofficers, directors or employees or any investment bankers, attorneys or other
\nadvisors or representatives retained by any of them, to cease any and all
\nexisting activities, discussions or negotiations with any parties conducted
\nheretofore with respect to any Contributed Group Alternative Proposal (as
\ndefined below). From and after the date of this Agreement until the earlier of
\nthe Effective Time or the termination of this Agreement in accordance with its
\nterms, STI and SSI shall not authorize or permit any Contributing Company or any
\nmember of the Contributed Company Group (or any of their respective officers,
\ndirectors or employees or any investment bankers, attorneys or other advisors or
\nrepresentatives retained by any of them), directly or indirectly, (i) to
\nsolicit, initiate or encourage the submission of any Contributed Group
\nAlternative Proposal, (ii) to engage in discussions or negotiations regarding,
\nprovide non-public information with respect to, or to take any other action
\nintended, designed or reasonably likely to facilitate any inquiries or the
\nmaking of any proposal that constitutes, or would reasonably be expected to lead
\nto, any Contributed Group Alternative Proposal, (iii) to enter into any letter
\nof intent, agreement in principle, acquisition agreement or other similar
\nagreement with any person with respect to any Contributed Group Alternative
\nProposal, or (iv) to make or authorize any statement, recommendation or
\nsolicitation in support of any Contributed Group Alternative Proposal. For
\npurposes of this Agreement, “CONTRIBUTED GROUP ALTERNATIVE PROPOSAL” means any
\ninquiry, <\/p>\n
-48-
\n 57<\/p>\n
proposal or offer from any person or “group” (as defined under Section
\n13(d) of the Exchange Act and the rules and regulations thereunder) relating to
\nany direct or indirect (a) acquisition, purchase, sale or other disposition of
\nany of the Group Assets (other than in the ordinary course and disposal of worn
\nor obsolete items consistent with past practice), (b) acquisition, purchase,
\nsale or other disposition of any of the outstanding voting securities of any
\nmember of the Contributed Company Group, or (c) merger, consolidation, business
\ncombination, sale of any of the assets, recapitalization, liquidation,
\ndissolution or similar transaction involving any member of the Contributed
\nCompany Group, other than the transactions contemplated by this Agreement.
\nNotwithstanding the foregoing or any other provision of this Agreement, other
\nthan actions directly relating to the Contributed Company Group, the Group
\nAssets or the Group Business, neither STI nor SSI shall be restricted or limited
\nin any way from entering into discussions, negotiations or agreements of any
\nkind or from taking any other actions of any kind, including, without
\nlimitation, transactions relating to the sale of any of its or its direct or
\nindirect subsidiaries (other than any member(s) of the Contributed Company
\nGroup), equity securities (other than the Contributed Stock), or assets (other
\nthan Group Assets), or the merger, consolidation, business combination,
\nrecapitalization, liquidation, dissolution or similar transaction involving STI,
\nSSI or any of their respective direct or indirect subsidiaries (other than the
\nContributed Company Group).<\/p>\n
(b) In addition to the obligations set forth in Section
\n4.11(a), SSI and STI, as promptly as practicable, shall advise VERITAS orally
\nand in writing of any Contributed Group Alternative Proposal or of any request
\nfor non-public information which SSI reasonably believes would lead to a
\nContributed Group Alternative Proposal, or of any Contributed Group Alternative
\nProposal, the material terms and conditions of such request or Contributed Group
\nAlternative Proposal, and the identity of the person making any such request,
\nContributed Group Alternative Proposal or inquiry. SSI will keep VERITAS
\ninformed in all material respects of the status and details (including material
\namendments) of any such request or Contributed Group Alternative Proposal.<\/p>\n
4.12 Books and Records. If, in order properly to prepare documents
\nrequired to be filed with governmental authorities (including taxing
\nauthorities) or its financial statements, it is necessary that any party hereto
\nbe furnished with additional information relating to the Group Assets or any
\nmember of the Contributed Company Group, and such information is in the
\npossession of a Contributing Company, then STI and SSI, for themselves and the
\nother Contributing Companies, agree to use their good faith efforts to promptly
\nfurnish such information to the party needing such information, at SSI’s cost
\nand expense. This Section 4.12 shall survive Closing for two years.<\/p>\n
4.13 Transitional Support. As soon as feasible after the date hereof,
\nSSI and Newco shall use good faith, commercially reasonable efforts to negotiate
\na Transition Services and Facilities Use Agreement the principal terms of which
\nare as summarized on Exhibit 4.13 attached hereto (the “TRANSITION SERVICES AND
\nFACILITIES USE AGREEMENT”).<\/p>\n
4.14 Development Agreement and Cross-License Agreement. The parties on
\nthe date of this Agreement shall have signed the Development and License
\nAgreement among Newco, <\/p>\n
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\n 58<\/p>\n
VERITAS and STI attached hereto as Exhibit 4.14A (the “DEVELOPMENT AGREEMENT”)
\nand the Cross-License and OEM Agreement between SSI, Newco, and VERITAS (the
\n“CROSS-LICENSE AGREEMENT”) attached hereto as Exhibit 4.14B.<\/p>\n
4.15 Settlement of Intercompany Accounts. At the Closing, STI and SSI
\nand their subsidiaries (other than the Contributed Company Group) shall pay to
\nthe Contributed Company Group, or the Contributed Company Group shall pay to STI
\nand SSI or their subsidiaries (other than the Contributed Company Group), as
\nappropriate, the balance owing on the Intercompany Accounts.<\/p>\n
4.16 Modification of Joint Contributed Agreements. As soon as feasible
\nafter the date hereof, SSI and Newco will negotiate to agree upon a mutually
\nacceptable arrangement between SSI and Newco and, if required, other parties
\nwith respect to the treatment of Contributed Contracts on Schedule 4.16, for
\nexample, with distributors who distribute both Group Products and the products
\nof any business retained by the Contributing Companies or their subsidiaries
\n(“JOINT CONTRIBUTED AGREEMENTS”), such that Newco and SSI and its subsidiaries,
\nincluding IMG, shall each receive an equitable share of the payments and the
\nLiabilities with respect to Group Products and each of the other products
\npursuant to the Joint Contributed Agreements, respectively, as the case may be
\n(including, without limitation, price protection, accumulated rebate credits,
\nproduct returns, warranty support and similar Liabilities).<\/p>\n
4.17 Management Employment Contracts. STI and SSI will informally
\nencourage (without having to incur any cost) each of the Seagate employees
\nlisted on Exhibit 4.17 to execute their respective Management Employment
\nContracts.<\/p>\n
4.18 Stockholder and Registration Rights Agreement. The Newco Common
\nStock to be issued in the Seagate Transaction to SSI shall be entitled to
\nregistration rights on Form S-3 as provided in the Registration Rights
\nAgreement, in the form attached hereto as Exhibit 4.18A (the “RIGHTS AGREEMENT”)
\nand shall be subject to the other rights and restrictions contained in the
\nStockholders Agreement in the form attached hereto as Exhibit 4.18B (the
\n“STOCKHOLDERS AGREEMENT”); which Rights Agreement and Stockholders Agreement
\nshall be executed by Newco and VERITAS as of the Effective Time.<\/p>\n
4.19 Seagate IP Rights. As soon as feasible after the date hereof SSI
\nand VERITAS shall confirm whether the Intellectual Property Rights and
\nIntangible Assets required for the production, development, marketing and
\nsupport of the Group Products are included in the Intellectual Property Rights
\nincluded in the Group Assets duly transferred to Newco pursuant hereto. If such
\nitems are discovered then the Group Assets shall be expanded to include, and
\nthere shall be duly assigned to Newco by the appropriate Contributing Company
\nall such Intellectual Property Rights and Intangible Assets required for the
\nproduction of the Group Products which were acquired or developed with funds
\ncharged to the Group Financial Statements, or if not so charged to the Group
\nFinancial Statements, then Newco shall be provided a non-exclusive, fully paid,
\nperpetual license for use of such Intellectual Property Rights and Intangible
\nAssets for the purpose of producing, developing, marketing and supporting the
\nGroup Products. If the Intellectual Property Rights and Intangible<\/p>\n
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\n 59
\nAssets included or added to the Group Assets are also required for the
\nproduction of the products produced by SSI and its subsidiaries (other than the
\nGroup Products) then Newco (or its subsidiary, which receives said Intellectual
\nProperty Rights and Intangible Assets constituting Group Assets) shall provide
\nSSI, or its designated subsidiary, with a fully paid, non-exclusive, perpetual
\nlicense for use of such Intellectual Property Rights and Intangible Assets for
\nthe purpose of producing such other products. This Section 4.19 shall survive
\nClosing for two years.<\/p>\n
5. VERITAS AND NEWCO COVENANTS<\/p>\n
5.1 Advice of Changes. During the period from the date of this
\nAgreement until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, VERITAS will promptly advise STI and SSI
\nin writing (a) of any event occurring subsequent to the date of this Agreement
\nthat would reasonably be likely to render any representation or warranty of
\nVERITAS or Newco contained in this Agreement, if made on or as of the date of
\nsuch event or the Effective Time, untrue or inaccurate, (b) of any event that
\nwould reasonably be likely to have a Material Adverse Effect on VERITAS, and (c)
\nof any material breach by VERITAS or Newco of any covenant or agreement
\ncontained in this Agreement; provided, however, that the delivery of, or failure
\nto deliver, any notice pursuant to this Section 5.1 shall not limit or otherwise
\naffect the remedies available hereunder.<\/p>\n
5.2 Maintenance of Business. During the period from the date of this
\nAgreement until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, VERITAS will use its best efforts to
\ncarry on and preserve its business and its relationships with customers,
\nsuppliers, employees and others in substantially the same manner as it has prior
\nto the date hereof.<\/p>\n
5.3 Conduct of Business. During the period from the date of this
\nAgreement until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, VERITAS will continue to conduct its
\nbusiness and maintain its business relationships in the ordinary and usual
\ncourse and consistent with past practice and, except as otherwise disclosed
\nherein or in the VERITAS Disclosure Letter, it will not, without the prior
\nwritten consent of SSI, which consent shall not be unreasonably withheld or
\ndelayed, take any of the following actions where it would cause a Material
\nAdverse Effect on VERITAS:<\/p>\n
(a) borrow any money except for (A) amounts that are not in
\nthe aggregate material to the financial condition of VERITAS and its
\nsubsidiaries, taken as a whole or (B) pursuant to existing credit facilities;<\/p>\n
(b) cause any of the VERITAS Assets to become subject to any
\nEncumbrance, except for VERITAS Permitted Encumbrances and except for VERITAS
\nEncumbrances arising under existing credit facilities;<\/p>\n
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\n 60<\/p>\n
(c) dispose of any of VERITAS Assets except in the ordinary
\ncourse of business, consistent with past practice;<\/p>\n
(d) declare, set aside or pay any cash or stock dividend or
\nother distribution in respect of capital stock, or redeem or otherwise acquire
\nany of its capital stock (other than pursuant to arrangements with terminated
\nemployees or consultants in the ordinary course of business, consistent with
\npast practice) or issue capital stock representing more than a 35% interest in
\nthe total outstanding securities of VERITAS;<\/p>\n
(e) waive or release any material claims against a third
\nparty;<\/p>\n
(f) merge, consolidate or reorganize with, or acquire any
\nentity, except as set forth in the VERITAS Disclosure Letter and except for
\ntransactions in which the aggregate consideration is below $100 million;<\/p>\n
(g) amend the Certificate of Incorporation or Bylaws of
\nVERITAS or any of its subsidiaries (except as set forth in Exhibit 5.3(g) or as
\notherwise expressly contemplated by this Agreement);<\/p>\n
(h) implement any layoffs or reductions in force involving a
\nnumber of VERITAS employees such as will trigger WARN Act responsibilities or
\nliabilities;<\/p>\n
(i) fail to pay or withhold any material Tax when due to be
\npaid or withheld; or<\/p>\n
(j) agree to take, or permit any VERITAS entity to take or
\nagree to take, or enter into negotiations with respect to, any of the actions
\ndescribed in the preceding clauses in this Section 5.3.<\/p>\n
Notwithstanding the foregoing, nothing in this Section 5.3 shall
\nrestrict or limit the conduct of any business of VERITAS or its direct or
\nindirect subsidiaries or the use or disposition of the VERITAS Assets, other
\nthan as set forth in this Section 5.3.<\/p>\n
5.4 Stockholder Approval. VERITAS will call the VERITAS Stockholders
\nMeeting, to be held within 45 days after the Form S-4 shall have been declared
\neffective by the SEC, to submit the Merger, the Seagate Transaction and any
\nrelated matters for the consideration and approval of the VERITAS stockholders.
\nSubject to Section 9.1(i) and (j), the Prospectus\/Proxy Statement will include a
\nstatement to the effect that VERITAS’ Board of Directors is recommending that
\nVERITAS stockholders vote in favor of the Merger and the Seagate Transaction.
\nSuch meeting will be called, held and conducted, and any proxies will be
\nsolicited, in compliance with applicable law.<\/p>\n
5.5 Letter of VERITAS’ Accountants. VERITAS shall use its reasonable
\nbest efforts to cause to be delivered to STI and SSI a letter of Ernst & Young
\nLLP, dated a date within two business days before the date on which the Form S-4
\nshall become effective and addressed to each of the Contributing Companies, in
\nform and substance reasonably satisfactory to STI and SSI and <\/p>\n
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\n 61<\/p>\n
customary in scope and substance for letters delivered by independent public
\naccountants in connection with registration statements similar to the Form S-4.<\/p>\n
5.6 Prospectus\/Proxy Statement. VERITAS will mail to its stockholders
\nin a timely manner, for the purpose of considering and voting upon the Merger
\nand the Seagate Transaction at the VERITAS Stockholders Meeting, the
\nProspectus\/Proxy Statement in the Form S-4. VERITAS and Newco will prepare and
\nfile the Prospectus\/Proxy Statement with the SEC as promptly as practicable, and
\neach will use its respective best reasonable efforts to cause the Form S-4 to
\nbecome effective as soon after such filing as practicable. In this regard,
\nVERITAS and Newco will advise STI and SSI promptly as to the time at which the
\nForm S-4 becomes effective and of the issuance by the SEC of any stop order
\nsuspending the effectiveness of the Form S-4 or the initiation of any
\nproceedings for such purpose and each will use its respective reasonable best
\nefforts to prevent the issuance of any stop order and to obtain as soon as
\npossible the lifting thereof, if issued. Until the Effective Time, VERITAS and
\nNewco will advise STI and SSI promptly of any requirement of the SEC for any
\namendment or supplement of the Form S-4 or for additional information, and will
\nnot at any time file any amendment of or supplement to the prospectus contained
\ntherein (or to the prospectus filled pursuant to Rule 424(b) of the SEC) (the
\n“PROSPECTUS”) which shall not have been previously submitted to STI and SSI in
\nreasonable time prior to the proposed filing thereof or to which STI or SSI
\nshall reasonably object or which is not in compliance in all material respects
\nwith the Securities Act and the rules and regulations issued by the SEC
\nthereunder. None of the information relating to VERITAS or Newco (or, to
\nVERITAS’ or Newco’s knowledge, any other person, contained in any document,
\ncertificate or other writing furnished or to be furnished by VERITAS) included
\nin (i) the Prospectus\/Proxy Statement by Newco and\/or VERITAS at the time the
\nProspectus\/Proxy Statement is mailed or at the time of the meeting of VERITAS
\nstockholders to vote on the Merger and the Seagate Transaction or at the
\nEffective Time, as then amended or supplemented, or (ii) the Form S-4 at the
\ntime the Form S-4 becomes effective, as then amended or supplemented, will
\ncontain any untrue statement of a material fact or will omit to state any
\nmaterial fact required to be stated therein or necessary to make the statements
\ntherein, in light of the circumstances in which they were made, not misleading
\nor necessary to correct any statement which has become false or misleading in
\nany earlier communication with respect to the solicitation of proxies for the
\nVERITAS Stockholder Meeting. From and after the date the Form S-4 becomes
\neffective and until the Effective Time, if any event known to VERITAS or Newco
\noccurs as a result of which the Prospectus\/Proxy Statement would include an
\nuntrue statement of a material fact or omit to state a material fact required to
\nbe stated therein or necessary to make the statements therein not misleading, or
\nif it is necessary at any time to amend the Form S-4 or the Prospectus\/Proxy
\nStatement to comply with the Securities Act, VERITAS and Newco will promptly
\nnotify STI and SSI and will prepare an amended or supplemented Form S-4 or
\nProspectus\/Proxy Statement which will correct such statement or omission and
\nwill use its reasonable best efforts to cause any such amendment to become
\neffective as promptly as possible. The Prospectus\/Proxy Statement, as it relates
\nto VERITAS and Newco, will comply as to form in all material respects with the
\nrequirements of the Exchange Act and the rules and regulations thereunder in
\neffect at the time the Prospectus\/Proxy Statement is mailed.<\/p>\n
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\n 62<\/p>\n
5.7 State Securities Law Compliance. VERITAS and Newco shall use their
\nrespective reasonable best efforts to (i) qualify the Newco Common Stock to be
\nissued pursuant to the Merger and the Seagate Transaction under the state
\nsecurities or “blue sky” laws of every jurisdiction of the United States in
\nwhich (a) any registered stockholder of VERITAS has an address on the records of
\nVERITAS’ transfer agent on the record date for determining the VERITAS
\nstockholders entitled to notice of and to vote on the Merger and the Seagate
\nTransaction or any other party receiving Newco securities hereunder resides and
\n(b) a Nasdaq Stock Market or other exemption from the qualification requirements
\nunder such laws is unavailable, and (ii) qualify the Newco Options to be granted
\nin exchange for Exchanged SSI Options to be assumed by VERITAS pursuant hereto
\nunder the state securities or “blue sky” laws of every jurisdiction of the
\nUnited States in which (a) the records of VERITAS, STI, or SSI, as of the
\nEffective Time, indicate that a holder of such options resides and (b) a Nasdaq
\nStock Market or other exemption from the qualification requirements under such
\nlaws is unavailable.<\/p>\n
5.8 Regulatory Approvals. As promptly as reasonably practicable,
\nVERITAS and Newco will execute and file, or join in the execution and filing, of
\nany application or other document that may be necessary in order to obtain the
\nauthorization, approval or consent of any governmental body, federal, state,
\nlocal or foreign which may be reasonably required, or which they may reasonably
\nrequest, in connection with the consummation of the transactions contemplated by
\nthis Agreement. VERITAS and Newco will each use its respective reasonable
\nefforts to promptly obtain all such authorizations, approvals and consents and
\nwill cooperate fully with the other parties in promptly seeking to obtain all
\nsuch authorizations, approvals, and consents.<\/p>\n
5.9 Necessary Consents. VERITAS and Newco will each use its respective
\nreasonable efforts to obtain such written consents under the Material VERITAS
\nContracts and to take such other actions as may be necessary or appropriate to
\nallow the consummation of the transactions contemplated hereby and to allow
\nVERITAS and Newco to carry on VERITAS’ business and the Group Business after the
\nEffective Time.<\/p>\n
5.10 Access to Information. From the date of this Agreement until the
\nEffective Time, VERITAS and Newco will allow the Contributing Companies and
\ntheir agents reasonable access to the files, books, records, technology and
\noffices of VERITAS or Newco reasonably requested by the Contributing Companies
\nincluding, without limitation, any and all information relating to Taxes,
\ncommitments, contracts, leases, licenses and real, personal, intellectual and
\nintangible property and financial condition. VERITAS will use its reasonable
\nefforts to cause its accountants to cooperate with the Contributing Companies
\nand their agents in making available to such parties all financial information
\nreasonably requested, including, without limitation, the right to examine all
\nworking papers pertaining to all Tax returns and financial statements prepared
\nor audited by such accountants. No information or knowledge obtained by any
\nparty hereto in any investigation pursuant to this Section will affect or be
\ndeemed to modify any representation or warranty contained herein or the
\nconditions to the obligations of the parties to consummate the Merger and the
\nSeagate Transaction. <\/p>\n
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\n 63<\/p>\n
All information obtained by the Contributing Companies or their agents pursuant
\nto this Section shall be kept confidential in accordance with the Nondisclosure
\nAgreement.<\/p>\n
5.11 Books and Records. If, in order properly to prepare documents
\nrequired to be filed with governmental authorities (including taxing
\nauthorities) or its financial statements, it is necessary that any party hereto
\nbe furnished with additional information relating to the Group Assets, and such
\ninformation is in the possession of Newco or VERITAS, then VERITAS and Newco on
\nbehalf of themselves and each member of the VERITAS Group agree to use their
\ngood faith efforts to promptly furnish such information to the party needing
\nsuch information, at VERITAS’ cost and expense. This Section 5.11 shall survive
\nClosing for two years.<\/p>\n
5.12 Transitional Support. As soon as feasible after the date hereof,
\nVERITAS and Newco shall use good faith, commercially reasonable efforts to
\nnegotiate the Transition Services and Facilities Use Agreement.<\/p>\n
5.13 Development Agreement and Cross License Agreement. The Parties
\nshall have signed the Development Agreement and Cross License Agreement as of
\nthe date of this Agreement.<\/p>\n
5.14 Satisfaction of Conditions Precedent. VERITAS and Newco will each
\nuse its respective reasonable best efforts to satisfy or cause to be satisfied
\nall the conditions precedent that are set forth in Section 7 and to cause the
\nMerger and the Seagate Transaction and the other transactions contemplated by
\nthis Agreement to be consummated. Without limiting the foregoing, in connection
\nwith the agreements to be reached by the parties after the date hereof and prior
\nto the Effective Time, the parties agree to negotiate in good faith to reach
\nagreement on all matters to be included in such agreements promptly after the
\nsigning of this Agreement.<\/p>\n
5.15 Voting Agreement. VERITAS will use its reasonable efforts to
\nobtain Voting Agreements in the form attached as Exhibit 5.15A (the “VOTING
\nAGREEMENT”), executed by the VERITAS affiliates listed on Exhibit 5.15B.<\/p>\n
5.16 Group Employee Plans and Benefit Arrangements.<\/p>\n
(a) Newco will adopt the VERITAS Benefit Arrangements and
\nVERITAS Employee Plans and will use reasonable efforts to provide the VERITAS
\nBenefit Arrangements and VERITAS Employee Plans to the transferring Employees as
\nis provided to VERITAS’ employees who are similarly situated as soon as
\npracticable. To the extent that Newco does not have VERITAS Benefit Arrangements
\nand VERITAS Employee Plans in effect in a jurisdiction where there are
\ntransferring Employees, Newco shall adopt plans providing comparable benefits to
\nthe Group Employee plans for said transferring Employees. From and after the
\nEffective Time Newco shall provide all transferring Employees with the
\nopportunity to participate in any employee stock option or other incentive
\ncompensation plan of Newco and its affiliates on substantially the same terms
\nand subject to substantially the same conditions as are available to similarly
\nsituated employees of VERITAS or Newco including beginning a new offering period
\nas soon as possible following the <\/p>\n
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\n 64<\/p>\n
Effective Time if necessary to permit transferring Employees to participate in
\nNewco’s employee stock purchase plan. Prior to the Effective Time, VERITAS,
\nNewco and SSI shall mutually agree upon an integration plan relating to the
\nMerger and the Seagate Transaction which shall include, among other things,
\nprovisions relating to compensation and other equity incentives for Employees.
\nIn addition, at the Effective Time, Newco shall enter into Management Employment
\nContracts (the form of which is attached hereto as Exhibit 5.16) with the Key
\nEmployees who are the Employees and with key employees of VERITAS listed on
\nSchedule 14.15E-2 hereof.<\/p>\n
(b) Waiting Periods, Premiums and Deductibles. Newco shall
\ntake all steps necessary to cause each VERITAS Benefit Arrangement and each
\nVERITAS Employee Plan to waive any “waiting period” or other requirement with
\nrespect to duration of employment with Newco which would prevent a transferring
\nEmployee or beneficiary thereof who is otherwise eligible to participate in such
\nVERITAS Employee Plan and VERITAS Benefit Arrangement from participating in such
\nVERITAS Employee Plan and VERITAS Benefit Arrangement immediately following the
\nEffective Time. Newco shall pro rate any portion of a premium or deductible with
\nrespect to a VERITAS Employee Plan and VERITAS Benefit Arrangement for any
\ntransferring Employee or beneficiary thereof for any plan year that commenced
\nprior to the Effective Time.<\/p>\n
(c) Recognition of Prior Service. Newco shall take all steps
\nnecessary to cause each VERITAS Employee Plan and VERITAS Benefit Arrangement to
\nrecognize each transferring Employee’s length of service under comparable
\nemployee benefit plans maintained by Seagate for purposes of eligibility,
\nparticipation, vesting and benefit accrual in such VERITAS Employee Plan and
\nVERITAS Benefit Arrangement as if such transferring Employee had been employed
\nby Newco for such period.<\/p>\n
(d) Waiver of Restrictions. Newco shall take all steps
\nnecessary to cause each VERITAS Employee Plan which is an “employee welfare
\nbenefit plan” under Section 3(1) of ERISA to waive any restrictions or
\nlimitations with respect to “pre-existing conditions” or prior medical history
\nwhich would apply to transferring Employee or beneficiary thereof who is
\notherwise eligible to participate in such VERITAS Employee Plan and VERITAS
\nBenefit Arrangement from participating in such plan or arrangement without
\nrestriction or limitation.<\/p>\n
5.17 Indemnification and Insurance-VERITAS.<\/p>\n
(a) The Certificate of Incorporation and Bylaws of Newco and
\nVERITAS shall contain the provisions with respect to indemnification and
\nlimitation of liability for monetary damages set forth in the Certificate of
\nIncorporation and Bylaws of VERITAS on the date of this Agreement, which
\nprovisions shall not be amended, repealed or otherwise modified for a period of
\nten years from the Effective Time in any manner that would adversely affect the
\nrights thereunder of individuals who at the Effective Time were directors,
\nofficers, employees or agents of VERITAS, unless such modification is required
\nby law.<\/p>\n
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\n 65
\n (b) From and after the Effective Time, Newco and VERITAS shall
\nhonor, in all respects, all of the indemnity agreements entered into prior to
\nthe date hereof by VERITAS, with its respective officers and directors, whether
\nor not such persons continue in their positions with Newco or VERITAS following
\nthe Effective Time. Following the Effective Time, VERITAS’ form of
\nindemnification agreement shall be adopted as the form of indemnification
\nagreement for Newco and the VERITAS Surviving Corporation shall be afforded the
\nopportunity to enter into such indemnification agreement, and shall be covered
\nby such directors’ and officers’ liability insurance policies as Newco shall
\nhave in effect from time to time.<\/p>\n
(c) After the Effective Time, Newco and VERITAS will, jointly
\nand severally, to the fullest extent permitted under applicable law, indemnify
\nand hold harmless, each present and former director or officer of VERITAS or any
\nof its subsidiaries (collectively, for purposes of this Section 5.17(c), the
\n“INDEMNIFIED PARTIES”) against any costs or expenses (including attorneys’
\nfees), judgments, fines, losses, claims, damages, liabilities and amounts paid
\nin settlement in connection with any claim, action, suit, proceeding or
\ninvestigation, whether civil, criminal administrative or investigative, to the
\nextent arising out of or pertaining to any action or omission in his or her
\ncapacity as a director or officer of VERITAS arising out of or pertaining to the
\ntransactions contemplated by this Agreement or the transactions contemplated
\nhereby for a period of six years after the date hereof. In the event of any such
\nclaim, action, suit, proceeding or investigation (whether arising before or
\nafter the Effective Time), (a) any counsel retained for the defense of the
\nIndemnified Parties for any period after the Effective Time will be reasonably
\nsatisfactory to the Indemnified Parties, (b) after the Effective Time, VERITAS
\nwill pay the reasonable fees and expenses of such counsel, promptly after
\nstatements therefor are received, and (c) VERITAS will cooperate in the defense
\nof any such matter; provided, however, that VERITAS will not be liable for any
\nsettlement effected without its written consent (which consent will not be
\nunreasonably withheld); and provided, further, that, in the event that any claim
\nor claims for indemnification are asserted or made within such six-year period,
\nall rights to indemnification in respect of any such claim or claims will
\ncontinue until the disposition of any and all such claims. The Indemnified
\nParties as a group may be defended by only one law firm (in addition to local
\ncounsel) with respect to any single action, unless there is, under applicable
\nstandards of professional conduct, a conflict on any significant issue between
\nthe positions of any two or more Indemnified Parties.<\/p>\n
(d) For the entire period from and after the Effective Time
\nuntil at least six years after the Effective Time, Newco will cause VERITAS to
\nuse its commercially reasonable efforts to maintain in effect directors’ and
\nofficers’ liability insurance covering those persons who are currently covered
\nby VERITAS’ directors’ and officers’ liability insurance policy (a copy of which
\nhas been heretofore delivered or made available to Seagate) of at least the same
\ncoverage and amounts, containing terms that are no less advantageous with
\nrespect to claims arising at or before the Effective Time than VERITAS’ policies
\nin effect immediately prior to the Effective Time to those applicable to the
\nthen current directors and officers of Newco and VERITAS; provided, however,
\nthat in no event shall Newco or VERITAS be required to expend in excess of 150%
\nof the <\/p>\n
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\n 66<\/p>\n
annual premium currently paid by VERITAS for such coverage in which event Newco
\nshall purchase such coverage as is available for such 150% of such annual
\npremium.<\/p>\n
(e) Newco and VERITAS shall pay all expenses, including
\nattorneys’ fees, that may be incurred by any Indemnified Parties in enforcing
\nthe indemnity and other obligations provided for in this Section 5.17(e).<\/p>\n
(f) In the event Newco or VERITAS or any of their respective
\nsuccessors or assigns (a) consolidates with or merges into any other person or
\nentity and shall not be the continuing or surviving corporation or entity of
\nsuch consolidation or merger, or (b) transfers or conveys all or a substantial
\nportion of its properties or assets to any person or entity, then, and in each
\nsuch case, to the extent necessary to effectuate the purposes of this Section
\n5.17(f), proper provision shall be made so that the successors and the assigns
\nof Newco and VERITAS assume the obligations set forth in this Section 5.17.<\/p>\n
(g) The provisions of this Section 5.17 shall survive the
\nEffective Time and are intended to be for the benefit of, and shall be
\nenforceable by, each officer and director of VERITAS STI, SSI and the
\nContributed Company Group described in Sections 5.17 and his or her heirs and
\nrepresentatives.<\/p>\n
5.18 Indemnification and Insurance-Employees.<\/p>\n
(a) The Certificate of Incorporation and Bylaws of Newco shall
\ncontain the provisions with respect to indemnification and limitation of
\nliability for monetary damages set forth in the Certificate of Incorporation and
\nBylaws of VERITAS on the date of this Agreement, which provisions shall not be
\namended, repealed or otherwise modified for a period of ten years from the
\nEffective Time in any manner that would adversely affect the rights thereunder
\nof individuals who at the Effective Time were directors, officers, employees or
\nagents of (i) the Contributed Companies or (ii) of SSI (A) to the extent
\ninvolved in the Group Business and (B) provided they become Employees, officers
\nor directors (“GROUP PERSONS”), unless such modification is required by law.<\/p>\n
(b) From and after the Effective Time, Newco shall honor, in
\nall respects, all of the indemnity agreements entered into prior to the date
\nhereof by SSI or any member of the Contributed Company Group with any Group
\nPersons, whether or not such persons continue in their positions with Newco
\nfollowing the Effective Time. Following the Effective Time, VERITAS’ form of
\nindemnification agreement shall be adopted as the form of indemnification
\nagreement for Newco and all continuing officers and directors of Newco shall be
\nafforded the opportunity to enter into such indemnification agreement, and shall
\nbe covered by such directors’ and officers’ liability insurance policies as
\nNewco shall have in effect from time to time.<\/p>\n
(c) After the Effective Time, Newco will, jointly and
\nseverally, to the fullest extent permitted under applicable law, indemnify and
\nhold harmless, subject to Section 5.18(g), each of the Group Persons against any
\ncosts or expenses (including attorneys’ fees), judgments, fines, <\/p>\n
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\n 67<\/p>\n
losses, claims, damages, liabilities and amounts paid in settlement in
\nconnection with any claim, action, suit, proceeding or investigation, whether
\ncivil, criminal administrative or investigative, to the extent arising out of or
\npertaining to any action or omission in his or her capacity as a director or
\nofficer of SSI or any of the Contributed Companies arising out of or pertaining
\nto the transactions contemplated by this Agreement for a period of six years
\nafter the date hereof. Notwithstanding the foregoing, the parties agree that
\nclaims against the Group Persons shall first be made against any directors’ and
\nofficers’ liability insurance, if any, then maintained by SSI or any of the
\nContributed Companies that provides converge for such Group Persons. In the
\nevent of any such claim, action, suit, proceeding or investigation (whether
\narising before or after the Effective Time), (a) any counsel retained for the
\ndefense of the Group Persons for any period after the Effective Time will be
\nreasonably satisfactory to the Group Persons, (b) after the Effective Time,
\nNewco will, subject to Section 5.18(g), pay the reasonable fees and expenses of
\nsuch counsel, promptly after statements therefor are received, and (c) Newco
\nwill cooperate in the defense of any such matter; provided, however, that Newco
\nwill not be liable for any settlement effected without its written consent
\n(which consent will not be unreasonably withheld); and provided, further, that,
\nin the event that any claim or claims for indemnification are asserted or made
\nwithin such six-year period, all rights to indemnification in respect of any
\nsuch claim or claims will continue until the disposition of any and all such
\nclaims. The Group Persons as a group may be defended by only one law firm (in
\naddition to local counsel) with respect to any single action unless there is,
\nunder applicable standards of professional conduct, a conflict on any
\nsignificant issue between the positions of any two or more Group Persons.<\/p>\n
(d) Newco shall pay all expenses, including attorneys’ fees,
\nthat may be incurred by any Group Persons in enforcing the indemnity and other
\nobligations provided for their benefit in this Section 5.18.<\/p>\n
(e) In the event Newco or any of its respective successors or
\nassigns (i) consolidates with or merges into any other person or entity and
\nshall not be the continuing or surviving corporation or entity of such
\nconsolidation or merger, or (ii) transfers or conveys all or a substantial
\nportion of its properties or assets to any person or entity, then, and in each
\nsuch case, to the extent necessary to effectuate the purposes of this Section
\n5.18, proper provision shall be made so that the successors and the assigns of
\nNewco assume the obligations set forth in this Section 5.18.<\/p>\n
(f) The provisions of this Section 5.18 shall survive the
\nEffective Time and are intended to be for the benefit of, and shall be
\nenforceable by, each of the Group Persons and his or her heirs and
\nrepresentatives.<\/p>\n
(g) Notwithstanding any provision of this Section 5.18 to the
\ncontrary, Newco shall not assume and shall have no Liability relating to claims
\nmade by Minority Holders or SSI optionees arising out of the repurchase, sale or
\nexchange of SSI capital stock or options in connection with the Seagate
\nTransaction (other than the transactions contemplated by Section 1.3(a)(ii)) or
\nspecifically relating to matters arising out of the IMG business.<\/p>\n
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\n 68<\/p>\n
5.19 Stockholder and Registration Rights Agreement. The Newco Common
\nStock to be issued in the Seagate Transaction to SSI shall be entitled to
\nregistration rights on Form S-3 as provided in the Registration Rights
\nAgreement, which Rights Agreement and Stockholders Agreement shall be executed
\nby Newco and VERITAS as of the Effective Time.<\/p>\n
5.20 No Other VERITAS Negotiations.<\/p>\n
(a) VERITAS shall, and shall cause its subsidiaries and its
\nand their subsidiaries’ officers, directors or employees or any investment
\nbankers, attorneys or other advisors or representatives retained by any of them,
\nto cease any and all existing activities, discussions or negotiations with any
\nparties conducted heretofore with respect to any VERITAS Alternative Proposal
\n(as defined below). From and after the date of this Agreement until the earlier
\nof the Effective Time or the termination of this Agreement in accordance with
\nits terms, VERITAS shall not, nor will it authorize or permit any of its
\nsubsidiaries or any of its or its subsidiaries’ officers, directors or employees
\nor any investment banker, attorney or other advisor or representative retained
\nby any of them to, directly or indirectly, (i) solicit, initiate or encourage
\nthe submission of any VERITAS Alternative Proposal, (ii) engage in discussions
\nor negotiations regarding, provide non-public information with respect to, or
\ntake any other action intended, designed or reasonably likely to facilitate any
\ninquiries or the making of any proposal that constitutes or would reasonably be
\nexpected to lead to, any VERITAS Alternative Proposal, (iii) enter into any
\nletter of intent, agreement in principle, acquisition agreement or other similar
\nagreement with any person with respect to any VERITAS Alternative Proposal, or
\n(iv) make or authorize any statement, recommendation or solicitation in support
\nof any VERITAS Alternative Proposal. For purposes of this Agreement, “VERITAS
\nALTERNATIVE PROPOSAL” means any inquiry, proposal or offer from any person or
\n“GROUP” (as defined under Section 13(d) of the Exchange Act and the rules and
\nregulations thereunder) relating to any direct or indirect acquisition, sale or
\nother disposition purchase of more than 20% of the assets of VERITAS and its
\nsubsidiaries or more than a 35% interest in the total outstanding voting
\nsecurities of VERITAS or any tender offer or exchange offer that if consummated
\nwould result in any person or “GROUP” (as defined under Section 13(d) of the
\nExchange Act and the rules and regulations thereunder) beneficially owning 35%
\nmore of the total outstanding voting securities of VERITAS or any merger,
\nconsolidation, business combination, sale of substantially all the assets,
\nrecapitalization, liquidation, dissolution or similar transaction involving
\nVERITAS, other than the transactions contemplated by this Agreement, provided,
\nhowever, that no pending acquisition described in the VERITAS Disclosure Letter
\nand no issuance of VERITAS Common Stock in connection therewith shall be
\nconsidered a VERITAS Alternative Proposal.<\/p>\n
(b) Notwithstanding Section 5.20(a), prior to obtaining the
\napproval of the stockholders of VERITAS of this Agreement and the Merger by the
\nrequisite vote under applicable law (the “VERITAS STOCKHOLDER Approval”),
\nVERITAS may in response to an unsolicited bona fide VERITAS Alternative
\nProposal, participate in discussions or negotiations with, furnish information
\nto a third party making such proposal, make or authorize a statement or
\nrecommendation in support of solicitation of such proposal, or accept such
\nproposal, if all of the following events shall have <\/p>\n
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\n 69<\/p>\n
occurred: (w) such third party has made a bona fide written proposal to the
\nBoard of Directors of VERITAS to consummate a VERITAS Alternative Proposal which
\nproposal identifies a price or range of values to be paid for the outstanding
\nsecurities or assets of VERITAS and its subsidiaries, (x) if consummated, after
\nconsultation with investment bankers of nationally recognized reputation, such
\nBoard of Directors has determined is reasonably likely to be financially more
\nfavorable to the stockholders of VERITAS than the terms of the transactions
\ncontemplated by this Agreement, (y) such Board of Directors has determined,
\nafter consultation with investment bankers of nationally recognized reputation,
\nthat such third party is financially capable of consummating such VERITAS
\nAlternative Proposal; and (z) STI and SSI shall have been notified by VERITAS in
\nwriting of such VERITAS Alternative Proposal, including its principal financial
\nand other material terms and conditions, including the identity of the person
\n(and, if relevant, its Affiliates) making such proposal (it being understood
\nthat any amendment to the price, identity or material terms shall require an
\nadditional notice).<\/p>\n
(c) In addition to the obligations of VERITAS set forth in
\nSection 5.20(a) and (b), VERITAS as promptly as practicable shall advise STI and
\nSSI orally and in writing of any request for non-public information which
\nVERITAS reasonably believes would lead to an VERITAS Alternative Proposal or of
\nany VERITAS Alternative Proposal, the material terms and conditions of such
\nrequest or VERITAS Alternative Proposal, and the identity of the person making
\nany such request, VERITAS Alternative Proposal or inquiry. VERITAS will keep STI
\nand SSI informed in all material respects of the status and details (including
\nmaterial amendments) of any such request or VERITAS Alternative Proposal.<\/p>\n
6. CLOSING MATTERS<\/p>\n
6.1 Closing. Subject to the termination of this Agreement as provided
\nin Section 9 below, the closing of the transactions contemplated by this
\nAgreement (the “CLOSING”) will take place at the offices of Fenwick & West LLP,
\nTwo Palo Alto Square, Palo Alto, California 94306 on a date and at a time to be
\nmutually agreed upon by the parties, which date shall be as soon as practicable
\nafter the VERITAS Stockholders Meeting and, in any event, no later than the
\nthird business day after all conditions to Closing set forth herein shall have
\nbeen satisfied or waived, unless another place, time and date is mutually
\nselected by SSI and VERITAS. Concurrently with the Effective Time, the
\nCertificate of Merger will be filed in the offices of the Secretary of the State
\nof Delaware.<\/p>\n
6.2 Exchange of Certificates.<\/p>\n
(a) Exchange Agent. ChaseMellon Stockholder Services LLC shall
\nact as exchange agent (the “EXCHANGE AGENT”) in the Merger. Promptly after the
\nEffective Time, Newco shall deposit with the Exchange Agent, for the benefit of
\nthe holders of shares of VERITAS Common Stock being exchanged for Newco Common
\nStock pursuant hereto (collectively “NEWCO STOCK RECIPIENTS”), for exchange in
\naccordance with this Agreement, the Certificate of Merger, certificates
\nrepresenting the shares of Newco Common Stock (such shares of Newco Common
\nStock, <\/p>\n
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\n 70<\/p>\n
together with any dividends or distributions with respect thereto, being
\nhereinafter referred to as the “EXCHANGE FUND”) issuable pursuant to this
\nAgreement and the Certificate of Merger, in exchange for fractional outstanding
\nshares of VERITAS Common Stock.<\/p>\n
(b) Exchange Procedures. As soon as practicable after the
\nEffective Time, Newco shall cause the Exchange Agent to mail to each of the
\nNewco Stock Recipients that holds any certificates representing VERITAS Common
\nStock being exchanged or converted into Newco Common Stock pursuant hereto
\n(collectively, the “CERTIFICATES”): (i) a letter of transmittal (which shall
\nspecify that delivery shall be effected, and risk of loss and title to the
\nCertificates shall pass, only upon delivery of the Certificates to the Exchange
\nAgent and shall be in such form and have such other provisions as VERITAS and
\nSSI may reasonably specify) and (ii) instructions for use in effecting the
\nsurrender of the Certificates in exchange for certificates representing Newco
\nCommon Stock. Upon surrender of a Certificate for cancellation to the Exchange
\nAgent, together with a duly executed letter of transmittal and such other
\ndocuments as may be reasonably required by the Exchange Agent, the holder of
\nsuch Certificate shall be entitled to receive in exchange therefor a certificate
\nrepresenting that number of whole shares of Newco Common Stock and cash in lieu
\nof fractional shares which such holder has the right to receive pursuant to the
\nprovisions of this Agreement and the Certificate of Merger, and the Certificate
\nso surrendered shall forthwith be canceled. Certificates which immediately prior
\nto the Effective Time represented issued and outstanding shares of VERITAS
\nCommon Stock do not need to be delivered to the Exchange Agent and, from and
\nafter the Effective Time, such certificates shall be deemed to evidence the
\nownership of an equal number of full shares of Newco Common Stock. In the event
\nof a transfer of ownership of shares of VERITAS Common Stock which is not
\nregistered on the transfer records of VERITAS, a certificate representing the
\nproper number of shares of Newco Common Stock may be issued to a transferee, if
\nthe Certificate representing such VERITAS Common Stock is presented to the
\nExchange Agent, accompanied by all documents required to evidence and effect
\nsuch transfer and by evidence that any applicable stock transfer taxes have been
\npaid. Until surrendered as contemplated by this Section 6.2 and the Certificate
\nof Merger, each Certificate shall be deemed, on and after the Effective Time, to
\nevidence the ownership of the number of full shares of Newco Common Stock into
\nwhich such shares of VERITAS Common Stock shall have been so converted.<\/p>\n
(c) Distributions with Respect to Unsurrendered Certificates.
\nNo dividends or other distributions declared or made after the Effective Time
\nwith respect to Newco Common Stock with a record date after the Effective Time
\nshall be paid to the holder of any unsurrendered Certificate for VERITAS Common
\nStock with respect to any shares of Newco Common Stock represented thereby,
\nuntil the holder of record of such Certificate shall surrender such Certificate
\nor affidavit of lost certificate. Subject to the effect of applicable laws,
\nfollowing surrender of any such Certificate, there shall be paid to the record
\nholder of the certificates representing whole shares of Newco Common Stock
\nissued in exchange therefor, without interest, (i) the amount of dividends or
\nother distributions with a record date after the Effective Time theretofore paid
\nwith respect to such whole shares of Newco Common Stock, and (ii) at the
\nappropriate payment date, the amount of dividends or other distributions with a
\nrecord date after the Effective Time but prior to surrender and <\/p>\n
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\n 71
\na payment date subsequent to surrender payable with respect to such whole shares
\nof Newco Common Stock.<\/p>\n
(d) No Further Ownership Rights. All shares of Newco Common
\nStock issued upon the surrender for exchange of shares of VERITAS Common Stock
\nin accordance with the terms of this Agreement and the Certificate of Merger
\n(including any cash paid pursuant to Section 6.2(c)) shall be deemed to have
\nbeen issued in full satisfaction of all rights pertaining to such shares of
\nVERITAS Common Stock. After the Effective Time there shall be no further
\nregistration of transfers on the stock transfer books of VERITAS of the shares
\nof VERITAS Common Stock, which were outstanding immediately prior to the
\nEffective Time. If, after the Effective Time, Certificates are presented to
\nVERITAS for any reason, they shall be canceled and exchanged as provided in this
\nSection 6.2 and the Certificate of Merger.<\/p>\n
(e) Termination of Exchange Fund. Any portion of the Exchange
\nFund which remains undistributed six months after performance by Newco of all of
\nits obligations hereunder shall be delivered to Newco, upon demand, and any
\nformer stockholders of VERITAS who have not theretofore complied with this
\nSection 6.2 and the Certificate of Merger shall thereafter look only to Newco
\nfor payment of their claim for Newco Common Stock, any cash in lieu of
\nfractional shares of Newco Common Stock and any dividends or distributions with
\nrespect to Newco Common Stock.<\/p>\n
(f) No Liability. Neither the Exchange Agent, Newco, VERITAS
\nor SSI shall be liable to SSI or any holder of shares of VERITAS Common Stock,
\nor Newco Common Stock, as the case may be, for any amount delivered to a public
\nofficial pursuant to any applicable abandoned property, escheat or similar law.<\/p>\n
(g) Lost, Stolen or Destroyed Certificates. In the event any
\nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall
\nissue in exchange for such lost, stolen or destroyed Certificates, upon the
\nmaking of an affidavit of that fact by the holder thereof and the posting of a
\nreasonable bond therefor, such shares of Newco Common Stock, and any dividends
\nor distributions payable pursuant to Section 6.2(c).<\/p>\n
6.3 Exchange of Exchanged SSI Options. Prior to Closing, Newco shall
\noffer to each Employee, contingent upon the consummation of the Transaction and
\nsuch Employee’s acceptance of Newco’s offer of employment, to exchange their
\nExchanged SSI Option for a Newco Option pursuant to the terms of Section
\n1.3(a)(ii).<\/p>\n
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SSI AND STI<\/p>\n
The obligations of STI, SSI and the other Contributing Companies
\nhereunder are subject to the fulfillment or satisfaction on or before the
\nClosing of each of the following conditions (any one or more of which may be
\nwaived by SSI on behalf of all said entities, but only in a writing signed by
\nSSI):<\/p>\n
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\n 72<\/p>\n
7.1 Accuracy of Representations and Warranties. The representations and
\nwarranties of VERITAS and Newco set forth in Section 3 (as qualified by the
\nVERITAS Disclosure Letter) shall be true and accurate on the date of this
\nAgreement and on and as of the Effective Time with the same force and effect as
\nif they had been made at the Effective Time, except for those representations
\nand warranties that address matters only as of a particular date (which shall
\nremain true and correct as of such particular date), except, in all such cases,
\nwhere such breaches of such representations and warranties, individually or in
\nthe aggregate, would not have resulted in, nor reasonably would be expected to
\nresult in, a Material Adverse Effect on VERITAS, and STI and SSI shall receive a
\ncertificate to such effect executed on behalf of Newco by a duly authorized
\nofficer of VERITAS and of Newco at the Effective Time.<\/p>\n
7.2 Covenants. VERITAS and Newco shall have performed and complied in
\nall material respects with all of their respective covenants in this Agreement
\nrequired to be complied with prior to the Effective Time; and STI and SSI shall
\nreceive a certificate to such effect executed by a duly authorized officer of
\nVERITAS and of Newco at the Effective Time.<\/p>\n
7.3 Compliance with Law. There shall be no order, decree or ruling by
\nany governmental agency which would prohibit or render illegal the transactions
\ncontemplated by this Agreement.<\/p>\n
7.4 Consents. There shall have been obtained on or before the Effective
\nTime all permits, consents and authorizations, where the failure to obtain same
\nwould have resulted, or reasonably would be expected to result, in a Material
\nAdverse Effect on VERITAS.<\/p>\n
7.5 Form S-4. The Form S-4 shall have become effective under the
\nSecurities Act and shall not be the subject of any stop-order and the
\nProspectus\/Proxy Statement shall on the Effective Time not be subject to any
\nproceedings commenced or overtly threatened by the SEC.<\/p>\n
7.6 Opinion of VERITAS and Newco’s Counsel. SSI shall have received
\nfrom Fenwick & West LLP, counsel to VERITAS and Newco, an opinion in a form
\nreasonably acceptable to SSI and its counsel, with such assumptions and
\nqualifications as are customary for such opinions.<\/p>\n
7.7 VERITAS Stockholder Approval. The principal terms of this
\nAgreement, the Merger and the Seagate Transaction shall have been approved and
\nadopted by the VERITAS stockholders in accordance with the Delaware Law and
\nVERITAS’ Certificate of Incorporation and Bylaws.<\/p>\n
7.8 No Legal Action. No temporary restraining order, preliminary
\ninjunction or permanent injunction or other order preventing the consummation of
\nthe Merger or the Seagate Transaction shall have been issued by any federal or
\nstate court and remain in effect.<\/p>\n
7.9 Tax Opinion. STI and SSI shall have received an opinion in form and
\nsubstance satisfactory to them, from their respective counsel, to the effect
\nthat the Seagate Transaction, when taken together with the Merger, will be
\ntreated as a transfer of property to Newco by them governed by Section 351 of
\nthe Internal Revenue Code, provided that if their counsel does not render such<\/p>\n
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\n 73<\/p>\n
opinion, this condition shall nonetheless be deemed satisfied, if counsel to
\nVERITAS and Newco renders such opinion in form and substance reasonably
\nacceptable to them. The parties shall make representations reasonably requested
\nby counsel related to said tax opinion, which representations may be relied upon
\nby the counsel providing the opinion, and the opinion may contain such
\nassumptions and qualifications as are customary for such opinions.<\/p>\n
7.10 Election of The Contributing Companies Designees to the Board of
\nDirectors of Newco. The Board of Directors of Newco shall have taken appropriate
\naction to elect Gregory B. Kerfoot, Stephen J. Luczo and Terence R. Cunningham
\nto the initial Board of Directors of Newco, effective upon the Effective Time.<\/p>\n
7.11 Nasdaq Listing. The Newco Common Stock to be issued in the Merger
\nand in the Seagate Transaction shall have been approved for quotation on the
\nNasdaq Stock Market, subject to notice of issuance.<\/p>\n
7.12 Incorporation of New Delaware Company. Newco shall have formed
\nMerger Sub prior to the Effective Time, and Newco and Merger Sub shall be duly
\norganized, validly existing and in good standing under the laws of Delaware and
\nsuch corporations shall not have engaged in any business activities during the
\nperiod from incorporation to the Effective Time. SSI, at the Effective Time,
\nshall receive a certificate to such effect signed by Newco incorporator on
\nbehalf of Newco.<\/p>\n
7.13 HSR Act. Any waiting period (and any extension thereof) under the
\nHSR Act applicable to transactions contemplated hereby shall have expired or
\nshall have been terminated.<\/p>\n
7.14 No Order. No non-U.S., United States or state governmental
\nauthority or other agency or commission or United States or state, federal or
\ninternational court of competent jurisdiction shall have enacted, issued,
\npromulgated, enforced or entered any statute, rule, regulation, injunction,
\ndecree, executive order, or other order (whether temporary, preliminary or
\npermanent) which is in effect and has the effect of making the transactions
\ncontemplated by this Agreement illegal or otherwise restraining or prohibiting
\nconsummation of such transactions; provided, however, that the parties hereto
\nshall use their reasonable best efforts to have any such order or injunction
\nvacated as soon as practicable.<\/p>\n
7.15 Ancillary Agreements. VERITAS and Newco shall have executed and
\ndelivered counterparts of each of the following Ancillary Agreements to which
\nthey are a party: (i) the Stockholder Agreement; (ii) the Registration Rights
\nAgreement; and (iii) the Transition Services Agreement.<\/p>\n
7.16 Stockholder Approval. The Seagate Transaction shall have been
\napproved by the requisite vote under applicable law by the stockholders of SSI.<\/p>\n
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\n 74<\/p>\n
7.17 Delivery of Newco Shares. Newco shall have delivered to SSI a
\ncertificate representing that number of whole shares of Newco Common Stock that
\nequals the SSI Percentage Interest.<\/p>\n
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF VERITAS AND NEWCO<\/p>\n
The obligations of VERITAS, Merger Sub and Newco hereunder are subject
\nto the fulfillment or satisfaction on or before the Closing of each of the
\nfollowing conditions (any one or more of which may be waived by VERITAS on
\nbehalf of all such parties, but only in a writing signed by VERITAS):<\/p>\n
8.1 Accuracy of Representations and Warranties. The representations and
\nwarranties of SSI and STI set forth in Section 2 (as qualified by the SSI
\nDisclosure Letter) shall be true and accurate on the date of this Agreement and
\non and as of the Effective Time, with the same force and effect as if they has
\nbeen made at the Effective Time, except for those representations and warranties
\nthat address matters only as of a particular date (which shall remain true and
\ncorrect as of such particular date), except, in all such cases, where such
\nbreaches of such representations and warranties, individually or in the
\naggregate, would not have resulted in, nor reasonably would be expected to
\nresult in, a Material Adverse Effect on Newco, and VERITAS shall receive a
\ncertificate to such effect executed on behalf of SSI by a duly authorized
\nofficer of SSI.<\/p>\n
8.2 Covenants. The Contributing Companies and the Contributed Companies
\nshall have performed and complied in all material respects with all of their
\nrespective covenants in this Agreement required to be complied with prior to the
\nEffective Time; and VERITAS shall receive a certificate to such effect signed on
\nbehalf of SSI by a duly authorized officer of SSI.<\/p>\n
8.3 Compliance with Law. There shall be no order, decree or ruling by
\nany court or governmental agency which would prohibit or render illegal the
\ntransactions contemplated by this Agreement.<\/p>\n
8.4 Consents. There shall have been obtained on or before the Effective
\nTime all permits, consents and authorizations, where the failure to obtain same
\nwould have resulted, or reasonably would be expected to result, in a Material
\nAdverse Effect on the Group Business.<\/p>\n
8.5 Form S-4. The Form S-4 shall have become effective under the
\nSecurities Act and shall not be the subject of any stop-order or proceedings
\nseeking a stop-order and the Prospectus\/Proxy Statement shall at the Effective
\nTime not be subject to any proceedings commenced or overtly threatened by the
\nSEC.<\/p>\n
8.6 Opinion of Counsel to STI and SSI. VERITAS shall have received from
\nWilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to the
\nContributing Companies, an opinion in form reasonably acceptable to VERITAS,
\nwith such assumptions and qualifications as are customary for such opinions.<\/p>\n
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\n 75<\/p>\n
8.7 VERITAS Stockholder Approval. The principal terms of this
\nAgreement, the Merger and the Seagate Transaction shall have been approved and
\nadopted by the VERITAS stockholders in accordance with applicable law and
\nVERITAS’ Certificate of Incorporation and Bylaws<\/p>\n
8.8 SSI Corporate Approvals. The principal terms of this Agreement and
\nthe Seagate Transaction (including the contribution and transfer of the
\nContributed Assets) shall have been approved and adopted by the SSI Stockholders
\nin accordance with applicable law and its Certificate of Incorporation and
\nBylaws.<\/p>\n
8.9 No Legal Action. No temporary restraining order, preliminary
\ninjunction or permanent injunction or other order preventing the consummation of
\nthe Merger shall have been issued by any federal or state court and remain in
\neffect.<\/p>\n
8.10 Tax Opinion. VERITAS and Newco shall have received an opinion in
\nform and substance satisfactory to them from their counsel, to the effect that
\nthe Merger will be treated for federal income tax purposes as a tax-free
\nreorganization within the meaning of Section 368 of the Internal Revenue Code,
\nprovided that if the counsel to VERITAS and Newco does not render such opinion,
\nthis condition shall nonetheless be deemed satisfied if counsel to SSI and STI
\nrenders such opinion to such parties in form and substance reasonably acceptable
\nto them. The parties shall make representations reasonably requested by counsel
\nrelated to said tax opinion, which representations may be relied upon by the
\ncounsel providing said opinion, with such qualifications as are customary for
\nsuch opinions.<\/p>\n
8.11 HSR Act. Any waiting period (and any extension thereof) under the
\nHSR Act applicable to the transactions contemplated hereby shall have expired or
\nshall have been terminated.<\/p>\n
8.12 No Order. No non-U.S., United States or state governmental
\nauthority or other agency or commission or United States or state or federal or
\ninternational court of competent jurisdiction shall have enacted, issued,
\npromulgated, enforced or entered any statute, rule, regulation, injunction,
\ndecree, executive order, or other order (whether temporary, preliminary or
\npermanent) which is in effect and has the effect of making the transactions
\ncontemplated by this Agreement illegal or otherwise restraining or prohibiting
\nconsummation of such transactions; provided, however, that the parties hereto
\nshall use their reasonable best efforts to have any such order or injunction
\nvacated, as soon as practicable.<\/p>\n
8.13 Ancillary Agreements. The Contributing Companies shall have
\nexecuted and delivered counterparts of each of the following Ancillary
\nAgreements to which they are a party: (i) the Stockholder Agreement; (ii) the
\nRegistration Rights Agreement; and (iii) the Transition Services Agreement.<\/p>\n
8.14 Sufficiency of Assets. VERITAS and Newco shall be reasonably
\nsatisfied that there has been no breach of the representation set forth in the
\nsecond sentence of Section 2.22 and that the <\/p>\n
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\n 76<\/p>\n
Contributed Stock and Assets shall have been duly transferred and delivered to
\nNewco as required by this Agreement.<\/p>\n
8.15 Intellectual Property Assignments. Newco shall have received from
\nthe Contributing Companies assignments of the Contributing Companies’ right,
\ntitle and interest in the following Intellectual Property Rights included in the
\nContributed Assets: (i) patents on disc operating system backup and recovery
\nsystem and on data back-up restore for a computer network; (ii) the “Backup
\nExec” registered trademark; and (iii) the copyright on Back-up Exec (the “CORE
\nIP”), each duly executed on behalf of said company and notarized, and in a form
\nreasonably acceptable to VERITAS and acceptable for recording with the United
\nStates Copyright Office or the United States Patent and Trademark Office, as
\napplicable. In addition, the Contributing Companies shall have taken such steps
\nin causing the registration of copyrights in the Core IP and the recordation of
\nany previous assignments in the chain of title for the Core IP which are
\nnecessary to enable Newco to record the Core IP assignments.<\/p>\n
8.16 Modification of Joint Contributed Agreements. A mutually
\nacceptable arrangement between SSI and Newco and, if required, the other parties
\nthereto shall have been reached with respect to the treatment of the Joint
\nContributed Agreements, for example with distributors who distribute both Group
\nProducts and the products of any other business claimed of the Contributing
\nCompanies or their subsidiaries, such that Newco, SSI and its subsidiaries
\nincluding IMG shall receive payments with respect to Group Products and other
\nproducts, respectively, as the case may be, and the appropriate party shall be
\nresponsible for price protection, accumulated rebate credits, product returns,
\nwarranty support and similar Liabilities.<\/p>\n
9. TERMINATION OF AGREEMENT<\/p>\n
9.1 Termination. This Agreement may be terminated at any time prior to
\nthe Effective Time, whether before or after approval of the Merger by the
\nstockholders of VERITAS or SSI:<\/p>\n
(a) by mutual written agreement of SSI, STI and VERITAS;<\/p>\n
(b) by SSI or STI, if there has been a breach by VERITAS or
\nNewco of any representation or warranty set forth in this Agreement on the part
\nof VERITAS or Newco, and, as a result of such breach, the conditions set forth
\nin Section 7.1 would not then be satisfied and such breach is not cured within
\nthirty (30) days after notice thereof from SSI to VERITAS (except that no cure
\nperiod shall be provided for a breach by VERITAS or Newco which by its nature
\ncannot be cured);<\/p>\n
(c) by SSI or STI, if there has been a breach by VERITAS or
\nNewco of any covenant or agreement set forth in this Agreement on their part to
\nbe performed and as a result of such breach, the conditions set forth in Section
\n7.2 would not then be satisfied and such breach is not cured, within thirty (30)
\ndays after written notice thereof from SSI to VERITAS (except that no cure
\nperiod shall be provided for a breach by VERITAS or Newco which by its nature
\ncannot be cured);<\/p>\n
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\n 77<\/p>\n
(d) by VERITAS, if there has been a breach by STI or SSI of
\nany representation or warranty set forth in this Agreement on their part, and as
\na result of such breach, the conditions set forth in Section 8.1 would not then
\nbe satisfied and such breach is not cured within thirty (30) days after written
\nnotice thereof from VERITAS to SSI (except that no cure period shall be provided
\nfor a breach by STI or SSI which by its nature cannot be cured);<\/p>\n
(e) by VERITAS, if there has been a breach by STI or SSI of
\nany covenant or agreement set forth in this Agreement on their part to be
\nperformed, and as a result of such breach, the conditions set forth in Section
\n8.2 would not then be satisfied and such breach is not cured within thirty (30)
\ndays after written notice thereof from VERITAS to SSI (except that no cure
\nperiod shall be provided for a breach by STI or SSI which by its nature cannot
\nbe cured);<\/p>\n
(f) by VERITAS or STI or SSI, if the Merger and the Seagate
\nTransaction shall not have been consummated on or before the Final Date for any
\nreason, other than any wrongful action or failure to act or as a result of a
\nbreach of this Agreement or any Ancillary Document by the terminating party;<\/p>\n
(g) by VERITAS or STI or SSI, if a permanent injunction or
\nother order by any federal or state court would make illegal or otherwise
\nrestrain or prohibit the consummation of the Merger and\/or the Seagate
\nTransaction shall have been issued and shall have become final and
\nnonappealable;<\/p>\n
(h) by VERITAS or STI or SSI, if the stockholders of VERITAS
\ndo not approve the Merger and\/or the Seagate Transaction at a duly convened
\nVERITAS stockholders meeting or any adjournment thereof by reason of the failure
\nto obtain the required vote (a “VERITAS STOCKHOLDER REJECTION”); provided, that
\nthe right to terminate this Agreement under this Subsection (h) shall not be
\navailable to VERITAS where the failure to obtain VERITAS stockholder approval
\nshall have been caused by any breach of this Agreement or any Ancillary Document
\nby VERITAS;<\/p>\n
(i) by STI or SSI, if (a) the Board of Directors of VERITAS
\nshall have withdrawn (or modified in a manner adverse to the VERITAS Stockholder
\nApproval or the consummation of the Merger and\/or the Seagate Transaction) its
\napproval or recommendation of the Merger, the Seagate Transaction or this
\nAgreement, (b) VERITAS shall have failed to include in the Proxy
\nStatement\/Prospectus the recommendation of the Board of Directors of VERITAS in
\nfavor of approval of the Merger, the Seagate Transaction, or this Agreement, (c)
\nthe Board of Directors of VERITAS shall have recommended or shall have approved
\nany VERITAS Alternative Proposal, or (d) the Board of Directors of VERITAS shall
\nhave resolved to do any of the foregoing (collectively a “CHANGE IN VERITAS
\nBOARD RECOMMENDATION”).<\/p>\n
(j) by VERITAS, STI or SSI at any time prior to the VERITAS
\nStockholder Approval, if the Board of Directors of VERITAS shall have
\nrecommended or accepted a VERITAS Alternative Proposal provided that VERITAS is
\nnot in breach of Section 5.20.<\/p>\n
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\n 78<\/p>\n
As used herein, the “FINAL DATE” shall be February 28, 1999, except
\nthat if the FTC or the DOJ issues a “second request” under the HSR Act, then the
\nFinal Date shall be extended to May 31, 1999; and except that if a temporary,
\npreliminary or permanent injunction or other order by any Federal or state court
\nwhich would prohibit or otherwise restrain consummation of the Merger and\/or the
\nSeagate Transaction shall have been issued and shall remain in effect on May 31,
\n1999, and such injunction shall not have become final and non-appealable, either
\nparty, by giving the other written notice thereof on or prior to May 31, 1999,
\nmay extend the time for consummation of the Merger and\/or the Seagate
\nTransaction up to and including the earlier of the date such injunction shall
\nbecome final and non-appealable or June 30, 1999, so long as such party shall,
\nat its own expense, use its reasonable best efforts to have such injunction
\ndissolved.<\/p>\n
9.2 Notice of Termination. Any termination of this Agreement under
\nSection 9.1 above will be effected by the delivery of notice of the terminating
\nparty to the other party hereto of such termination, specifying the grounds
\ntherefore.<\/p>\n
9.3 No Liability. Except as provided in Section 9.4 below, any
\ntermination of this Agreement in accordance with this Section 9 will be without
\nfurther obligation or liability upon any party in favor of the other parties
\nhereto other than the obligations contained in the Nondisclosure Agreement,
\nwhich will survive termination of this Agreement; provided, however, that
\nnothing herein will relieve any party from liability for any willful breach,
\nmisrepresentation or misconduct in connection with this Agreement.<\/p>\n
9.4 Breakup Fee.<\/p>\n
(a) If this Agreement is terminated by SSI or STI or VERITAS
\npursuant to Section 9.1(h) as a result of a VERITAS Stockholder Rejection and
\nprior to such rejection (i) an Alternative Proposal has not been publicly
\nannounced or otherwise publicly disclosed and not withdrawn, and (ii) no Change
\nin Board Recommendation has occurred, then VERITAS shall promptly pay SSI and
\nSTI (by wire transfer or cashier’s check) a nonrefundable fee equal to the
\nactual reasonable legal, accounting and printing expenses incurred by STI, SSI,
\nthe Contributing Companies and\/or the Contributed Company Group, but not
\nexceeding $5 million, within three (3) business days following the delivery of
\nan itemized list of such expenses by SSI and STI.<\/p>\n
(b) If this Agreement is terminated by SSI or STI or VERITAS
\n(i) pursuant to Section 9.1(h) as a result of a VERITAS Stockholder Rejection
\nafter an Alternative Proposal has been publicly announced or otherwise publicly
\ndisclosed and not withdrawn, (ii) pursuant to Sections 9.1(i) or 9.1(j), then
\nVERITAS shall promptly pay to SSI (by wire transfer or cashier’s check) a
\nnonrefundable fee equal to $50 million within ten (10) days following delivery
\nof the notice of termination to or by SSI and STI pursuant to Section 9.2.<\/p>\n
(c) VERITAS acknowledges that the agreements contained in this
\nSection 9.4 are an integral part of the transactions contemplated by this
\nAgreement, and that, without these agreements, none of STI, SSI or NSMG would
\nenter into this Agreement; accordingly, if VERITAS <\/p>\n
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\n 79<\/p>\n
fails to timely pay the amounts due pursuant to this Section 9.4, and, in order
\nto obtain such payment, STI or SSI commences a suit which results in a judgment
\nagainst VERITAS for the amounts set forth in this Section 9.4 and such judgment
\nis not set aside or reversed, VERITAS shall pay to STI or SSI their reasonable
\ncosts and expenses (including attorneys’ fees and expenses) in connection with
\nsuch suit, together with interest on the amounts set forth in this Section 9.4
\nat the prime rate of CitiBank in effect on the date such payment was required to
\nbe made.<\/p>\n
10. SURVIVAL OF REPRESENTATIONS<\/p>\n
10.1 No Survival of Representations. Except as otherwise expressly
\nprovided herein, all representations, warranties and covenants other parties
\ncontained in this Agreement will remain operative and in full force and effect,
\nregardless of any investigation made by or on behalf of the parties to this
\nAgreement, only until the Effective Time or any earlier termination of this
\nAgreement in accordance with Section 9 above, whereupon such representations,
\nwarranties and covenants will expire (except for covenants and other provisions
\nhereof that by their express terms survive for a longer period).<\/p>\n
11. INDEMNIFICATION<\/p>\n
11.1 Indemnification by SSI and STI. SSI and STI agree, notwithstanding
\nany provision of Section 1.4 hereof to the contrary, to indemnify Newco and
\nVERITAS against, and to hold Newco and VERITAS harmless from, all Loss arising
\nout of any of the following (even if included in the Assumed Liabilities as
\notherwise being or allegedly being a Liability of one of the Contributed
\nCompanies or of the Contributed Subsidiaries):<\/p>\n
(a) all Liabilities to Minority Holders or Optionees arising
\nout of the repurchase, sale or exchange of SSI capital stock or options in
\nconnection with the Seagate Transaction (other than the transactions
\ncontemplated by Section 1.3(a)(ii)) or that arise from rights granted by SSI or
\nSTI to any Employees to require SSI or STI to repurchase shares of SSI capital
\nstock upon termination of employment.<\/p>\n
(b) any of the Excluded Liabilities, except as may be provided
\nin Section 13;<\/p>\n
(c) any demand, claim, debt, suit, cause of action,
\narbitration, investigation or other proceeding made or asserted by any
\nContributing Company or any stockholder, creditor, or affiliate of any
\nContributing Company or by any receiver or trustee in bankruptcy of any
\nContributing Company of the property or assets of any Contributing Company,
\nasserting that the transfer of the Contributed Stock and Assets to Newco
\nhereunder constitutes a fraudulent conveyance, fraudulent transfer or a
\npreference under any applicable state or federal law, including but not limited
\nto the United States Bankruptcy Code, or any breach by any Contributing Company
\nof its representations and covenants in Section 1.4(e) hereof (the Heading of
\nwhich is “NO FRAUDULENT CONVEYANCES”) or any Liabilities related to
\nnon-compliance with bulk transfer laws in connection with the Seagate
\nTransaction;<\/p>\n
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\n 80<\/p>\n
(d) IMG; or<\/p>\n
(e) any material Liability omitted from the Group Financial
\nStatements that was required by GAAP to be included or reflected therein
\n(collectively, the “OMITTED BALANCE SHEET LIABILITIES”), or any Tax Liability
\nassociated with the Contributed Company Group or the Group Business that STI or
\nSSI is otherwise responsible for or required to indemnify for under Section 13
\nand which (i) are not reflected on any line item in the 1998 Group Balance
\nSheet; (ii) are not disclosed on Schedule 1.4(b)(i)(B); or (iii) are not
\nincurred in the Conduct of the Group Business in the ordinary course after the
\nGroup Financial Statements Balance Sheet Date (collectively, the “UNFORESEEN TAX
\nLIABILITIES”), to the extent the aggregate of such Omitted Balance Sheet
\nLiabilities and Unforeseen Tax Liabilities exceed $5,000,000 (the “THRESHOLD
\nAMOUNT”); and, notwithstanding anything in Section 13.4(a)(ii), neither STI nor
\nSSI shall have any obligation to indemnify Newco under Section 13.4(a)(ii) until
\nthe Threshold Amount is so exceeded; and Newco shall pay any and all of the
\nOmitted Balance Sheet Liabilities and Unforeseen Tax Liabilities until the
\naggregate of such payments of Omitted Balance Sheet Liabilities and Unforeseen
\nTax Liabilities equals the Threshold Amount; or<\/p>\n
(f) any breach of the representation in the second sentence of
\nSection 2.22 hereof (the Heading of which is “Title to and Condition and
\nSufficiency of Group Assets”).<\/p>\n
11.2 Time Limitations on Indemnification. Notwithstanding anything
\nherein to the contrary, claims for indemnification under this Section 11 may be
\nbrought after the Closing and at any time prior to the expiration of the legal
\nstatute of limitations applicable to the subject matter of the claim underlying
\nthe claim for indemnification; provided that any claims under Section 11.1(e) or
\nunder Section 11.1(f) must be noticed within 60 days after conclusion of the
\nfirst audit of Newco financial results following the Closing that includes the
\ncombined financial results of the Group Business and VERITAS (and in any event
\nwithin twelve (12) months after the closing). To preserve a claim for
\nindemnification under this Section 11, an Indemnified Party need only provide
\nwritten notice in reasonable detail of such claim to SSI prior to the expiration
\nof the applicable time limit (if any) described in the preceding sentence; and
\nif an Indemnified Party provides such notice prior to the expiration of such
\ntime limit, such Indemnified Party may pursue such claim for indemnification
\nafter the expiration of such time limit.<\/p>\n
11.3 No Limitation on Other Rights. The foregoing indemnification
\nprovisions are in addition to, and not in derogation of, any statutory,
\nequitable or common law remedies that Newco or any other Indemnified Party may
\nhave.<\/p>\n
12. EMPLOYEE MATTERS<\/p>\n
12.1 Right to Offer Employment.<\/p>\n
(a) Employees. Schedule 12.1 of the SSI Disclosure Letter
\ncontains a preliminary list (the “PRELIMINARY LIST”) of each Contributed Company
\nemployee or consultant and <\/p>\n
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\n 81<\/p>\n
each other employee or consultant of SSI, STI or the Group Business who works
\nin, or provides services in connection with, the Group Business or any of the
\nGroup Assets (each an “EMPLOYEE”). Within twenty (20) days prior to the
\nEffective Time, SSI shall deliver to Newco a final list of the Employees (the
\n“FINAL LIST”), which list shall identify those Employees who are active
\nEmployees of the Group Business as of that date, including those on vacation,
\nsick leave, disability leave, family leave or personal leave of absence or who
\nwork full or part time, and which shall separately identify those Employees who
\nare on a workers’ compensation-related or disability leave. The Final List shall
\ncontain, with respect to each Employee, a true and accurate list of all
\nlocations at which Employees are working as of the date hereof, together with
\nthe date of hire, location of employment, years of employment or service,
\ncurrent annual base salary or base wage, and of all other compensation
\narrangements for such Employees, including bonuses or other compensation
\narrangements. For purposes of this Agreement, “EMPLOYEES” means only those
\nindividuals (whether employees or consultants) included on such final list.<\/p>\n
(b) Offers of Employment. Effective at the Effective Time,
\nNewco shall offer to employ Employees on an “at-will” basis and subject to
\nNewco’s standard terms, conditions and policies of employment and the terms of
\nthis Agreement, and shall offer Employees (i) salary consistent with the salary
\nearned by such Employees prior to the Effective Time but only to the extent such
\nsalary is not in excess of industry norms (ii) participation in incentive
\ncompensation arrangements, subject to Section 5.16 and consistent with the
\nincentive compensation arrangements of employees of VERITAS in comparable
\npositions. This Section 12.1(b) shall not be construed to create any third party
\nBeneficiary rights or any other rights of any kind in any Employee and no
\nEmployee shall have any cause of action as a third party beneficiary. Such
\noffers of employment that will be extended by Newco to Employees will be on the
\nsame basis of time commitment (full or part time) as such Employee was employed
\nby immediately prior to the Effective Time. Unless the parties otherwise agree,
\non the Closing Date, SSI and STI shall notify each Employee who accepts an offer
\nof employment extended by Newco as of the Effective Time, in a writing
\nreasonably satisfactory to Newco, that such Employee’s employment with STI or
\nany of its direct or indirect subsidiaries is then terminated. Neither SSI or
\nSTI may make offer of employment to any Employees. Notwithstanding the foregoing
\nsentence, SSI or STI may make offers of employment to Employees at the Scotts
\nValley location other than the Oracle Developers; provided, however, that SSI or
\nSTI may make offers of employment to the Oracle Developers if Newco changes
\ntheir place of employment from Scotts Valley, California.<\/p>\n
(c) Non-U.S. Employees. Subject to Section 11.1(a), Newco
\nshall be responsible for any severance, any Liability arising out of failure to
\ngive requisite notice to any non-U.S. Employee or non-U.S. governmental agencies
\nregarding possible employment transitions to Newco of certain employees or any
\nother Liability arising out of the employment by Newco of, or the failure of
\nNewco to employ any non-U.S. Employee.<\/p>\n
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\n 82<\/p>\n
12.2 Termination of Employment.<\/p>\n
(a) SSI and STI agree to comply with the provisions of the
\nWARN Act and any other federal, state or local statute or regulation regarding
\ntermination of employment, plant closing or layoffs and to perform all
\nobligations required by SSI and\/or STI with respect to the cessation of any
\noperations of the Group Business or any other business of SSI and\/or STI or
\ntheir subsidiaries, or the termination, re-assignment, re-location or change in
\nposition of any Employee (or other employee of them) who does not accept Newco’s
\noffer of employment.<\/p>\n
(b) SSI and\/or STI shall (i) provide continuation health care
\ncoverage to all Employees and their qualified beneficiaries who incur a
\nqualifying event or prior to the Effective Time or who do not accept Newco’s
\noffer of employment pursuant to Section 12.1(b) or in accordance with the
\ncontinuation health care coverage requirements of COBRA and (ii) provide COBRA
\ncontinuation coverage to any former employee of Contributed Company Group who
\nwas previously employed in the Group Business (collectively, the “FORMER
\nEMPLOYEES”) and their qualified beneficiaries to whom, at the Effective Time,
\nsuch continuation coverage was provided or to whom SSI and STI are under an
\nobligation to provide such continuation coverage at the election of such Former
\nEmployee or qualified beneficiary.<\/p>\n
12.3 Cooperation. SSI and STI, VERITAS and Newco agree, for themselves
\nand their affected subsidiaries, to cooperate fully with respect to the actions
\nwhich are necessary or reasonably desirable to accomplish the transactions
\ncontemplated hereunder, including, without limitation, the provision of records
\nand information as each may reasonably request and the making of all appropriate
\nfilings under ERISA and the Internal Revenue Code.<\/p>\n
13. TAX MATTERS<\/p>\n
13.1 Transaction Taxes; Representation; Transaction Tax Indemnity.
\nSeagate and Newco shall each bear half of the first $1,000,000 of Transaction
\nTaxes (as defined below). Thereafter, Seagate shall be solely responsible for
\nany and all sales, use, excise, value added, registration, stamp, property,
\ndocumentary, transfer, withholding and similar taxes and levies, (including all
\nreal estate transfer taxes, but not any real estate transfer taxes that would be
\ntriggered as a result of a change in control of a corporation) incurred, or that
\nmay be payable to any taxing authority, with respect to the sale, transfer, or
\ndelivery of the Contributed Stock and Assets and the assumption of the Assumed
\nLiabilities, including any sales or use tax imposed on Newco pursuant to Section
\n6812 of the California Revenue and Taxation Code (collectively, “TRANSACTION
\nTAXES”). Newco and Seagate agree to cooperate in minimizing the amount of any
\nsuch Taxes and in the filing of all necessary documentation and all Tax returns,
\nreports and forms (“RETURNS”) with respect to all such Taxes, including any
\navailable pre-sale filing procedures.<\/p>\n
13.2 No Limitation. Except as provided in Section 11, there shall be no
\nlimitation on the amount of a party’s liability with respect to its
\nindemnification obligations under Section 13, and an indemnified party may
\nassert any such indemnity claim at any time prior to expiration of the<\/p>\n
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\n 83<\/p>\n
applicable Tax statutes of limitations applicable to the subject matter of the
\nclaim underlying the claim for indemnification under applicable law (including
\nextensions).<\/p>\n
13.3 Treatment of Indemnity Payments. All payments made by Seagate or
\nNewco, as the case may be, to or for the benefit of the other party pursuant to
\nany indemnification obligations under this Agreement shall be treated for Tax
\npurposes as adjustments to the value of the Contributed Stock and Contributed
\nAssets, as capital contributions, or as appropriate, the satisfaction of a
\npreexisting obligation and such treatment shall govern for purposes of this
\nAgreement, unless there is a final determination as defined in Section 1313(a)
\nof the Code to the contrary.<\/p>\n
13.4 Indemnity for Taxes.<\/p>\n
(a) Except as otherwise provided in this Section 13 or Section
\n11, from and after the Closing, SSI and STI shall timely pay and indemnify and
\nsave Newco and its Affiliates harmless from any liability for, or arising out of
\nor based upon, or relating to any Tax (including, without limitation, any
\nobligation to contribute to the payment of a Tax determined on a consolidated
\nbasis with respect to a group of corporations that includes or included STI or
\nSSI) (i) of STI or SSI or any member of the affiliated group of corporations (as
\ndefined in section 1504 of the Code) of which STI or SSI is a member (other than
\nany member of the Contributed Company Group or with respect to any Tax relating
\nto the income, business, assets, property or operations of the Group Business)
\nfor any taxable period or (ii) relating to the income, business, assets,
\nproperty or operations of the Group Business or of the Contributed Company Group
\nto the extent that such liability for Tax is not reflected in the SSI Disclosure
\nLetter or the Group Financial Statements (irrespective of where it is reflected
\non the Group Financial Statements Balance Sheet), and is either (A) in respect
\nof any taxable period that ends prior to the Group Financial Statements Balance
\nSheet Date or in respect of any taxable period that includes, but does not end
\non, the Group Financial Statements Balance Sheet Date, the portion of such
\nperiod ending on the Group Financial Statements Balance Sheet Date or (B) with
\nrespect to an excess loss account in the stock of any Contributed Company or
\nfrom a deferred intercompany transaction (other than among members of the
\nContributed Company Group) entered into prior to the Group Financial Statements
\nBalance Sheet Date and is triggered as a result of the Contributed Company Group
\nceasing to be affiliated with STI or SSI. The indemnity provisions of this
\nSection 13.4(a) shall not apply to Taxes attributable to a breach of, or
\ninaccuracy in, Section 13.6(a).<\/p>\n
(b) Notwithstanding anything contained in this Section 13, STI
\nand SSI shall not be obligated to indemnify Newco for any Tax (including,
\nwithout limitation, any obligation to contribute to the payment of a Tax
\ndetermined on a consolidated basis with respect to a group of corporations that
\nincludes or included STI or SSI) by reason of an election or deemed election
\n(including any protective election) with respect to transactions described in
\nthis Agreement made or filed post-Closing by Newco or any member of the
\nContributed Companies under Section 338 of the Internal Revenue Code. Further,
\nno such election shall be made with respect to any of the transactions described
\nin this Agreement.<\/p>\n
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\n 84<\/p>\n
(c) Except to the extent otherwise provided in this Section
\n13, Newco shall timely pay and indemnify and save STI and its Affiliates
\nharmless from any liability for, or arising out of or based upon or relating to
\nany Tax (including, without limitation, any obligation to contribute to the
\npayment of a Tax determined on a consolidated basis with respect to a group of
\ncorporations that includes or included STI or SSI) (i) relating to the income,
\nbusiness, assets, property or operations of the Group Business by Newco and its
\nAffiliate in respect of all taxable periods beginning after the Group Financial
\nStatements Balance Sheet Date, or, in the case of any taxable period that
\nincludes but does not end on the Group Financial Statements Balance Sheet Date,
\nthe portion of such period commencing on the day following the Group Financial
\nStatements Balance Sheet Date; and (ii) to the extent such liability for Tax is
\nreflected in the Group Financial Statements (irrespective of where it is
\nreflected on the Group Financial Statements Balance Sheet) or the SSI Disclosure
\nLetter and such liability is for Tax relating to the income, business, assets,
\nproperty or operations of the Group Business or of any member of the Contributed
\nCompany.<\/p>\n
13.5 Other Tax Matters.<\/p>\n
(a) Seagate and Newco will cooperate fully with each other in
\nconnection with the preparation of all returns and reports of Taxes, information
\nreturns, and all audit examinations of, or claims or assertions against, any
\nmember of the Contributed Company Group, in each case including but not limited
\nto the furnishing or making available of records, books of account or other
\nmaterials and appropriate personnel necessary or helpful to the defense against
\nthe assertions of any taxing authority. Seagate shall, within a reasonable time
\nafter the Closing Date but no later than 60 days prior to the deadline
\n(including extensions) of any Tax return of Newco or its Affiliates that
\nincludes the operations of the Group Business or the Contributed Company Group,
\nuse its best efforts to deliver to Newco a schedule listing the tax basis of
\neach of the Group Assets and the Contributed Stock.<\/p>\n
(b) Except as provided in Section 13.5(c), in the event and to
\nthe extent that STI or any member of an affiliated group of corporations (as
\ndefined in Section 1504 of the Internal Revenue Code) of which STI is a member
\n(other than any member of the Contributed Company Group) receives a refund or
\ncredit of Taxes for any taxable period that ends prior to the Closing Date or in
\nrespect of any period that includes, but does not end on, the Effective Time,
\nthe portion of such period ending on the Effective Time (the “PRE-CLOSING
\nPERIOD”) which is attributable to the carry back of losses, credits or similar
\nitems from any Tax return of any member of the Contributed Company Group, and in
\nany case, in respect of any taxable period that begins after the Effective Time
\nor in respect of any period that includes, but does not end on the Effective
\nTime, the portion of such period commencing on the day following the Effective
\nTime (the “Post-Closing Period”), STI shall pay to Newco, net of any additional
\nTax payable by STI or its Affiliates by reason of such carryback, the amount of
\nsuch refund or credit (including any interest received thereon) or Tax
\nreduction. In the event that any refund or credit of Taxes or Tax reductions for
\nwhich a payment has been made pursuant to this Section 13.5 subsequently is
\nreduced or disallowed, the Contributed <\/p>\n
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\n 85<\/p>\n
Companies and Newco shall indemnify and hold harmless STI and its Affiliates for
\nany Tax liability, including interest and penalties, assessed by reason of such
\nreduction or disallowance.<\/p>\n
(c) In the event that an indemnified party receives a refund
\nor credit of Taxes for which it has been indemnified pursuant to Section 13.4 of
\nthis Agreement, such indemnified party agrees to pay to the indemnifying party
\nthe amount of such refund or credit (including any interest received thereon).
\nIn the event that any refund or credit of Taxes for which a payment has been
\nmade pursuant to this Section 13.5(c) subsequently is reduced or disallowed, the
\nindemnifying party shall indemnify and hold harmless the indemnified party for
\nany Tax liability, including interest and penalties, assessed by reason of such
\nreduction or disallowance.<\/p>\n
(d) If any claim for Tax relating to the Group Business or the
\nContributed Company Group is asserted against STI or SSI or any Affiliate for
\nany Pre-Closing Period, STI shall promptly notify Newco in writing of such fact.
\nSTI, SSI and their duly appointed representatives shall have the sole right to
\nnegotiate, resolve, settle or contest any such claim for Tax; provided, however,
\nthat they shall deal fairly and in good faith with respect to any claim for Tax
\nwhich would require a payment by Newco to STI or its affiliates under Section
\n13.4(c) and provided further, that with respect to any claim which would require
\na payment by Newco or have a Material Adverse Effect on the Group Business, no
\nsettlement will be agreed to without Newco’s prior written consent. Such consent
\nshall not be unreasonably withheld. If Newco fails to provide STI with written
\nconsent within 30 days of a written request from STI, and submits a written
\nobjection the procedures in Section 7(c) of the Tax Allocation Agreement dated
\nas of April 4, 1996 (the “TAX ALLOCATION AGREEMENT”) shall be applied. Newco
\nshall bear the legal and accounting costs and expenses incurred in contesting a
\nmatter for which it has withheld its consent. If any claim for Tax relating to
\nthe Contributed Company Group for any Post-Closing Period comes to the attention
\nof STI, STI will notify Newco promptly of such claims and will cooperate fully
\nwith Newco and the Contributed Company Group in the resolution of such claim. A
\nfailure to promptly notify pursuant to this Section 13.6(d) shall not preclude
\nanother party’s indemnification obligation.<\/p>\n
(e) STI shall prepare any Tax returns (including any
\namendments thereto) of the members of the Contributed Company Group for all
\ntaxable periods that end, with respect to the Contributed Company Group, on or
\nbefore the Effective Time (including any short period ending on the Closing
\nDate) and which are due either before or after the Effective Time and shall
\ndeliver to Newco for signing by the appropriate party and filing, any Tax
\nreturns of the members of the Contributed Company Group (including any
\namendments thereto) with respect to any such period that have not been filed
\nprior to the Effective Time. STI shall deliver any such tax return or the
\nportion thereof relating to the Group Business to Newco at least fifteen days
\nprior to the date such tax return is due to be filed (taking into account any
\napplicable extensions). STI shall report for federal income tax purposes the
\noperations of the Group Business and the Contributed Company Group for any short
\nperiod ending on the Effective Time, and shall be responsible for the filing of,
\nthe consolidated tax returns of STI’s consolidated group which will include the
\nincome of the Group Business and the Contributed Company Group through the
\nEffective Time and Newco will pay to <\/p>\n
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\n 86<\/p>\n
STI any amounts relating to such tax returns required by Section 13.4(c) prior
\nto the filing of such tax returns. In order appropriately to apportion any taxes
\nrelating to a period that includes (but that would not, but for this Section
\n13.5(e) end on the Effective Time), the parties hereto will, to the extent
\npermitted by applicable law, elect with the relevant taxing authority to treat
\nfor all purposes the Effective Time as the last day of a taxable period of any
\nmember of the Contributed Company Group. STI shall, in respect of such returns,
\nand Newco and the Contributed Company Group for returns with respect to the
\nPost-Closing Period shall determine the income, gain, expenses, losses,
\ndeductions and credits of the Group Business and the Contributed Company Group
\nin a manner (i) consistent with prior practice and actual operations in a manner
\nthat apportions such income, gain, expenses, loss, deductions and credits
\nequitably from period to period and (ii) consistent with prior years. STI and
\nSSI shall not pay a “FSC” commission with respect to the Group Business without
\nthe prior written consent of Newco.<\/p>\n
(f) The tax returns described in Section 13.5(e) shall be
\nprepared in accordance with the Tax Allocation Agreement except to the extent it
\nis inconsistent with Section 13.5(e). In addition, the parties agree that for
\nthe taxable periods the Contributed Companies are included in a consolidated
\nreturn with STI or SSI, the parties will compensate each other for the use of
\nlosses and credits in the amounts determined in accordance with the Tax
\nAllocation Agreement. The provisions of this Section 13 with respect to the
\nconsolidated groups or consolidated returns that include STI or SSI or their
\naffiliates other than a Contributed Company shall apply mutatis mutandis with
\nrespect to combined or unitary groups or returns thereof.<\/p>\n
(g) Newco, STI and SSI shall make payments of estimated taxes
\n(including amounts due with extensions) for which they are responsible under
\nthis agreement in accordance with the Tax Allocation Agreement. Any Tax which is
\ndue (including estimated Taxes) on or prior to the Effective Time and which is
\nthe responsibility of Newco, shall, in lieu of requiring a payment by Newco
\nprior to the Effective Time, be satisfied by a payment out of the Group Assets
\nor the Group Business or after payment of such Tax by STI or SSI through an
\nincrease in the account balances owed by the Group Business or the Contributed
\nCompanies to STI or SSI, which increase in the obligation will be satisfied by
\nNewco subsequent to the Closing. A payment or indemnity obligation under this
\nsection 13 which is not made or satisfied when due shall accrue interest at the
\nrate of 6% compounded daily. Notwithstanding anything in this Section 13 to the
\ncontrary, a party shall not have to bear the cost of a Tax liability more than
\nonce (e.g. a payment of an estimated tax shall be credited against any payment
\ndue when the return is filed).<\/p>\n
(h) Except as provided in paragraph 13.5(e), for purposes of
\nallocating a Tax for which a party is otherwise responsible under Section 13.4,
\nthe portion of those Taxes that are attributable to the operations of the Group
\nBusiness or of any member of the Contributed Company Group for a relevant period
\n(the “INTERIM PERIOD”) shall be (i) in the case of a Tax that is not based on a
\nnet income, the total amount of such Tax for the Interim Period in question
\nmultiplied by a fraction, the numerator of which is the number of days in the
\nInterim Period and the denominator of which is the total number of days in such
\nperiod, and (ii) in the case of a Tax that is based on net <\/p>\n
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\n 87
\nincome, the Tax that is due shall be an amount as equitably determined by the
\nparties based upon a hypothetical closing of the books.<\/p>\n
(i) If Newco, a Contributed Company or any Affiliate receives
\nany notice of the assertion of any Tax liability relating to a member of the
\nContributed Company Group for which STI or SSI may be liable under this
\nAgreement, Newco shall give prompt written notice thereof to STI or SSI. A
\nfailure to promptly notify pursuant to this paragraph shall not preclude another
\nparty’s indemnification obligation.<\/p>\n
(j) After the Closing, Newco and the Contributed Companies
\nwill provide reasonable access to all relevant Newco and the Contributed Company
\nGroup relevant books, records, agreements and memoranda, and provide such
\nassistance to STI and SSI as STI, SSI and their Affiliates shall reasonably
\nrequest, with respect to any federal, foreign, state or local Tax matters
\npertaining to the members of the Contributed Company Group for taxable periods
\nor transactions on or prior to the Effective Time. Newco will notify STI prior
\nto disposition of such Tax records, if such disposition will take place within
\nten years after the Effective Time.<\/p>\n
(k) Notwithstanding anything in this Agreement to the
\ncontrary, STI and Newco covenant and agree, (unless there has been a final
\ndetermination as defined in Section 1313(a) of the Code or any other event which
\nconclusively establishes a contrary position) for all Tax purposes including all
\nTax Returns and any Tax examinations, proceedings or controversies, to (and to
\ncause any affiliate or successor to their assets or businesses to) take each of
\nthe positions set forth below (and not to take any position inconsistent
\ntherewith) and to use good faith and reasonable best efforts to defend such
\npositions:<\/p>\n
(i) The Merger (i) will qualify as a tax-free
\nreorganization described in Section 368(a) of the Code and (ii) when taken
\ntogether with the Seagate Transaction, will qualify as a tax-free transfer of
\nthe stock of VERITAS to Newco governed by Section 351(a) of the Code.<\/p>\n
(ii) The Seagate Transaction, when taken together
\nwith Merger, will qualify as a transfer of the Contributed Stock and Contributed
\nAssets to Newco governed by Section 351(a) of the Code.<\/p>\n
(iii) None of the consideration issued in
\nconnection with the Seagate Transaction will be paid or issued for services or
\nas a covenant not to compete.<\/p>\n
(l) STI and Newco agree to report to the other any
\ncommunication from or with the Internal Revenue Service or any other Taxing
\nAuthority which relates in any way to the characterization of the transactions
\ngoverned by this Agreement. Each of STI and Newco will file with its Federal
\nincome tax return for the taxable year in which the Merger and Seagate
\nTransaction occurs (which tax return shall be timely filed) the information
\nrequired by Treas. Reg. Section 1.351-3 and 1.368-3 and to provide each other
\nupon request with a statement to the effect that such party has <\/p>\n
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\n 88<\/p>\n
complied with this requirement after filing. STI, the Contributed Companies, and
\nNewco also will maintain such permanent records as are required by Treas. Reg.
\nSections 1.351-3(c) and 1.368-3.<\/p>\n
13.6 Seagate Transaction Items.<\/p>\n
(a) Newco AND VERITAS covenant and represent that:<\/p>\n
(i) Newco and VERITAS have no plan or intention
\nto permit or to cause VERITAS or any Contributed Company to be liquidated or to
\nbe merged with any other entity.<\/p>\n
(ii) Newco and VERITAS have no plan or intention
\nto terminate the existence of Newco, VERITAS or any Contributed Company
\n(including without limitation by Merger).<\/p>\n
(iii) Newco and VERITAS have no plan or intention
\nto cause or permit Newco to dispose of all or any portion of the stock of
\nVERITAS or of any Contributed Company (including, without limitation, by merger)
\nor the Contributed Assets, except in the ordinary course of business.<\/p>\n
(iv) After taking into account (and thus deeming
\nshares to be issued as of the end on the Closing Date) any planned or intended
\n(as of the date hereof and the Effective Time) issuances of Newco stock and the
\nexercise of any Newco stock rights (including warrants, options, convertible
\ninstruments), the shareholders of VERITAS immediately prior to the transactions
\ncontemplated by this Agreement and Seagate (collectively, the “transferees”)
\nshall hold on the day after the Effective Time at least 80% of the voting stock
\nof Newco and at least 80% of each class of non-voting stock of Newco. This
\nrepresentation shall be deemed made twice, assuming in the alternative that the
\nVERITAS shares held by Seagate are (A) voting stock and (B) non-voting stock.<\/p>\n
(v) Other than the possible repurchase of
\nemployee shares as a result of an obligation of SSI that may be assumed by
\nNewco, VERITAS and Newco have no plan or intention to redeem or otherwise
\nreacquire any stock to be issued in the transactions contemplated in this
\nAgreement.<\/p>\n
(vi) VERITAS and Newco are not aware of any plan
\nor intent on the part of the officers, directors and 5% or greater shareholders
\nof VERITAS to dispose of any Newco shares issued in the merger in a transaction
\nundertaken in connection with this transaction.<\/p>\n
(vii) VERITAS and Newco are not “investment
\ncompanies” within the meaning of section 351(e) of the Code and section
\n1.351-1(c)(1)(ii) of the regulations promulgated thereunder.<\/p>\n
(viii) With respect to matters not covered by
\nSection 13.6(a)(i) through 13.6(a)(vii), Newco shall not take, or permit its
\naffiliates to take, any action within two years of the Effective Time which it
\n(or its advisors actually participating or advising in the action) <\/p>\n
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\n 89<\/p>\n
actually know (at the time of such action) will preclude the ability of the
\nSeagate transaction to qualify as a tax-free exchange under section 351(a) of
\nthe Code.<\/p>\n
(ix) VERITAS and Newco shall make such additional
\nrepresentations and covenants as SSI or its counsel shall reasonably request
\nprior to the closing for purposes of establishing the qualification under
\nSection 351 of the Seagate Transaction, provided such representations and
\ncovenants are in a form and substance reasonably satisfactory to VERITAS and
\nNewco. Any such representations shall be considered to be part of this section
\n13.6(a).<\/p>\n
(b) The representations and covenants of this Section 13.6(a)
\nshall survive the Closing of the Seagate Transaction through the expiration of
\nthe applicable Tax statutes of limitations (including extensions).<\/p>\n
14. MISCELLANEOUS<\/p>\n
14.1 Governing Law. The internal laws of the State of California
\n(irrespective of its choice of law principles) will govern the validity of this
\nAgreement, the construction of its terms and the interpretation and enforcement
\nof the rights and duties of the parties hereto, except that the fiduciary duties
\nof the directors and managers of parties hereto and their affiliates shall be
\ngoverned by the law of the jurisdiction of such company’s formation.<\/p>\n
14.2 Assignment; Binding Upon Successors and Assigns. None of the
\nparties hereto may assign any of its rights or obligations hereunder without the
\nprior written consent of the other parties hereto; provided, however, that the
\nsale or other transfer of the stock of any Contributing Company shall not be
\ndeemed an assignment provided that this Agreement remains enforceable against
\nthe Contributing Company after such stock sale or transfer. Subject to the
\npreceding sentence, this Agreement will be binding upon and inure to the benefit
\nof the parties hereto and their respective successors and permitted assigns.<\/p>\n
14.3 Severability. If any provision of this Agreement, or the
\napplication thereof, will for any reason and to any extent be invalid or
\nunenforceable, the remainder of this Agreement and application of such provision
\nto other persons or circumstances will be interpreted so as reasonably to effect
\nthe intent of the parties hereto. The parties further agree to replace such void
\nor unenforceable provision of this Agreement with a valid and enforceable
\nprovision that will achieve, to the greatest extent possible, the economic,
\nbusiness and other purposes of the void or unenforceable provision.<\/p>\n
14.4 Counterparts. This Agreement may be executed in any number of
\ncounterparts, each of which will be an original as regards any party whose
\nsignature appears thereon and all of which together will constitute one and the
\nsame instrument. This Agreement will become binding when one or more
\ncounterparts hereof, individually or taken together, will bear the signatures of
\nall the parties reflected hereon as signatories.<\/p>\n
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\n 90<\/p>\n
14.5 Other Remedies. Except as otherwise provided herein, any and all
\nremedies herein expressly conferred upon a party will be deemed cumulative with
\nand not exclusive of any other remedy conferred hereby or by law on such party,
\nand the exercise of any one remedy will not preclude the exercise of any other.
\nThe parties agree that specific performance is an appropriate remedy for a
\nbreach of their respective obligations under this Agreement.<\/p>\n
14.6 Amendment and Waivers. Any term or provision of this Agreement may
\nbe amended by the parties hereto at anytime by execution of an instrument in
\nwriting signed on behalf of each of STI, SSI and VERITAS. At any time prior to
\nthe Closing, and the observance of any term of this Agreement may be waived
\n(either generally or in a particular instance and either retroactively or
\nprospectively) only by a writing signed by the party or parties to be bound
\nthereby. The waiver by a party of any breach hereof or default in the
\nperformance hereof will not be deemed to constitute a waiver of any other
\ndefault or any succeeding breach or default. Delay in exercising any right under
\nthis Agreement shall not constitute a waiver of such right. The Agreement may be
\namended by the parties hereto at any time before or after approval of such
\nparty’s stockholders, but, after such approval, no amendment will be made which
\nby applicable law requires the further approval of a party’s stockholders
\nwithout obtaining such further approval.<\/p>\n
14.7 Expenses. Except as herein expressly provided to the contrary in
\nthis Agreement or the Ancillary Agreements, each party will bear its respective
\nfees and expenses incurred with respect to the negotiation, preparation and
\nperformance of this Agreement and the transactions contemplated hereby;
\nprovided, however, that SSI and VERITAS shall share equally all fees and
\nexpenses, other than incurred in connection with the printing and filing of the
\nForm S-4 (including financial statements and exhibits) and any amendment or
\nsupplements thereto; provided, further that upon Closing of the Merger and the
\nSeagate Transaction, Newco shall pay 20% of the reasonable attorneys’,
\naccountants’ and financial advisors’ fees, incurred by SSI and STI in connection
\nwith the Agreement.<\/p>\n
14.8 Attorneys’ Fees. Should suit be brought to enforce or interpret
\nany part of this Agreement, the prevailing party will be entitled to recover, as
\nan element of the costs of suit and not as damages, reasonable attorneys’ fees
\nto be fixed by the court (including, without limitation, costs, expenses and
\nfees on any appeal). The prevailing party will be entitled to recover its costs
\nof suit, regardless of whether such suit proceeds to final judgment.<\/p>\n
14.9 Notices. All notices and other communications pursuant to this
\nAgreement shall be in writing and deemed to be sufficient if contained in a
\nwritten instrument and shall be deemed given if delivered personally,
\ntelecopied, sent by nationally-recognized overnight courier or mailed by
\nregistered or certified mail (return receipt requested), postage prepaid, to the
\nparties at the following address (or at such other address for a party as shall
\nbe specified by like notice):<\/p>\n
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\n 91<\/p>\n
If to SSI\/STI to: Seagate Technology, Inc.
\n and Seagate Software, Inc.
\n 920 Disc Drive
\n Scotts Valley, CA 95066
\n Attention: Tom Mulvaney
\n Telecopier: (831) 438-6675<\/p>\n
With a copy to: Wilson, Sonsini, Goodrich & Rosati
\n 650 Page Mill Road
\n Palo Alto, CA 94304
\n Attention: Larry Sonsini, Esq.
\n Telecopier: (650) 493-6811<\/p>\n
And if to VERITAS or VERITAS Software Corporation
\n or Newco to: VERITAS Software Corporation
\n 1600 Plymouth Street
\n Mountain View, CA 94043
\n Attention: Chief Executive Officer
\n Telecopier: (650) 335-8050<\/p>\n
With a copy to: Fenwick & West LLP
\n Two Palo Alto Square
\n Palo Alto, CA 94306
\n Attention: Gordon K. Davidson, Esq.
\n Telecopier: (650) 494-1417<\/p>\n
All such notices and other communications shall be deemed to have been
\nreceived (a) in the case of personal delivery, on the date of such delivery, (b)
\nin the case of a telecopy, when the party receiving such copy shall have
\nconfirmed receipt of the communication, (c) in the case of delivery by
\nnationally-recognized overnight courier, on the business day following dispatch,
\nand (d) in the case of mailing, on the third business day following such
\nmailing.<\/p>\n
14.10 Construction of Agreement. This Agreement has been negotiated by
\nthe respective parties hereto and their attorneys and the language hereof will
\nnot be construed for or against either party. A reference to a Section or an
\nexhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
\nexplicitly set forth. The titles and headings herein are for reference purposes
\nonly and will not in any manner limit the construction of this Agreement which
\nwill be considered as a whole.<\/p>\n
14.11 No Joint Venture. Nothing contained in this Agreement will be
\ndeemed or construed as creating a joint venture or partnership between any of
\nthe parties hereto. No party is by virtue of this Agreement authorized as an
\nagent, employee or legal representative of any other party. No party will have
\nthe power to control the activities and operations of any other and their status
\nis, and at all <\/p>\n
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\n 92<\/p>\n
times, will continue to be, that of independent contractors with respect to each
\nother. No party will have any power or authority to bind or commit any other. No
\nparty will hold itself out as having any authority or relationship in
\ncontravention of this Section.<\/p>\n
14.12 Further Assurances. Each party agrees to cooperate fully with the
\nother parties and to execute such further instruments, documents and agreements
\nand to give such further written assurances as may be reasonably requested by
\nany other party to evidence and reflect the transactions described herein and
\ncontemplated hereby and to carry into effect the intents and purposes of this
\nAgreement.<\/p>\n
14.13 Absence of Third Party Beneficiary Rights. Except as provided in
\nSection 5.18, no provisions of this Agreement are intended, nor will be
\ninterpreted, to provide or create any third party beneficiary rights of any kind
\nin any holder of the stock of VERITAS, Newco, any Contributing Company or a
\nmember of the Contributed Company Group or any Employee, client, customer,
\naffiliate, stockholder, partner or any party hereto or any other person or
\nentity, and, except as so provided, all provisions hereof will be personal
\nsolely between the parties to this Agreement and no other person or entity shall
\nhave any cause of action as a third party beneficiary of this Agreement.<\/p>\n
14.14 Public Announcement. Upon execution of this Agreement, VERITAS
\nand SSI promptly will issue a joint press release approved by both parties
\nannouncing the Merger. Thereafter, VERITAS or STI or SSI may issue such press
\nreleases, and make such other disclosures regarding the Merger, as they may each
\ndetermine (after consultation with legal counsel) to be required under
\napplicable securities laws or NASD rules; VERITAS, SSI and STI shall confer with
\nthe other party prior to any press release or disclosure relating to the Merger
\nor Seagate Transaction.<\/p>\n
14.15 Certain Defined Terms. As used in this Agreement, the following
\nterms shall have the following meanings.<\/p>\n
“AFFILIATE” means, with respect to a specified person, any other person
\nthat directly or indirectly controls, is controlled by, or is under common
\ncontrol with, such specified person or which hold at least a 10% ownership
\ninterest in said person.<\/p>\n
“ANCILLARY AGREEMENTS” means, collectively, the Stockholder Agreement,
\nthe Registration Rights Agreement, the Bill of Transfer, the Development
\nAgreement, the Patent Assignment, the Copyright Assignment and the Trademark
\nAssignment, the Transition Services and Facilities Use Agreement, the Cross
\nLicense Agreement and the Voting Agreement (as such terms are defined herein).<\/p>\n
“BILL OF TRANSFER” means the Bill of Transfer for the Contributed
\nAssets (other than the Contributed Stock) to be executed and delivered by the
\nholders of such Contributed Assets and Newco at the Effective Time in form
\nmutually acceptable to SSI and Newco.<\/p>\n
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\n 93<\/p>\n
“BUSINESS RECORDS” shall mean SSI’s general and financial records,
\nfinancial information, marketing and sales information, pricing, marketing
\nplans, business plans, financial and business projections and other files and
\nrecords evidencing the Group Business in the possession of or control of the
\nContributing Companies but not the Contributed Companies (including but not
\nlimited to any such records, information, plans and files relating to any Group
\nAssets).<\/p>\n
“CLAIM ASSETS” shall mean all claims, security or similar deposits,
\nrights to refunds, chooses in action, causes of action, rights of recovery or
\nrights to damages, rights of set-off and other rights of recoupment (including
\nwithout limitation any of the foregoing related to the payment of Taxes) to the
\nextent arising out of the Conduct of the Group Business or directly related to
\nany of the Group Assets.<\/p>\n
“CLOSING” and “EFFECTIVE TIME” have the meanings specified for such
\nterm in Section 6.1.<\/p>\n
“CONDUCT OF THE GROUP BUSINESS” means the conduct in all material
\nrespects of the Group Business as conducted on the date of this Agreement and at
\nClosing.<\/p>\n
“CONDUCT OF VERITAS’ BUSINESS” means the conduct in all material
\nrespects of the Group Business as conducted on the date of this Agreement and at
\nClosing.<\/p>\n
“CONTRIBUTED ASSETS” shall mean those assets that are owned, leased or
\nlicensed by the Contributing Companies that are (a) listed on Schedule 1.4(a),
\n(b) Intellectual Property Rights material to the production, development,
\nsupport or marketing of the Group Products (subject to the provisions of Section
\n4.19), or (c) used primarily in the Group Business, and all Contributed
\nContracts to which any of the Contributing Companies is a party and subject to
\nSection 4.15, all Financial Assets.<\/p>\n
“CONTRIBUTED COMPANIES” means Seagate Software Network & Storage
\nManagement Group, Inc., a Delaware corporation, Seagate Software Limited, a
\ncorporation formed under the laws of the United Kingdom, Seagate Software GmbH,
\na corporation formed under the laws of Germany, Seagate Software International
\nHoldings Ltd., a limited liability company organized under the laws of the
\nCayman Islands, and Seagate Software Storage Management Group, Inc., a Delaware
\ncorporation.<\/p>\n
“CONTRIBUTED COMPANY GROUP” means the Contributed Companies and their
\ndirect or indirect subsidiaries, if any, identified on attached Schedule 14.15A.<\/p>\n
“CONTRIBUTED COMPANY PROPERTY” shall mean all of the assets, real,
\npersonal, tangible and intangible, owned, leased, licensed or otherwise held by
\nany member of the Contributed Company Group.<\/p>\n
“CONTRIBUTED CONTRACTS” means all agreements, contracts,
\nunderstandings, arrangements, commitments, mortgages, indentures, leases,
\nlicenses, permits, franchises, instruments, notes, bonds, <\/p>\n
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\n 94<\/p>\n
indemnities, guarantees, loan agreements, credit agreements, representations,
\nwarranties, deeds, assignments, powers of attorney, certificates, purchase
\norders, work orders, insurance policies, benefit plans, covenants, assurances or
\nundertakings of any nature (i) to which any of the Contributed Company Group is
\na party, or (ii) which are used in the Group Business including but not limited
\nto those listed on Schedule 14.15B subject in the case of Joint Contributed
\nAgreements to the provisions of 8.16.<\/p>\n
“CONTRIBUTED STOCK AND ASSETS” means the Contributed Stock and the
\nContributed Assets.<\/p>\n
“CONTRIBUTED SUBSIDIARIES” means the direct or indirect subsidiaries of
\nthe Contributed Companies identified in Section 14.15C of the SSI Disclosure
\nLetter.<\/p>\n
“CONTRIBUTING COMPANIES” means the STI, SSI, Seagate Software S.A., an
\nentity formed under the laws of the France, Nippon Seagate Software KK, an
\nentity formed under the laws of Japan, Seagate Software A.B., an entity formed
\nunder the laws of Sweden, Seagate Software Pty. Ltd., an entity formed under the
\nlaws of Australia, Seagate Technology International, a Cayman Islands limited
\nliability company, Penang Seagate Industries Sdn. Bhd., an entity formed under
\nthe laws of Malaysia, Seagate Software Limited, an entity formed under the laws
\nof Hong Kong, Seagate Information Management Group Limited, a corporation
\norganized under the laws of the United Kingdom and Delaware with respect to its
\nSouth African branch, and any other subsidiary of SSI which may own any interest
\nin the Contributed Stock and Assets to be conveyed to Newco or that is liable
\nfor any Assumed Liability to be assumed by Newco under the term of this
\nAgreement.<\/p>\n
“CONTROL” (including the terms “CONTROLLED BY” and “UNDER COMMON
\nCONTROL WITH”) means the possession, directly or indirectly, of the power to
\ndirect or cause the direction of the management policies of a person, whether
\nthrough the ownership of stock, as an officer, director or partner, by contract
\nor otherwise.<\/p>\n
“DISPOSAL,” “RELEASE,” and “THREATENED RELEASE” shall have the
\ndefinitions assigned thereto by the Comprehensive Environmental Response,
\nCompensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as
\namended (“CERCLA”).<\/p>\n
“DELAWARE LAW” means the Delaware General Corporation Law, as in effect
\nfrom time to time.<\/p>\n
“DOLLARS” or “$” means U.S. dollars.<\/p>\n
“EFFECTIVE TIME” shall mean the effective time and date that the
\nCertificate of Merger is deemed filed with the Secretary of State of the State
\nof Delaware in accordance with the relevant provisions of the Delaware Law.<\/p>\n
“ENVIRONMENTAL DAMAGE” means any actual or alleged Liability (including
\nwithout limitation Liability for investigatory costs, cleanup costs,
\ngovernmental response costs, natural <\/p>\n
-86-
\n 95
\nresources damages, property damages, personal injuries or penalties) arising out
\nof, based on or relating to (i) the presence, discharge, emission or release
\ninto the environment of any Hazardous Substance or (ii) facts or circumstances
\nforming the basis of any violation, or alleged violation, of any Environmental
\nLaw.<\/p>\n
“ENVIRONMENTAL LAWS” means all federal, state, local and international
\nlaws and regulations relating to pollution, the protection of human health or
\nthe environment (including without limitation ambient air, surface water, ground
\nwater, land surface or subsurface strata), including without limitation laws and
\nregulations relating to emissions, discharges, releases or threatened releases
\nof Hazardous Substances, or otherwise relating to the manufacture, processing,
\ndistribution, use, treatment, storage, disposal, transport or handling of
\nHazardous Substances.<\/p>\n
“EMPLOYEE” has the meaning specified in Section 12.1(a).<\/p>\n
“ENCUMBRANCE” means any pledge, lien, collateral assignment, security
\ninterest, mortgage, deed of trust, title retention, conditional sale or other
\nsecurity arrangement, or any charge, adverse claim of title, ownership or use,
\nor any other encumbrance of any kind.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of 1974, as
\namended, and the rulings and regulations promulgated thereunder.<\/p>\n
“EXCLUDED LIABILITIES” shall have the meaning defined for it in Section
\n1.4(b)(ii).<\/p>\n
“FINANCIAL ASSETS” shall mean (i) all cash and cash equivalents of any
\nof the Contributed Companies, Contributed Subsidiaries or Contributing Companies
\narising from or generated by the Group Business; (ii) any of the Contributed
\nCompanies or Contributed Subsidiaries and other Group Business accounts
\nreceivable, unbilled receivables, and other amounts receivable from or to third
\nparties; (iii) all rights of any of the Contributed Companies or Contributed
\nSubsidiaries of every nature and description under or arising out of all
\ninsurance policies of any of the Contributed Companies or Contributed
\nSubsidiaries; and (iv) the minute books, stock ledgers and Tax records of any of
\nthe Contributed Companies or Contributed Subsidiaries.<\/p>\n
“GAAP” means United States generally accepted accounting principles and
\npractices as in effect from time to time and applied consistently throughout the
\nperiods involved.<\/p>\n
“GOVERNMENTAL ANTITRUST AUTHORITY” means any federal, state, local or
\nnon-U.S. governmental or quasi-governmental authority charged with the
\nadministration or enforcement of antitrust, competition or merger control laws
\nor regulations.<\/p>\n
“GOVERNMENTAL PERMITS” means all municipal, state, local, federal and
\nother governmental franchises, permits, licenses, agreements, waivers and
\nauthorizations from, issued or granted by, any jurisdiction.<\/p>\n
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\n 96<\/p>\n
“GROUP ASSETS” shall mean the Contributed Assets and all Contributed
\nCompany Property, considered collectively.<\/p>\n
“GROUP BUSINESS” means the business of STI and its direct and indirect
\nsubsidiaries with respect to the Group Products, as reflected in the 1998 Group
\nBalance Sheet, including without limitation the business of developing,
\nmanufacturing, marketing, licensing, distributing, using, operating, installing,
\nservicing, supporting, maintaining, repairing or otherwise using or commercially
\nexploiting all or any aspect of any or all of the Group Products or of any
\nIntangible Assets or Intellectual Property Rights related to any of the Group
\nProducts.<\/p>\n
“GROUP FINANCIAL STATEMENTS” has the meaning given in Section 2.4(c).<\/p>\n
“GROUP GOVERNMENTAL PERMITS” means those Governmental Permits required
\nfor the Conduct of the Group Business (including without limitation the
\nmanufacture or sale of the Group Products) that are held by any member of the
\nContributed Company Group or held, in whole or in part, primarily by a
\nContributing Company and required for the Conduct of the Group Business, or
\nnecessary for the use or operation of any of the Group Assets (including without
\nlimitation the Real Property Assets) or the manufacture or sale of any of the
\nGroup Products, to the extent legally transferable in accordance with this
\nAgreement;<\/p>\n
“GROUP PRODUCTS” means the software and other products listed in the
\nGroup product list attached hereto as Exhibit 14.15D marketed or sold by any
\nmember of the Contributed Company Group or the Contributing Companies and all
\nsoftware under development for or licensed by the Group Business (together with
\nall derivative works, upgrades, modifications, enhancements and configurations
\nof any of the foregoing now existing or under development and all software and
\ncomponents included in any configuration of any of the foregoing, and all
\ndevelopment and QA tools, utilities and diagnostics used to develop any of the
\nforegoing, in each case whether or not ever commercially offered or
\nprice-listed, and whether or not in development).<\/p>\n
“HAZARDOUS MATERIALS” means: (i) any pollutant, contaminant, toxic,
\nhazardous or noxious substance or waste which is regulated by the laws of any
\nstate, local, federal or other governmental authority or jurisdiction, including
\nbut not limited to the State of Florida and the United States Government, and
\nincludes but is not limited to (a) any oil or petroleum compounds, flammable
\nsubstances, explosives, radioactive materials, or any other materials or
\npollutants which pose a hazard to persons or cause any real property to be in
\nviolation of any Environmental Laws, (b) to the extent so regulated, asbestos or
\nany asbestos-containing material of any kind or character, (c) polychlorinated
\nbiphenyls, as regulated by the Toxic Substances Control Act, 15 U.S.C. Section
\n2601 et seq., (d) any materials or substances designated as “hazardous
\nsubstances” pursuant to (1) Section 311 of the Clean Water Act, 33 U.S.C.
\nSection 1251 et seq., or (2) Section 101 of the Comprehensive Environmental
\nResponse, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (e)
\n“chemical substance,” “new chemical substance,” or “hazardous chemical substance
\nor mixture” pursuant to Sections 3, 6 and 7 of the Toxic Substances Control Act,
\n15 U.S.C. Section 2601 et <\/p>\n
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\n 97<\/p>\n
seq., and (f) any “hazardous waste” pursuant to Section 1004 of the Resource
\nConservation and Recovery Act, 42 U.S.C. Section 6901 et seq.<\/p>\n
“HSR ACT” means the Hart-Scott-Rodino Antitrust Improvements Act of
\n1976, as amended, and the rules and regulations promulgated thereunder.<\/p>\n
“IMG” means the business of SSI that does not constitute the Group
\nBusiness.<\/p>\n
“INSOLVENCY ACTION” means, with respect to a person, any or all of the
\nfollowing: (i) the voluntary or involuntary filing, with respect to such person,
\nof a petition for relief, or any other effort to seek relief, under any
\nInsolvency Proceeding; (ii) such person or any of its assets otherwise becoming
\nthe subject of an Insolvency Proceeding; (iii) the formal or informal
\ndissolution, liquidation or winding up of such person, or any efforts to
\ninitiate or carry out such dissolution, liquidation or winding up; (iv) the
\nappointment of (or efforts or attempts to appoint) a receiver, liquidator,
\nsequestrator, trustee, custodian or other similar officer with respect to such
\nperson or any part of its assets or properties; or (v) any composition of the
\nindebtedness of such person or any assignment for the benefit of such person’s
\ncreditors.<\/p>\n
“INSOLVENCY PROCEEDING” means any or all of the following actions,
\nevents or proceedings: (i) any voluntary or involuntary case, contested matter
\nor other proceeding under the United States Bankruptcy Code, as amended, and any
\nsuccessor law or laws thereto; or (ii) any case, action or other proceeding
\nunder any bankruptcy, insolvency, debt reorganization or similar law (whether
\nnow or hereafter in effect) of any state, country or other jurisdiction.<\/p>\n
“INTANGIBLE ASSETS” means, collectively, all intangible assets,
\nproperties and rights required for the development of the Group Products,
\nconstituting software (in both source code and binary code form), technology,
\nworks of authorship, manuals, logbooks, notebooks, user’s guides, programmers’
\nnotes, documentation, know-how, trade secrets, training materials (for both
\ntraining of customers and of service personnel).<\/p>\n
“INTELLECTUAL PROPERTY RIGHTS” means, collectively, all of the
\nfollowing worldwide intangible legal rights including those existing or acquired
\nby ownership, license or other legal operation, whether or not filed, perfected,
\nregistered or recorded and whether now or hereafter existing, filed, issued or
\nacquired: (i) patents, patent applications, and patent rights, including any and
\nall continuations, continuations-in-part, divisions, reissues, reexaminations or
\nextensions thereof; (ii) inventions (whether patentable or not in any country),
\ninvention disclosures, industrial designs, improvements, trade secrets,
\nproprietary information, know-how, technology and technical data; (iii) rights
\nassociated with works of authorship (including without limitation audiovisual
\nworks), including without limitation copyrights, copyright applications and
\ncopyright registrations, moral rights, mask work rights, mask work applications
\nand mask work registrations; (iv) rights in trade secrets (including without
\nlimitation rights in Industrial Property, customer, vendor and prospect lists
\nand all associated information or databases and other confidential or
\nproprietary information), and all rights relating to the protection of the same
\nincluding without limitation rights under nondisclosure <\/p>\n
-89-
\n 98
\nagreements; (v) any other proprietary rights in technology, including software,
\nall source and object code, algorithms, architecture, structure, display
\nscreens, layouts, inventions, development tools and all documentation and media
\nconstituting, describing or relating to the above, including, without
\nlimitation, manuals, memoranda, records, business information, or trade marks,
\ntrade dress or names, anywhere in the world; (vi) any rights analogous to those
\nset forth in the preceding clauses and any other proprietary rights relating to
\nintangible property, including without limitation brand names, trademarks,
\nservice marks, trademark and service mark registrations and applications
\ntherefor, trade names, rights in trade dress and packaging and all goodwill
\nassociated with the same; and (vii) all rights to sue or make any claims for any
\npast, present or future infringement, misappropriation or unauthorized use of
\nany of the foregoing rights and the right to all income, royalties, damages and
\nother payments that are now or may hereafter become due or payable with respect
\nto any of the foregoing rights, including without limitation damages for past,
\npresent or future infringement, misappropriation or unauthorized use thereof;
\nand (viii) rights under license agreements for the foregoing.<\/p>\n
“INTERCOMPANY ACCOUNTS” means the net amounts payable by or owing to
\nthe Group Business as of the Effective Time as a consequence of the Conduct of
\nthe Group Business, in the ordinary course, (i) pursuant to (a) the tax sharing
\nagreement, (b) the intercompany revolving loan agreement, (c) the general
\nservices agreement, all of which are between the Contributed Company Group, on
\nthe one hand, and STI and its direct or indirect subsidiaries (other than the
\nContributed Company Group) on the other hand, or (ii) as a consequence of
\nreimbursements by SSI or STI of amounts paid by them for the Conduct of the
\nBusiness in the ordinary course; provided, however that in no event shall the
\nGroup Business be responsible for amounts attributable to the IMG Business.<\/p>\n
“INTERNAL REVENUE CODE” means the Internal Revenue Code of 1986, as
\namended, and the rulings and regulations promulgated thereunder.<\/p>\n
“KEY EMPLOYEES” are identified in Schedule 14.15E-1.<\/p>\n
“LIABILITIES” (or when used with reference to a single item described
\nbelow, “LIABILITY”) means debts, liabilities and obligations (whether pecuniary
\nor not, including without limitation obligations to perform or forbear from
\nperforming acts or services), fines or penalties, whether accrued or fixed,
\nabsolute or contingent, matured or unmatured, determined or determinable, known
\nor unknown, including without limitation those arising under any law, action or
\ngovernmental order, liabilities for Taxes and those arising under any contract,
\nagreement, arrangement, commitment or undertaking of any kind whatsoever
\n(whether written or oral, express or implied), including, without limitation,
\nthose arising under any Contributed Contract.<\/p>\n
“LOSS” means and includes any and all Liability, loss, damage, claim,
\nexpense, cost, fine, fee, penalty, obligation, or injury, including, without
\nlimitation, those resulting from any and all claims, actions, suits, demands,
\nassessments, investigations, judgments, orders, awards, arbitrations,
\nsettlements or other proceedings, together with reasonable costs and expenses,
\nincluding the reasonable attorneys’ and experts’ fees, court costs, arbitration
\ncosts, filing fees and other legal costs <\/p>\n
-90-
\n 99<\/p>\n
and expenses relating thereto, together with interest accrued on each of the
\nforegoing amounts from the date the same was incurred at the lower of (i) the
\nprime rate charged from time to time by the Bank of America, N.T. & S.A. or (ii)
\nthe highest rate of interest permitted under applicable law.<\/p>\n
“MANAGEMENT EMPLOYMENT CONTRACTS” means the Management Employment
\nContracts to be executed by Newco and the Key Employees listed on attached
\nSchedule 14.15E-1 and the employees of Veritas listed on Schedule 14.15E-2 prior
\nto the Effective Time as provided in Section 5.16 in the form attached hereto as
\nExhibit 4.17(a).<\/p>\n
“MATERIAL ADVERSE EFFECT ON NEWCO” means any event, change or effect
\nwould have a material adverse effect on the business, tangible and intangible
\nassets, financial condition, and future operations of Newco and its
\nsubsidiaries, taken as a whole, after the Effective Time or prevent in any
\nmaterial respect Newco from taking the actions anticipated by this Agreement and
\nthe Ancillary Agreements to be taken by Newco and this Subsidiaries on and after
\nthe Effective Time.<\/p>\n
“MATERIAL ADVERSE EFFECT ON THE GROUP BUSINESS” means any event, change
\nor effect which would have a material adverse effect on the business, tangible
\nand intangible assets, financial condition, and results of operations of the
\nGroup Business, taken as a whole, or prevent in any material respect the
\nperformance by SSI, STI, and their subsidiaries of the actions anticipated by
\nthis Agreement and the Ancillary Agreements to be taken by them on or before the
\nClosing.<\/p>\n
“MATERIAL ADVERSE EFFECT ON VERITAS” means any event, change or effect
\nwould have a material adverse effect on the business, tangible and intangible
\nassets, financial condition, and results of operations of VERITAS and the
\nVERITAS Subsidiaries, taken as a whole , or prevent in any material respect the
\nperformance by VERITAS and its subsidiaries of the actions anticipated by this
\nAgreement and the Ancillary Agreements to be taken by them on or before the
\nClosing.<\/p>\n
“MINORITY HOLDER” means holders of shares of SSI other than STI.<\/p>\n
“NEWCO INDEMNITEES” means and includes Newco and any present or future
\nofficer, director, employee, affiliate, stockholder or agent of Newco.<\/p>\n
DEVELOPMENT AND LICENSE AGREEMENT” means the Development and License
\nAgreement to be executed and delivered by Newco and STI simultaneously with this
\nAgreement in the form attached hereto as Exhibit 4.14(a).<\/p>\n
“OPTIONEE PERCENTAGE INTEREST” means a fully diluted equity interest in
\nNewco (taking into account all options, warrants and convertible debentures on
\nan as-converted basis) immediately following the Effective Time represented by
\nthe aggregate number of shares of Newco Common Stock issuable upon exercise of
\nthe Newco Options issued in exchange for Exchanged SSI Options pursuant to the
\nprovisions of Section 1.3(a)(ii) hereof.<\/p>\n
-91-
\n 100<\/p>\n
“PERMITTED ENCUMBRANCE” means Encumbrances (a) as disclosed as an
\nencumbrance in the SSI Disclosure Schedule 14.15F or in the Seagate SEC
\nDocuments filed prior to the date of this Agreement, (b) Encumbrances for
\nLiabilities reflected in the Group Financial Statements or the VERITAS Financial
\nStatements as appropriate, (c) liens for taxes not yet delinquent, (d) liens
\nimposed by law and incurred in the ordinary course of business to carriers,
\nwarehousemen, laborers, material men and the like not yet due and payable, (e)
\nimmaterial imperfections of title set forth in the SSI Disclosure Letter (f)
\nEncumbrances which are not material in amount or which will not materially
\ninterfere with the use of the Group Assets for the Conduct of the Group
\nBusiness.<\/p>\n
“PERSON” means any individual, partnership, limited liability company,
\nfirm, corporation, association, trust, unincorporated organization or other
\nentity, as well as any syndicate or group that would be deemed to be a person
\nunder Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.<\/p>\n
“REAL PROPERTY ASSETS” shall mean all real property assets required for
\nthe Conduct of the Group Business.<\/p>\n
“RESTRICTIVE AGREEMENT” has the meaning specified in Section 2.23.<\/p>\n
“SEAGATE’S KNOWLEDGE” or “KNOWN TO SEAGATE”. A particular fact or other
\nmatter shall be deemed to be within “Seagate’s Knowledge” or “Known to Seagate”
\nif any officer of SSI or a Contributed Company or any officer of STI responsible
\nfor the Group Business has current actual knowledge of such fact or other
\nmatter.<\/p>\n
“SOLVENT” shall mean, with respect to any person on a particular date,
\nthat on such date (a) the fair value of the property of such person is greater
\nthan the total amount of liabilities, including contingent liabilities, of such
\nperson; (b) the present fair salable value of the assets of such person is not
\nless than the amount that will be required to pay the probable liability of such
\nperson on its debts as they become absolute and matured; (c) such person does
\nnot intend to, and does not believe that it will, incur debts or liabilities
\nbeyond such person’s ability to pay as such debts and liabilities mature; and
\n(d) such person is not engaged in a business or transaction, and is not about to
\nengage in a business or transaction, for which such person’s property would
\nconstitute an unreasonably small capital. The amount of contingent liabilities
\n(such as litigation, guarantees and pension plan liabilities) at any time shall
\nbe computed as the amount that, in light of all the facts and circumstances
\nexisting at the time, represents the amount that can reasonably be expected to
\nbecome an actual or matured liability.<\/p>\n
“SSI PERCENTAGE INTEREST” means a fully diluted equity interest in
\nNewco (taking into account all options, warrants and convertible debentures on
\nan as-converted basis) equal to 100% less the VERITAS Percentage Interest.<\/p>\n
“SEAGATE TRANSACTION” shall have the meaning described in Recital A
\nhereto.<\/p>\n
-92-
\n 101<\/p>\n
“SSI DISCLOSURE LETTER” means a letter dated as of date hereof and
\nsupplemented with the prior written consent of VERITAS at any time prior to the
\nClosing, delivered by STI and SSI to Newco and VERITAS concurrently with the
\nexecution of this Agreement and certified by an officer of each of STI and SSI
\non behalf of each such entity, to be true, accurate and complete.<\/p>\n
“TAX” or “TAXES” means all taxes of any kind whatsoever (whether
\npayable directly or by withholding), including without limitation franchise,
\nincome, gross receipts, personal property, real property, ad valorem, value
\nadded, sales, use, documentary, stamp, intangible personal property, withholding
\nor other taxes, together with any interest and penalties, additions to tax or
\nadditional amounts with respect thereto imposed by any taxing authority.<\/p>\n
“VERITAS” is VERITAS Software Corporation and VERITAS Surviving
\nCorporation.<\/p>\n
“VERITAS ASSETS” are the tangible and intangible, real and personal
\nassets owned, leased or licensed by VERITAS.<\/p>\n
“VERITAS BUSINESS” is the business of VERITAS as carried on immediately
\nprior to the Seagate Transaction, including without limitation VERITAS’ business
\nof developing, manufacturing, marketing, licensing, distributing, using,
\noperating, installing, servicing, supporting, maintaining, repairing or
\notherwise using or commercially exploiting all or any aspect of any or all of
\nthe VERITAS Products or VERITAS Assets.<\/p>\n
“VERITAS CONTRACTS” means all agreements, contracts, understandings,
\narrangements, commitments, mortgages, indentures, leases, licenses, permits,
\nfranchises, instruments, notes, bonds, indemnities, guarantees, loan agreements,
\ncredit agreements, representations, warranties, deeds, assignments, powers of
\nattorney, certificates, purchase orders, work orders, insurance policies,
\nbenefit plans, covenants, assurances or undertakings of any nature to which
\nVERITAS or the VERITAS Subsidiaries are a party.<\/p>\n
“VERITAS EMPLOYEES” are the employees of VERITAS.<\/p>\n
“VERITAS PERMITTED ENCUMBRANCE” means Encumbrances (a) as disclosed as
\nan Encumbrance in the VERITAS Disclosure Schedule or the VERITAS SEC Documents
\nfiled prior to the date of this Agreement, (b) Encumbrances for liabilities
\nreflected in the VERITAS Financial Statements, (c) liens for current taxes not
\nyet delinquent, (d) liens imposed by law and incurred in the ordinary course of
\nbusiness to carriers, warehousemen, laborers, material men and the like not yet
\ndue, (e) immaterial imperfections of title set forth in the title report(s), if
\nany, referred to in the VERITAS Disclosure Letter (f) Encumbrances which are not
\nmaterial in amount or which will not materially interfere with the use of the
\nVERITAS Assets for the Conduct of the VERITAS Business.<\/p>\n
“VERITAS PRODUCTS” means the software and other products marketed or
\nsold by VERITAS and all of software products currently under development by or
\nfor VERITAS or for use or sale or license by VERITAS (in each case together with
\nall of the software, products, and other items listed <\/p>\n
-93-
\n 102<\/p>\n
on VERITAS’ products price list) and all derivative works, upgrades,
\nmodifications, enhancements and configurations of any of the foregoing and all
\nsoftware and components included in any configuration of any of the foregoing,
\nand all development tools, utilities and diagnostics used to develop any of the
\nforegoing in each case whether or not ever commercially offered or price-listed,
\nand whether or not in development).<\/p>\n
“VERITAS PERCENTAGE INTEREST” means that percentage of the fully
\ndiluted Common Stock equivalent equity interests in Newco (assuming conversion
\nof all convertible securities and exercise of all options and warrants)
\nimmediately following the Effective Time which equals the greater of (a) 60% or
\n(b) that percentage which results in the holders of VERITAS Common Stock,
\noptions, warrants and convertible debentures immediately before the Effective
\nTime owning, immediately after the Effective Time, 60% of the Common Stock
\nequivalent equity interests in Newco computed using the treasury stock method
\nwith respect to the outstanding options and warrants but not with respect to
\nconvertible debentures (which shall be treated as-if-converted to Common Stock).
\nFor this purpose, “treasury stock method” means that the number of shares
\nissuable upon exercise of all outstanding options and warrants will be deemed to
\nbe reduced by the number of shares that could be repurchased at the VERITAS
\nClosing Price with the proceeds from the hypothetical exercise of all
\noutstanding options and warrants which have exercise prices less than the
\nVERITAS Closing Price. Attached hereto as Exhibit 14.15H is an exemplar of the
\nmethodology to be used in calculating the VERITAS Percentage Interest at the
\nClosing.<\/p>\n
“VERITAS PERMITS AND APPROVALS” are all municipal, state, local,
\nfederal and other franchises, permits licenses, agreements, waivers and
\nauthorizations from, issued or granted by, any Governmental Entity held by
\nVERITAS or any of its subsidiaries and required for the conduct of VERITAS’
\nBusiness.<\/p>\n
“VERITAS’ KNOWLEDGE” or “KNOWN TO VERITAS”. A particular fact or other
\nmatter shall be deemed to be within “VERITAS’ Knowledge” or “Known to VERITAS”
\nif any officer of VERITAS has current actual knowledge of such fact or other
\nmatter.<\/p>\n
“VERITAS SUBSIDIARY” shall mean any direct or indirect subsidiary of
\nVERITAS listed on Schedule 14.15.G.<\/p>\n
14.16 Entire Agreement. This Agreement and the exhibits hereto
\nconstitute the entire understanding and agreement of the parties hereto with
\nrespect to the subject matter hereof and supersede all prior and contemporaneous
\nagreements or understandings, inducements or conditions, express or implied,
\nwritten or oral, between the parties with respect hereto other than the
\nNondisclosure Agreement, which shall remain in full force and effect. The
\nexpress terms hereof control and supersede any course of performance or usage of
\nthe trade inconsistent with any of the terms hereof.<\/p>\n
-94-
\n 103
\n IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
\nPlan of Reorganization as of the date first above written.<\/p>\n
VERITAS SOFTWARE CORPORATION, SEAGATE TECHNOLOGY, INC.,
\na Delaware corporation a Delaware corporation<\/p>\n
By: \/s\/ Mark Leslie By: \/s\/ Steven Luczo
\n ————————————- ———————————
\n President and Chief Executive Officer President and Chief Executive
\n Officer<\/p>\n
VERITAS HOLDING CORPORATION,
\na Delaware corporation<\/p>\n
By: \/s\/ Mark Leslie
\n———————————
\nPresident<\/p>\n
SEAGATE SOFTWARE, INC., SEAGATE SOFTWARE NETWORK & a Delaware corporation STORAGE MANAGEMENT
\n GROUP, INC.
\n a Delaware corporation<\/p>\n
By: \/s\/ Terence Cunningham By: \/s\/ Terence Cunningham
\n ————————————- ———————————
\n President and Chief Executive Officer President and Chief Executive
\n Officer<\/p>\n
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]<\/p>\n
-95-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9244],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43219","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-veritas-software-corp","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43219"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43219"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43219"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}