-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UC1MZ1nL9/Id5MFo5dtnRkNZllb+oMAQybYDTcRAqsoQci+Ukf+M1W0lSttmqNys kTpOBxH9cqDyKX74lC+Z9A== 0000912057-01-522331.txt : 20010703 0000912057-01-522331.hdr.sgml : 20010703 ACCESSION NUMBER: 0000912057-01-522331 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010615 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OVERLAND DATA INC CENTRAL INDEX KEY: 0000889930 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 953535285 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22071 FILM NUMBER: 1673650 BUSINESS ADDRESS: STREET 1: 8975 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 8585715555 MAIL ADDRESS: STREET 1: 8975 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123 8-K 1 a2053423z8-k.txt 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): JUNE 15, 2001 OVERLAND DATA, INC. (Exact name of registrant as specified in its charter) CALIFORNIA (State or other jurisdiction of incorporation) 000-22071 95-3535285 (Commission File Number) (IRS Employer Identification No.) 8975 BALBOA AVENUE, SAN DIEGO, CALIFORNIA 92123-1599 (Address of principal executive offices, including zip code) (858) 571-5555 (Registrant's telephone number, including area code) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 15, 2001, Overland Data, Inc., a California corporation (the "Company"), sold its Travan-based WS30 and EDT40 tape drive designs (the "Designs") to Seagate Removable Storage Solutions LLC, a Delaware limited liability company ("Seagate"), in exchange for future royalty payments based on the sales of certain tape drive products and related tape media cartridges based on the Designs. In connection with this transaction, the Company has given to Seagate the option to acquire certain fixed assets and inventories required to manufacture products based on the Designs, and Seagate has engaged the Company to perform certain modification services for Seagate with respect to the Designs. In addition, the tape drives produced by Seagate based on the Designs will utilize the Company's patented Variable Rate Randomizer (VR(2)(R)) technology which will be embedded in an ASIC chip within such tape drives. Seagate has entered into a Supply Agreement to purchase the VR(2) chips from the Company, and the Company has granted a license to Seagate to incorporate the chips into its tape drives and to promote the VR(2) chips as part of its tape drives. In conjunction with the disposition of the Travan-based WS30 and EDT40 tape drive designs and related assets, the Company also plans to exit the entry-level tape drive business. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) Unaudited Pro Forma Financial Information. Attached hereto as Exhibit 99.1 is the required Unaudited Pro Forma Financial Information of the Company consisting of Unaudited Pro Forma Condensed Consolidated Statements of Operations for the twelve months ended June 30, 2000 and for the nine months ended March 31, 2001, and an Unaudited Pro Forma Condensed Consolidated Balance Sheet at March 31, 2001. (c) Exhibits. 2.1 Design Purchase and Services Agreement dated June 15, 2001 by and between Overland Data, Inc. and Seagate Removable Storage Solutions LLC.(1) 2.2 Supply Agreement dated June 15, 2001 by and between Overland Data, Inc. and Seagate Removable Storage Solutions LLC.(1) 99.1 Unaudited Pro Forma Financial Information. (1) Pursuant to the Company's request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended, portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission. The omitted portions have been marked with an asterisk. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. OVERLAND DATA, INC. By:/s/ Vernon A. LoForti Date: July 2, 2001 -------------------------------------- Vernon A. LoForti Vice President, Chief Financial Officer and Secretary 3 INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION 2.1(1) Design Purchase and Services Agreement dated June 15, 2001 by and between Overland Data, Inc. and Seagate Removable Storage Solutions LLC. 2.2(1) Supply Agreement dated June 15, 2001 by and between Overland Data, Inc. and Seagate Removable Storage Solutions LLC. 99.1 Unaudited Pro Forma Financial Information. (1) Pursuant to the Company's request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended, portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission. The omitted portions have been marked with an asterisk. 4 EX-2.1 2 a2053423zex-2_1.txt EX-2.1 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. EXHIBIT 2.1 DESIGN PURCHASE AND SERVICES AGREEMENT THIS DESIGN PURCHASE AND SERVICES AGREEMENT, dated as of June 15, 2001 (this "AGREEMENT"), is made and entered into by and between OVERLAND DATA, INC., a California corporation ("SELLER"), and SEAGATE REMOVABLE STORAGE SOLUTIONS LLC, a Delaware limited liability company ("PURCHASER"). Unless otherwise specified herein, definitions of capitalized terms are set forth in EXHIBIT A, which is attached hereto and incorporated by reference herein. RECITALS WHEREAS, Seller currently owns the rights to the TR Nextgen Design, identified as "WS30" and "EDT40", which is capable of resulting in two generations of *** Travan format-based products identified as "TR6" and "TR7" (collectively, the "PRODUCTS"); WHEREAS, Purchaser desires to purchase from Seller the rights to, and certain assets associated with, the TR Nextgen Design, including certain raw materials and tooling and other production equipment used in the manufacture of the Products, as set forth on SCHEDULE 1.1, which is attached hereto and incorporated herein by reference; WHEREAS, Purchaser desires Seller to provide the Design Services to modify the TR Nextgen Design to eliminate its "read-while-write" capabilities and cause it to be compatible with the Travan technology specifications issued by ***; WHEREAS, concurrently with the execution of this Agreement, Purchaser and Seller shall enter into a supply agreement for the purchase and supply of Seller's four-channel diversity ASIC chip for use in the Products (the "FC SUPPLY AGREEMENT"), which such agreement shall replace the existing Supply Agreement, dated as of November 5, 1999, between Purchaser and Seller for purchase of Seller's single channel ASIC chip; and WHEREAS, the Parties desire to enter into this Agreement to set forth their mutual agreements concerning the above matter. NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, the Parties hereby agree as follows: AGREEMENT 1. RIGHTS AND ASSETS; ROYALTIES AND PAYMENT. 1.1 RIGHTS AND ASSETS. Upon the terms and subject to the conditions set forth in this Agreement, Seller hereby agrees to sell and transfer, at the specific times designated in SECTIONS 1.2, 1.3 and 1.4 below, the TR Nextgen Design, the Inventory and the Tooling and Production Equipment set forth on SCHEDULE 1.1, which is attached hereto and incorporated by reference herein (collectively, the "RIGHTS AND ASSETS"), to Purchaser, and Purchaser hereby agrees to purchase, receive and accept the Rights and Assets from Seller. As consideration for the transfer of the Rights and Assets from Seller, Purchaser agrees to pay to Seller the amounts set forth in this ARTICLE 1. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 1 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 1.2 TR NEXTGEN DESIGN. Seller shall transfer the TR Nextgen Design to Purchaser upon complete execution of this Agreement by the Parties (the "SIGNING") and deliver to Purchaser a duly executed bill of sale in the form attached hereto as EXHIBIT B. In consideration for such transfer, Purchaser shall pay to Seller a royalty based on the sale of the Products and the *** Cartridges: (a) *** of the Products that is sold for revenue (excluding returns and credits) by Purchaser (each such unit sold for revenue (excluding returns and credits), a "Net Revenue Unit" and collectively, "Net Revenue Units") *** of the Product; and (b) *** of the *** Cartridge sold for revenue (excluding returns and credits) by *** of the *** Cartridges. Such royalty amounts are payable by Purchaser on a quarterly basis, will be due within the first *** after the end of each calendar quarter and shall be accompanied by a final report indicating the actual number of Net Revenue Units of the Product and the actual number of *** Cartridges sold for revenue (excluding returns and credits) in the immediately preceding calendar quarter by Purchaser and ***, respectively. In addition, Purchaser shall provide to Seller within ten (10) business days after the end of each calendar quarter a report indicating the estimated number of Net Revenue Units of the Product and the estimated number of *** Cartridges sold for revenue (excluding returns and credits) in the immediately preceding calendar quarter by Purchaser and ***, respectively. 1.3 INVENTORY. Seller shall make available the Inventory for purchase by Purchaser and delivery to Purchaser's facility in Malaysia after the close of Seller's Thailand's operation. At Seller's option, Seller may at its own expense and risk consign such Inventory at Purchaser's facility in Malaysia. Purchaser will segregate and store the Inventory in its facility in Malaysia in a secure area such that the Inventory is not commingled with Purchaser's inventory; provided that if any loss or damage to the Inventory occurs as a result of Purchaser's failure to segregate and store the Inventory in a secure area, Purchaser shall be liable for such loss or damage. Purchaser shall place purchase orders for such Inventory as needed. With respect to Inventory applicable *** (the "FIRST SET OF INVENTORY"), the amount payable shall be equal to *** (as identified in Exhibit 1.1) and payment will be due *** from receipt and acceptance of the applicable Inventory by Purchaser. The purchase order quantity *** To the extent Purchaser wants to purchase Inventory applicable to additional development units (the "SECOND SET OF INVENTORY"), *** (as identified in Exhibit 1.1). The purchase order quantity for the Second Set of Inventory will be based upon Purchaser's estimated production requirements in *** Purchaser agrees that it will not purchase from any other party any materials that are the equivalent of the items listed on the Bill of Materials prior to depleting Seller's Inventory (excluding any non-conforming Inventory) of such items; PROVIDED, HOWEVER, that Purchaser may place purchase orders for such materials prior to depletion of Seller's Inventory for the purpose of accommodating required lead times for supply of such materials from a party other than Seller. 1.4 TOOLING AND PRODUCTION EQUIPMENT Purchaser shall make available the Tooling and Production Equipment that is owned by Seller and used in the manufacture of the Products at a price to be negotiated by the Parties during the period of Seller's performance of the Design Services. Upon conclusion of such negotiations, based upon Purchaser's needs, Purchaser will place purchase orders to buy any Tooling and Production Equipment from Seller. Purchaser will segregate and store the Tooling and Production Equipment in its facility in Malaysia in a secure area such that the Tooling and Production Equipment is not commingled with Purchaser's inventory or equipment; PROVIDED that if any loss or damage to the Tooling and Production Equipment occurs as a result of Purchaser's THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 2 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. failure to segregate and store the Tooling and Production Equipment in a secure area, Purchaser shall be liable for such loss or damage. Payment for such Tooling and Production Equipment will be due *** after acceptance by Purchaser, but not earlier than *** At Seller's option, Seller may at its own expense and risk consign such Tooling and Production Equipment at Purchaser's facility in Malaysia. 2. DESIGN SERVICES; PROPRIETARY RIGHTS. 2.1 PERFORMANCE OF DESIGN SERVICES. Seller agrees to use commercially reasonable efforts to perform the design services as requested by Purchaser and accepted by Seller (the "DESIGN SERVICES") and set forth in the statement of work, which is attached hereto as EXHIBIT C and incorporated herein by reference (the "STATEMENT OF WORK"). 2.2 PERSONNEL. Purchaser and Seller together initially have designated *** of Seller's personnel in Seller's design center located in Longmont, Colorado to perform the Design Services, including *** A list of such designated personnel is set forth on EXHIBIT D, which is attached hereto and incorporated herein by reference, and such list may be subject to revision, in terms of the number of individuals so designated as well with respect to the individuals themselves, based on the needs of Purchaser with respect to the Design Services and upon mutual agreement by the Parties. Seller shall provide day-to-day management of the designated personnel and Purchaser shall monitor, as it deems necessary, the Design Services to be performed by the designated personnel with respect to the Design Services, subject to Seller's personnel policies and procedures. If Purchaser, in its reasonable discretion, determines that any particular employee of Seller is not performing the Design Services in a satisfactory manner, then Purchaser shall notify Seller in writing and provide the name of such individual and the reasons for Purchaser's dissatisfaction. Upon receipt of such notice, Seller agrees to cooperate with Purchaser to resolve the situation in a manner satisfactory to both Parties; PROVIDED, HOWEVER, that Seller shall have the exclusive authority to make supervisorial and staffing decisions with respect to the use of its personnel, including the right to reassign its personnel so long as Seller continues to provide the Design Services in accordance with the terms of this Agreement. Seller acknowledges and agrees that under no circumstances shall any Seller personnel be considered employed by Purchaser. 2.3 FEES FOR DESIGN SERVICES. (a) FEES. Seller shall provide an initial forecast of expenses *** until the estimated completion of the Design Services, which is attached hereto as EXHIBIT E and is incorporated herein by reference, to be incurred by Seller with respect to the Design Services. On a monthly basis, Purchaser and Seller shall review actual expenses incurred against forecast. Any anticipated deviations to such initial forecast will be subject to Purchaser's approval prior to Seller incurring such additional expense; PROVIDED, HOWEVER, that all expenses incurred by Seller *** with respect to the Design Services shall be subject to Purchaser's review and approval *** Purchaser shall pay to Seller an amount equal to direct and actual expenses incurred by Seller and as previously approved by Purchaser with respect to the Design Services, including costs for labor and materials *** (collectively, the "DESIGN SERVICE FEES"). *** THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 3 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. (b) PAYMENT TERMS. Seller shall invoice Purchaser on a monthly basis with respect to the Design Service Fees. The amounts stated in such invoices shall be payable by Purchaser within *** after receipt of each of Seller's monthly invoices. 2.4 OWNERSHIP OF WORK PRODUCT. (a) ASSIGNMENT OF WORK PRODUCT. Subject to Purchaser's performance of its obligations hereunder, Seller agrees that the Work Product shall be the sole and exclusive property of Purchaser. Except for Seller's Proprietary Rights in the Background Technology, Seller hereby irrevocably assigns and agrees to assign to Purchaser all of Seller's Proprietary Rights in the Work Product. Seller retains no rights to use the Work Product and agrees not to challenge the validity of Purchaser's ownership in the Work Product. At Purchaser's reasonable request and expense, Seller agrees to assist and cooperate with Purchaser in all commercially reasonable respects to execute documents, give testimony and take further acts as reasonably requested by Purchaser to acquire, transfer, maintain and enforce any Proprietary Rights with respect to the Work Product. (b) LICENSE; WAIVER OF RIGHTS. To the extent, if any, that the Work Product or any Proprietary Rights therein or thereto, are not assignable or that Seller retains any Proprietary Rights in or to the Work Product, Seller, subject to Purchaser's performance of its obligations hereunder: (i) unconditionally and irrevocably waives the enforcement of such rights, and all claims and causes of action of any kind against Purchaser with respect to such rights; (ii) agrees, at Purchaser's request and expense, to consent to and join in any action to enforce such rights; and (iii) hereby grants to Purchaser a *** right and license to use, reproduce, distribute, display and perform (whether publicly or otherwise), prepare derivative works of and otherwise modify, make, sell, offer to sell, import and otherwise use and exploit (and have others exercise such rights on behalf of Purchaser) all or any portion of the Work Product, in any form or media (now known or later developed). The foregoing license includes, without limitation, the right to make any modifications to the Work Product regardless of the effect of such modifications on the integrity of the Work Product, and to identify Seller, or not to identify Seller, as one or more authors of or contributors to the Work Product or any portion thereof, whether or not the Work Product or any portion thereof have been modified. Seller further irrevocably waives any "moral rights" or other rights with respect to attribution of authorship or integrity of the Work Product that Seller may have under any applicable law under any legal theory. Seller hereby waives and quitclaims to Purchaser any and all claims, of any nature whatsoever, that Seller now or may hereafter have for infringement of the Work Product, or Proprietary Rights therein or thereto, assigned and/or licensed hereunder to Purchaser. 2.5 BACKGROUND TECHNOLOGY. (a) OWNERSHIP. The Work Product shall not include, and the assignment obligations in SECTION 2.4(a) above shall not apply to, the Background Technology and Seller's Confidential Information. (b) LICENSE. Unless otherwise expressly agreed by the Parties in writing, to the extent that any Background Technology and/or Seller's Confidential Information is incorporated into or otherwise included in, or is necessary or desirable for the use or exploitation of, the Work Product, the TR Nextgen Design and/or any product utilizing the Work Product or the TR Nextgen Design, then, subject to Purchaser's performance of its obligations hereunder, Seller hereby grants to Purchaser a *** right and license to use and exploit such Background Technology and/or Seller's Confidential Information for the sole purpose of Purchaser's use of THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 4 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. the Work Product and the TR Nextgen Design to make, have made, use and sell products utilizing the Work Product or the TR Nextgen Design. 3. REPRESENTATIONS AND WARRANTIES OF SELLER. As an inducement for Purchaser to enter into this Agreement, Seller represents and warrants that each of the following statements is true and correct as of the Effective Date: 3.1 ORGANIZATION, POWER, ETC. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California and is duly qualified to do business as a foreign corporation in the jurisdictions in which it conducts its business, except where the failure to so qualify will not have a material adverse effect on Seller's ability to perform its obligations hereunder. Seller has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. Seller is not in violation of any of the provisions of its Articles of Incorporation. 3.2 AUTHORIZATION. The execution, delivery and performance of this Agreement by Seller, and the consummation by Seller of the Transactions, have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by Seller and, assuming the due authorization, execution and delivery thereof by Purchaser, constitutes the legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms. 3.3 EFFECT OF AGREEMENT. The execution, delivery and performance of this Agreement by Seller, and the consummation by Seller of the Transactions, will not: (a) conflict with or violate the Articles of Incorporation of Seller; (b) conflict with or violate any federal, state, foreign or local law, statute, ordinance, rule, regulation, order, judgment or decree (each a "LAW," and collectively, "LAWS"); (c) result in any material breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under any judgment, award or decree or any indenture, agreement, instrument, arrangement or commitment of any character to which Seller is a party or by which any of its assets or properties is bound or subject; or (d) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under, any such indenture, agreement, instrument, arrangement or commitment of any character, or result in the creation or imposition of any Encumbrances upon any of the properties or assets of Seller. 3.4 GOVERNMENTAL APPROVALS. All approvals, authorizations, consents, licenses, permits or orders or actions of or filings with any court, administrative agency or other governmental authority, domestic or foreign, or any department, agency or political subdivision thereof ("GOVERNMENTAL ENTITY") that are required to be obtained by Seller for the execution and delivery by Seller of this Agreement and the consummation of the Transactions by Seller have been so obtained, including, without limitation, all necessary and appropriate approvals, authorizations, consents, licenses, permits or orders or actions or filings relating to the export of technology outside of the United States. 3.5 RIGHTS AND ASSETS. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 5 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. SCHEDULE 1.1, which is attached hereto and incorporated by reference herein, contains a complete list of the Rights and Assets. Seller has good and marketable title to all of the Rights and Assets. 3.6 NONINFRINGEMENT. Seller represents and warrants that it knows of no trade secret misappropriation that has occurred and has no reason to believe that a misappropriation will occur with regard to the TR Nextgen Design or the Background Technology delivered to Purchaser, and it knows of no patent, trademark, copyright or other Proprietary Rights infringement by such TR Nextgen Design or such Background Technology on the Effective Date. 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As an inducement for Seller to enter into this Agreement, Purchaser hereby represents and warrants that each of the following statements is true and correct as of the Effective Date: 4.1 ORGANIZATION, POWER, ETC. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business as a foreign business in the jurisdictions in which it conducts its business, except where the failure to so qualify will not have a material adverse effect on Purchaser's ability to perform its obligations hereunder. Purchaser has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. Purchaser is not in violation of any of the provisions of its limited liability company agreement or any other constitutive documents. 4.2 AUTHORIZATION. The execution, delivery and performance of this Agreement by Purchaser, and the consummation by it of the Transactions, have been duly authorized by all necessary action. This Agreement has been duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery thereof by Seller, constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms. 4.3 EFFECT OF AGREEMENT. The execution, delivery and performance of this Agreement by Purchaser, and the consummation by Purchaser of the Transactions, will not: (a) conflict with or violate the limited liability company agreement or any other constitutive documents of Purchaser; (b) conflict with or violate any Laws; (c) result in any material breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under any judgment, award or decree or any indenture, agreement, instrument, arrangement or commitment of any character to which Purchaser is a party or by which any of its assets or properties is bound or subject; or (d) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under, any such indenture, agreement, instrument, arrangement or commitment of any character, or result in the creation or imposition of any Encumbrances upon any of the properties or assets of Purchaser. 4.4 GOVERNMENTAL APPROVALS. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 6 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. All approvals, authorizations, consents, licenses, permits or orders or actions of or filings with any Governmental Entity that are required to be obtained by Purchaser for the execution and delivery by Purchaser of this Agreement and the consummation of the Transactions by Purchaser have been so obtained, including, without limitation, all necessary and appropriate approvals, authorizations, consents, licenses, permits or orders or actions or filings relating to the export of technology outside of the United States. 4.5 EXPORT CONTROLS. Purchaser understands and acknowledges that Seller is subject to regulation by agencies of the U.S. government, including the U.S. Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Purchaser further understands and acknowledges that any and all obligations of Seller to transfer the Rights and Assets and the Work Product and license the Background Technology and/or Seller's Confidential Information shall be subject in all respects to such United States laws and regulations as shall from time to time govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of the United States, including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations ("EAR") issued by the Department of Commerce, International Trade Administration, Bureau of Export Administration ("BXA"). Purchaser shall comply in all respects with the export and reexport restrictions applicable to the Rights and Assets, the Work Product, the Background Technology and/or Seller's Confidential Information delivered to Purchaser and shall otherwise comply with the EAR or other United States laws and regulations in effect from time to time. 4.6 NONINFRINGEMENT. Purchaser represents and warrants that it knows of no trade secret misappropriation that has occurred and has no reason to believe that a misappropriation will occur with regard to the Work Product excluding the TR Nextgen Design or the specifications set forth in the Statement of Work for the modification of the TR Nextgen Design, and it knows of no patent, trademark, copyright or other Proprietary Rights infringement by such Work Product excluding the TR Nextgen Design or such specifications on the Completion Date. 5. COVENANTS OF SELLER. 5.1 REPRESENTATIONS TRUE. Until the completion of the Design Services, Seller agrees to use all reasonable efforts to prevent the occurrence of any event that would cause any of its representations and warranties set forth in this Agreement not to be true and correct in any material respect. 5.2 PERMITS. As promptly as practicable after the Effective Date, Seller will make all filings with any Governmental Entities and obtain all approvals, authorizations, consents, licenses, permits or orders or actions of or filings with all third parties, necessary for Purchaser and Seller to consummate the Transactions, including, without limitation, all necessary and appropriate approvals, authorizations, consents, licenses, permits or orders or actions or filings related to the export of technology outside of the United States. 5.3 RIGHTS AND ASSETS; DESIGN SERVICES. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 7 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. Seller agrees to: (a) provide to Purchaser the TR Nextgen Design, the Inventory and the Tooling and Production Equipment as set forth in ARTICLE 1 above; and (b) perform the Design Services as set forth in ARTICLE 2 above. 6. COVENANTS OF PURCHASER. 6.1 REPRESENTATIONS TRUE. Until the completion of the Design Services, Purchaser agrees to use its best efforts to prevent the occurrence of any event that would cause any of its representations and warranties set forth in this Agreement not to be true and correct in any material respect. 6.2 PERMITS. As promptly as practicable after the Effective Date, Purchaser will make all filings with any Governmental Entities and obtain all approvals, authorizations, consents, licenses, permits or orders or actions of or filings with all third parties, necessary for Purchaser and Seller to consummate the Transactions, including, without limitation, all necessary and appropriate approvals, authorizations, consents, licenses, permits or orders or actions or filings related to the export of technology outside of the United States. 6.3 PAYMENT OF FEES AND ROYALTIES. Purchaser shall pay to Seller the fees, royalties and purchase prices set forth in ARTICLES 1 and 2 above in accordance with the time periods and the payment terms set forth therein. In addition, Purchaser, in accordance with SECTION 1.2 above, shall provide to Seller: (a) within ten (10) business days after the end of each calendar quarter a report indicating the estimated number of Net Revenue Units of Products sold by Purchaser and the estimated number of *** Cartridges sold for revenue (excluding returns and credits) by *** in the immediately preceding calendar quarter; and (b) a final report, which will accompany the royalty payments set forth in Section 1.2 above, indicating the actual number of Net Revenue Units of Products sold by Purchaser and the actual number of *** Cartridges sold for revenue (excluding returns and credits) by *** in the immediately preceding calendar quarter. 6.4 EXPORT CONTROLS. Purchaser shall comply in all respects with the export and reexport restrictions applicable to the Rights and Assets, the Work Product, the Background Technology and/or Seller's Confidential Information delivered to Purchaser and will otherwise comply with the EAR or other United States laws and regulations in effect from time to time. 7. CONDITIONS PRECEDENT. 7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser under this Agreement are subject, at the option of Purchaser, to the satisfaction or written waiver of each of the following conditions at or prior to the Effective Date and at or prior to the date that the Design Services are completed (the "COMPLETION DATE"): (a) The representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects on and as of the Effective Date and on and as of the THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 8 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. Completion Date as though made at and as of such respective dates (except where such representation and warranty is made as of a date specifically set forth therein), and Seller shall have delivered to Purchaser a certificate to that effect. (b) Seller shall in all material respects have performed and complied with all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by Seller on or before the Effective Date and on or before the Completion Date, and Seller shall have delivered to Purchaser a certificate to that effect. (c) All other proceedings to be taken by Seller in connection with the Transactions and all documents incident thereto shall be satisfactory in form and substance to Purchaser, and Purchaser shall have received all such certified or other copies of such documents as it may reasonably request. (d) No legal action or proceeding shall have been instituted or threatened by any Governmental Entity seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the Transactions. (e) Seller shall have obtained all consents and approvals required for the execution, delivery and performance of this Agreement by Seller and the consummation of the Transactions. 7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of Seller under this Agreement are subject, at the option of Seller, to the satisfaction or written waiver of each of the following conditions at or prior to the Effective Date and at or prior to the Completion Date: (a) The representations and warranties of Purchaser contained in this Agreement or in any certificate or document delivered by Purchaser pursuant hereto shall be true and correct in all material respects on and as of the Effective Date and on and as of the Completion Date as though made at and as of such respective dates (except where such representation and warranty is made as of a date specifically set forth therein), and Purchaser shall have delivered to Seller a certificate to such effect. (b) Purchaser shall in all material respects have performed and complied with all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by Purchaser on or before the Effective Date and on or before the Completion Date, and Purchaser shall have delivered to Seller a certificate to that effect. (c) All other proceedings to be taken by Purchaser in connection with the Transactions and all documents incident thereto shall be satisfactory in form and substance to Seller, and Seller shall have received all such certified or other copies of such documents as it may reasonably request. (d) No legal action or proceeding shall have been instituted or threatened by any Governmental Entity seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the Transactions. (e) Purchaser shall have obtained all consents and approvals required for the execution, delivery and performance of this Agreement by Purchaser and the consummation of the Transactions. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 9 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 8. SURVIVAL; INDEMNIFICATION; WARRANTY DISCLAIMER; LIMITATION OF LIABILITY. 8.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties set forth in: (a) SECTIONS 3.1 through 3.4 and 3.6 and in SECTIONS 4.1 through 4.4 and 4.6 shall survive the execution and delivery of this Agreement for a period of five (5) years from the Effective Date; and (b) SECTION 3.5 shall survive the execution and delivery of this Agreement for a period of six (6) months for tangible assets (such as tooling and equipment) and for a period of three (3) years for intangible assets (such as intellectual property assets). Upon the expiration of a representation or warranty pursuant to this SECTION 8.1, unless written notice of a claim based upon such representation or warranty specifying in reasonable detail the facts on which the claim is based shall have been delivered to the Indemnifying Party prior to the expiration of such representation or warranty, such representation or warranty shall be deemed to be of no further force or effect, as if never made, and no action may be brought based on the same, whether for breach of contract, tort or under any other legal theory. 8.2 AGREEMENT TO INDEMNIFY. (a) PURCHASER INDEMNITY. Subject to the terms and conditions of this ARTICLE 8, Purchaser (the "PURCHASER INDEMNIFYING PARTY") hereby agrees to indemnify, defend and hold Seller and each of Seller's officers, directors, employees, agents, successors and assigns (each, a "SELLER INDEMNIFIED PARTY") harmless from and against all Losses incurred by each Seller Indemnified Party arising out of or resulting from a breach of any representation, warranty or covenant of Purchaser contained in or made pursuant to this Agreement (other than Purchaser's representation and warranty set forth in SECTION 4.6 above) and all Losses incurred by each Seller Indemnified Party by reason of losses, injury to or death of any Person or damage to or destruction of property arising out of or resulting from any sales or use of the TR Nextgen Design and/or the Work Product or any sales or use of any products incorporating the TR Nextgen Design and /or Work Product. (b) SELLER INDEMNITY. Subject to the terms and conditions of this ARTICLE 8, Seller (the "SELLER INDEMNIFYING PARTY") hereby agrees to indemnify, defend and hold Purchaser and each of Purchaser's officers, directors, employees, agents, successors and assigns (each, a "PURCHASER INDEMNIFIED PARTY") harmless from and against all Losses incurred by each Purchaser Indemnified Party resulting from a breach of any representation, warranty or covenant of Seller contained in or made pursuant to this Agreement (other than Seller's representation and warranty set forth in SECTION 3.6 above). 8.3 CONDITIONS OF INDEMNIFICATION. The obligations and liabilities of the Indemnifying Party to an Indemnified Party under SECTION 8.2 above with respect to claims resulting from the assertion of liability by third parties shall be subject to the following terms and conditions: (a) The Indemnifying Party will not be responsible for any such losses, damages, liabilities, claims, actions, judgments, costs, demands, attorneys' fees, disbursements and expenses caused by the sole negligence or willful misconduct of the Indemnified Party. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 10 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. (b) If an action, claim or demand is filed against the Indemnified Party for which the Indemnifying Party is to be responsible under SECTION 8.2 above, the Indemnified Party will promptly notify the Indemnifying Party in writing of such action, claim or demand. Upon receipt of such notice from the Indemnified Party, if the Indemnifying Party acknowledges in writing to the Indemnified Party that the Indemnifying Party is obligated to indemnify the Indemnified Party under the terms of SECTION 8.2 above in connection with such action, claim or demand, then the Indemnifying Party will be entitled, if it so elects, to take control of the defense and investigation of such action, claim or demand and to employ and engage attorneys of its own choice to handle and defend the same at the Indemnifying Party's sole cost, risk and expense, and the Indemnified Party will thereafter cooperate in all reasonable respects with the Indemnifying Party and its attorneys in the investigation, trial and defense of such action, claim or demand and any appeal arising therefrom. The Indemnified Party may also, through independent counsel and at its own cost, participate in such investigation, trial and defense of such action, claim or demand and any appeal arising therefrom. (c) The Indemnifying Party may effect no settlement without the prior written approval of the Indemnified Party, which approval will not be unreasonably withheld. The Indemnifying Party also agrees to carry fire and extended coverage insurance, and to be responsible for any of the Indemnified Party's property while in the Indemnifying Party's possession, to maintain such property in good condition, and not to dispose of such property except in accordance with the Indemnified Party's instructions and the terms hereunder. 8.4 INTELLECTUAL PROPERTY INFRINGEMENT. (a) DEFENSE BY PURCHASER. With respect to a breach by Purchaser of SECTION 4.6 above, Purchaser will indemnify and defend any suit or proceeding brought against any Seller Indemnified Party based on such breach of SECTION 4.6 above or based on a claim that the Work Product excluding the TR Nextgen Design or the specifications set forth in the Statement of Work with respect to the modification of the TR Nextgen Design, or any part thereof, constitutes an infringement of any patent, copyright, trademark, trade secret or any other Proprietary Right of any third party, provided that: (i) the Seller Indemnified Party notifies Purchaser in writing within thirty (30) days of such claim; (ii) Purchaser has sole control of the defense and all related settlement negotiations; and (iii) the Seller Indemnifying Party provides Purchaser with the assistance, information and authority necessary to perform the above. Purchaser will have no liability or obligation to defend any such claim of infringement based solely on the TR Nextgen Design or any Background Technology that is incorporated into the Work Product. (b) DEFENSE BY SELLER. With respect to a breach by Seller of SECTION 3.6 above, Seller will indemnify and defend any suit or proceeding brought against any Purchaser Indemnified Party based on such breach of SECTION 3.6 above or based on a claim that the TR Nextgen Design or the Background Technology, or any part thereof, constitutes an infringement of any patent, copyright, trademark, trade secret or any other Proprietary Right of any third party, provided that: (i) the Purchaser Indemnified Party notifies Seller in writing within thirty (30) days of such claim; (ii) Seller has sole control of the defense and all related settlement negotiations; and (iii) the Purchaser Indemnified Party provides Seller with the assistance, information and authority necessary to perform the above. Seller will have no liability or obligation to defend any such claim of infringement based solely on: (A) use of a superseded or altered version of the TR Nextgen Design or the Background Technology if such infringement would have been avoided by the use of a current unaltered version of the TR Nextgen Design supplied by Seller (or any Background Technology incorporated therein); (B) any customization of the TR Nextgen Design or the Background Technology to the extent such customization was at the request of Purchaser; THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 11 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. or (C) the combination, operation or use of the TR Nextgen Design or the Background Technology with other devices and components not supplied by Seller if such infringement would have been avoided by the use of the TR Nextgen Design or the Background Technology solely without such devices or components. (c) REMEDIES. If the TR Nextgen Design or the Background Technology is held, or is believed by Seller, to infringe the Proprietary Rights of any third party, Seller will have the option, at its expense, to: (i) modify the TR Nextgen Design or the Background Technology to be non-infringing; (ii) obtain for Purchaser a license to continue using the TR Nextgen Design or the Background Technology; or (iii) replace the TR Nextgen Design or the Background Technology with non-infringing alternatives. (d) NO OTHER LIABILITY. This SECTION 8.4 states each of Purchaser's and Seller's entire liability for infringement of the Proprietary Rights of any third party. 8.5 WARRANTY DISCLAIMER. Except as otherwise provided in this Agreement, Seller makes no warranties, whether implied or statutory regarding or relating to the Rights and Assets, the Work Product, the Background Technology, Seller's Confidential Information, the Design Services or any other materials or services furnished or provided to Purchaser under this Agreement. Seller specifically disclaims all implied warranties of: (a) merchantability; (b) fitness for a particular purpose; (c) noninfringement of third party rights; and (d) title, and any implied warranties that may arise from course of dealing, course of performance or usage or trade with respect to the Rights and Assets, the Work Product, the Background Technology, Seller's Confidential Information, the Design Services and any other materials or services furnished to Purchaser under this Agreement and with respect to the use of any of the foregoing. Any written representation or warranty not expressly contained in this Agreement will not be enforceable. 8.6 GENERAL LIMITATION OF LIABILITY Except for liabilities arising pursuant to SECTION 8.4 above, each Party's liability to the other Party for damages in connection with this Agreement and the Design Services or any Work Product provided pursuant to this Agreement, regardless of the form of action giving rise to such liability (under any theory, whether in contract, tort, statutory or otherwise and including any amounts that may arise under SECTION 8.7 below) shall not exceed *** 8.7 LIMITATION ON OTHER DAMAGES. IN NO EVENT WILL A PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT FOR INDIRECT, SPECIAL, INCIDENTAL AND/OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, RESTITUTION, WILL NOT, IN ANY EVENT, *** 8.8 REMEDIES NOT EXCLUSIVE. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 12 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. All rights and remedies existing under this ARTICLE 8 are in addition to, and not exclusive of, any rights or remedies otherwise available. 8.9 ACKNOWLEDGEMENT Each Party acknowledges that the limitations of liability contained in SECTIONS 8.5, 8.6 and 8.7 are a fundamental part of the basis of the other Party's bargain hereunder, and neither of the Parties would enter into this Agreement absent such limitations. 9. TERMINATION. This Agreement may only be terminated for the following reasons: 9.1 INJUNCTION. By either of the Parties if any Governmental Entity shall have issued an order (other than a temporary restraining order), decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the Transactions and such order, decree, ruling or other action shall have become final and non-appealable. 9.2 MUTUAL AGREEMENT. By mutual written agreement of the Parties that is signed by both Parties. 9.3 CONVENIENCE. Purchaser may terminate this Agreement for convenience by providing written notice of such termination to Seller, and such termination shall be effective *** thereafter. Unless otherwise agreed to in writing by the Parties, the Design Services shall cease upon such termination. 9.4 MATERIAL BREACH. (a) By Purchaser upon a material breach of any representation, warranty or covenant of this Agreement by Seller that remains uncured for a period of *** after receipt of written notice of such breach from Purchaser. (b) By Seller upon a material breach of any representation, warranty or covenant of this Agreement by Purchaser that remains uncured for a period of *** after receipt of written notice of such breach from Seller. 9.5 EFFECTS OF TERMINATION. If this Agreement is terminated pursuant to SECTIONS 9.1, 9.2, 9.3 or 9.4, all obligations of the Parties hereunder (except for any rights, licenses and obligations under SECTIONS 2.2, 2.3, 2.4, 2.5, 6.3, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 9.5, 10.1, 10.2, 11.1, 11.2, 11.8, 11.9 and 11.10) shall terminate without liability of any Party to any other Party. Nothing contained in this SECTION 9.5 shall relieve any Party of liability for any breach of this Agreement that occurred prior to the date of termination of this Agreement. 10. OTHER COVENANTS. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 13 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 10.1 CONFIDENTIALITY OBLIGATIONS. Each Party that receives confidential and/or proprietary information (the "RECEIVING PARTY") relating to this Agreement or the consummation of the Transactions (the "CONFIDENTIAL INFORMATION") shall maintain in confidence the identity of the other Party disclosing such Confidential Information (the "DISCLOSING PARTY"), and not disclose to any third party without prior written consent of the Disclosing Party: (a) any Confidential Information learned about the Disclosing Party or its affiliates in the course of the Transactions; or (b) the terms of this Agreement or the Transactions, unless and to the extent necessary to carry out the Transactions. At the termination of this Agreement, the Receiving Party agrees to return to the Disclosing Party any and all materials containing any such Confidential Information. These restrictions on use and obligations of confidentiality will not apply to any Confidential Information that: (i) is or becomes generally available to the public other than as a result of a disclosure by the Disclosing Party; (ii) was within the Receiving Party's possession prior to its being furnished to the Receiving Party by or on behalf of the Disclosing Party pursuant to this Agreement or for the consummation of the Transactions, provided that: (A) the source of such information was not known by the Receiving Party to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Disclosing Party or any other Person with respect to such Confidential Information; and (B) such prior possession by the Receiving Party can be adequately substantiated by documentary evidence antedating the disclosure by the Disclosing Party; (iii) becomes available to the Receiving Party on a nonconfidential basis from a source other than the Disclosing Party, provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Disclosing Party or any other Person with respect to such Confidential Information; (iv) is developed independently by the Receiving Party without using, directly or indirectly, any Confidential Information of the Disclosing Party, PROVIDED, HOWEVER, that the Receiving Party can adequately substantiate with documentary evidence that such independent development did not use, directly or indirectly, any Confidential Information of the Disclosing Party; or (v) the Receiving Party has received a written opinion of outside legal counsel that such disclosure must be made by the Receiving Party in order for the Receiving Party not to commit a violation of law. In the event that the Receiving Party is requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any Confidential Information, the Receiving Party shall provide the Disclosing Party with prompt written notice of any such request or requirement so that the Disclosing Party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this SECTION 10.1. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Disclosing Party, the Receiving Party is nonetheless, in the written opinion of legal counsel, legally compelled to disclose such Confidential Information to any tribunal or else stand liable for contempt or suffer other censure or penalty, the Receiving Party may, without liability hereunder, disclose to such tribunal only that portion of such Confidential Information that such legal counsel advises the Receiving Party is legally required to be disclosed, provided that the Receiving Party exercise its best efforts to preserve the confidentiality of such Confidential Information, including by cooperating with the Disclosing Party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded such Confidential Information by such tribunal. Each Party agrees that this ARTICLE 10 shall supersede and replace the confidentiality provision set forth in the Letter of Intent, dated May 30, 2001, between the Parties. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 14 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 10.2 ANNOUNCEMENTS. Neither Purchaser nor Seller shall make, or cause to be made, any news releases or other public announcements pertaining to the Transactions without first consulting the other and attempting to formulate a mutually satisfactory arrangement for such disclosure, and in any case will only make an announcement thereafter without the consent of the other only to the extent required by applicable law. 10.3 COOPERATION. Each Party agrees, both before and after the Effective Date, to execute any and all further documents and writings and perform such other reasonable actions which may be or become necessary or expedient to effectuate and carry out the Transactions (which shall not include any obligation to incur any expenses). 11. MISCELLANEOUS. 11.1 EXPENSES. Whether or not the Transactions are consummated, neither of the Parties shall have any obligation to pay any of the fees and expenses of the other Party incident to the negotiation, preparation and execution of this Agreement, including the fees and expenses of legal counsel, accountants, investment bankers and other experts. 11.2 AUDIT. Purchaser shall keep and maintain detailed and accurate books and records with regard to the royalties and fees set forth in ARTICLES 1 and 2 above and the calculation thereof. An internationally known independent certified public accounting firm selected by Seller (who shall be reasonably acceptable to Purchaser and bound in confidence not to disclose any Confidential Information except to inform Seller of discrepancies) shall be entitled to review and audit such books and records from time to time, but no more than ***, during normal business hours upon reasonable notice to Purchaser and at Seller's expense. 11.3 WAIVERS. (a) Purchaser may, by written notice: (i) extend the time for the performance of any of the obligations or other actions of Seller under this Agreement; (ii) waive any inaccuracies in the representations or warranties of Seller contained in this Agreement or in any document delivered pursuant to this Agreement; (iii) waive compliance with any of the conditions or covenants of Seller contained in this Agreement; or (iv) waive performance of any of the obligations of Seller under this Agreement. (b) Seller may, by written notice: (i) extend the time for the performance of any of the obligations or other actions of Purchaser under this Agreement; (ii) waive any inaccuracies in the representations or warranties of Purchaser contained in this Agreement or in any document delivered pursuant to this Agreement; (iii) waive compliance with any of the conditions or covenants of Purchaser contained in this Agreement; or (iv) waive performance of any of the obligations of Purchaser under this Agreement. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 15 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. (c) With regard to any power, remedy or right provided herein or otherwise available to any Parties hereunder: (i) no waiver or extension of time will be effective unless expressly contained in a writing signed by the waiving Parties; and (ii) no alteration, modification or impairment will be implied by reason of any previous waiver, extension of time, delay or omission in exercise or other indulgence. 11.4 AMENDMENTS, SUPPLEMENTS. This Agreement may be amended or supplemented at any time by the mutual written consent of the Parties. 11.5 ENTIRE AGREEMENT. This Agreement and its exhibits and schedules constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral and written, between the Parties with respect to the subject matter hereof. No representation, warranty, promise, inducement or statement of intention has been made by any Party that is not embodied in this Agreement or such other documents, and no Party shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement of intention not embodied herein or therein. 11.6 BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Parties or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 11.7 ASSIGNABILITY. Neither this Agreement nor either of the Parties' rights hereunder shall be assignable by a Party without the prior written consent of the other Party, provided, however, this Agreement may be assigned by a Party to a successor in interest to substantially all of the assets related to the Products or such Party, without the prior written consent of the other Party. 11.8 NOTICES. All notices under this Agreement will be in writing and will be delivered by personal service or telegram, telecopy or certified mail (if such service is not available, then by first class mail), postage prepaid, to such address as may be designated from time to time by the relevant Party, and that will initially be as set forth below. Any notice sent by certified mail will be deemed to have been given three (3) business days after the date on which it is mailed. All other notices will be deemed given when received. No objection may be made to the manner of delivery of any notice actually received in writing by an authorized agent of a Party. Notices will be addressed as follows or to such other address as the Party to whom the same is directed will have specified in conformity with the foregoing: (a) If to Seller: Overland Data, Inc. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 16 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 8975 Balboa Avenue San Diego, CA 92123 Facsimile: (858) 503-4342 Attention: Vernon A. LoForti with a copy to: Morrison & Foerster LLP 3811 Valley Centre Drive, Suite 500 San Diego, California 92130 Facsimile: (858) 720-5125 Attention: Carlos D. Heredia, Esq. (b) If to Purchaser: Seagate Removable Storage Solutions LLC 1650 Sunflower Avenue Costa Mesa, California 92626 Facsimile: (714) 966-5534 Attention: Larry T. McMannon, General Manager THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 17 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. with a copy to: Seagate Removable Storage Solutions LLC Intellectual Property Department, Building 15 920 Disc Drive, Scotts Valley, California 95066 Facsimile: (831)-438-1290 Attention: Patent Counsel 11.9 GOVERNING LAW; JURISDICTION. (a) GOVERNING LAW. This Agreement will be governed in all respects solely and exclusively by the laws of the State of California, U.S.A. without regard to conflict of laws principles. The United Nations Convention on the International Sale of Goods will not apply to this Agreement. (b) DISPUTE RESOLUTION. In any disputes, controversies, or claims arising out of, relating to, or in connection with this Agreement or between the Parties, including the determination of the scope of the agreement to arbitrate, the Parties agree to first endeavor to settle the dispute in an amicable manner by good faith discussions and bargaining between the Parties. If the Parties are unable to resolve the controversy, upon request of one Party, the Parties agree to submit the dispute to an arbitrator for final and binding arbitration at a location to be determined by the non-requesting Party. The arbitration will comply with and be governed by provisions of the California Arbitration Act before an arbitrator experienced in the matter to be decided. (c) ARBITRATION EXCEPTION; INJUNCTIVE RELIEF AVAILABILITY. Notwithstanding the foregoing, any claim relating to either of the Parties' confidential information, trademarks, or other proprietary technology or intellectual property may be, at either Parties' election, be determined by a court located in San Francisco, California, to whose exclusive jurisdiction the Parties hereby consent. Each Party shall be authorized and entitled to obtain preliminary and permanent injunctive relief, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which a Party may be entitled. (d) ANCILLARY RELIEF. Nothing herein will prevent a Party, prior to appointment of the arbitrator, from making application to any court of competent jurisdiction, for any provisional remedy available at law or in equity. Such application for relief will not constitute a waiver of this agreement to arbitrate. Upon appointment, the arbitrator will have exclusive authority to order provisional or interim relief, except that any relief ordered by the arbitrator may be immediately and specifically enforced by a court otherwise having jurisdiction. The Parties waive objection to venue and consent to the personal jurisdiction of the federal courts of San Francisco, California, U.S.A. in any action to enforce this agreement to arbitrate or any order or award of the arbitrator, or for the provisional or interim remedies provided for in this Agreement. (e) EXPENSES. In any arbitration proceeding pursuant to this Agreement, each Party will bear the expenses of its witnesses. All other costs of arbitration, including, without limitation, the fees and expenses of the arbitrators, the cost of the record or transcripts thereof, if any, administrative fees, the attorneys' fees of the Parties, and all other fees and costs will be allocated to the Parties to the arbitration as determined by the arbitrator, except that the prevailing Party in such arbitration will be entitled to recover its reasonable attorneys' fees and expenses. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 18 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. (f) DISCOVERY. In any arbitration proceeding pursuant to this Agreement, discovery will be limited to written requests for the production of specific documents. The period for requesting documents will be thirty (30) calendar days commencing upon the day that the answer is due under the Rules. The responding Party will have fifteen (15) calendar days to produce the requested documents by sending copies to the requesting Party or its representative via a recognized international courier service. The Parties will also voluntarily produce all documents that they intend to use at the arbitration hearing and a list of intended witnesses before the close of discovery subject to supplementation for purposes of rebuttal or good cause shown. The Parties waive any right to seek any discovery not provided for in this Agreement irrespective of whether the laws of any country provide for different or additional discovery in international arbitration. The arbitrator will hold a pre-hearing conference within three days of the close of discovery and will schedule and hold the final hearing within thirty (30) calendar days of the close of discovery. Except as set forth in SECTION 11.9(c) above, EACH PARTY HERETO HEREBY AGREES THAT THE ARBITRATION PROCEDURE PROVIDED IN THIS AGREEMENT WILL BE THE SOLE AND EXCLUSIVE METHOD OF RESOLVING ANY DISPUTES, CONTROVERSIES OR CLAIMS ARISING IN CONNECTION WITH, OR OUT OF THIS AGREEMENT, OR OTHERWISE BETWEEN THE PARTIES TO THIS AGREEMENT. 11.10 RULES OF CONSTRUCTION. (a) The Article and Section headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit, or extend or interpret the scope of this Agreement or of any particular Article or Section. (b) Throughout this Agreement, as the context may require, references to any word used in one tense or case shall include all other appropriate tenses or cases. The word "including," and any derivative word, when used herein is not intended to be exclusive and means "including, without limitation." (c) The validity, legality or enforceability of the remainder of this Agreement will not be affected even if one or more of the provisions of this Agreement will be held to be invalid, illegal or unenforceable in any respect. (d) The Parties hereto are sophisticated and have been represented throughout this transaction by lawyers who have carefully negotiated the provisions hereof. As a consequence, the Parties do not believe the presumption of the California Civil Code Section 1654 and similar laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied in this case and therefore waive the effect of any such presumption. 11.11 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.12 RELATIONSHIP OF THE PARTIES. This Agreement shall not be construed as creating an agency, partnership, joint venture or any other form of association, for tax purposes or otherwise, between the Parties, and the Parties shall at all times be and remain independent contractors. Except as expressly agreed by the Parties in writing, neither Party shall have any right or authority, express or implied, to assume or create THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 19 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. any obligation of any kind, or to make any representation or warranty, on behalf of the other Party or to bind the other Party in any respect whatsoever. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the Parties hereto as of the date first above written. OVERLAND DATA, INC. By: /s/ Vernon A. LoForti ------------------------------------------ Name: Vernon A. LoForti Title: Vice-President and Chief Financial Officer SEAGATE REMOVABLE STORAGE SOLUTIONS LLC By: /s/ Donald L. Waite ------------------------------------------ Name: Donald L. Waite Title: President [SIGNATURE PAGE TO DESIGN PURCHASE AND SERVICES AGREEMENT] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 20 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. DESIGN PURCHASE AND SERVICES AGREEMENT EXHIBIT A GLOSSARY OF DEFINED TERMS "AGREEMENT" shall have the meaning set forth in the preamble. "ASIC" means an application specific integrated circuit. "BACKGROUND TECHNOLOGY" means all Technology created by or for Seller (alone or with others) prior to the date of this Agreement (including without limitation, the VR(2) IP) but excluding the Technology embodied in the TR Nextgen Design. "BILL OF MATERIALS" means the mutually agreed upon list of materials that will be used by the Parties to determine which raw materials will be included in the Inventory and is attached hereto as SCHEDULE 1.3, which is incorporated herein by reference. "BXA" shall have the meaning set forth in SECTION 4.5. "COMPLETION DATE" shall have the meaning set forth in SECTION 7.1. "CONFIDENTIAL INFORMATION" shall have the meaning set forth in SECTION 10.1. "DESIGN SERVICE FEES" shall have the meaning set forth in SECTION 2.3. "DESIGN SERVICES" shall have the meaning set forth in SECTION 2.1. "DISCLOSING PARTY" shall have the meaning set forth in SECTION 10.1. "EAR" shall have the meaning set forth in SECTION 4.5. "EFFECTIVE DATE" means June 15, 2001. "ENCUMBRANCES" means any Liens, security interests, claims, pledges, agreements, limitations on voting rights, charges or other encumbrances of any nature whatsoever. "FIRST SET OF INVENTORY" shall have the meaning set forth in SECTION 1.3. "GOVERNMENTAL ENTITY" shall have the meaning set forth in SECTION 3.4. *** *** "INDEMNIFIED PARTY" means either a Purchaser Indemnified Party or a Seller Indemnified Party. "INDEMNIFYING PARTY" means either the Purchaser Indemnifying Party or the Seller Indemnifying Party. "INVENTORY" means all of Seller's existing supply of raw materials for use with, or in the manufacture of, the Products, the determination of which shall be based upon the Bill of THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Exhibit A - Page 1 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. Materials and designated as either the First Set of Inventory or the Second Set of Inventory and is set forth SCHEDULE 1.1. "LAW" and "LAWS" shall have the meaning set forth in SECTION 3.3. "LIEN" means any lien, charge, Encumbrance, mortgage, conditional sale agreement, title retention agreement, financing lease, pledge or security interest of any kind or type and whether arising by contract or under Law. "LOSS" or "LOSSES" shall mean any and all damages, liabilities, settlements, costs and expenses (including reasonable attorneys' fees) or other adverse effects of any nature whatsoever. "PARTY" and "PARTIES" shall refer to the parties to this Agreement. "PERSON" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a Governmental Entity or any other entity. "PRODUCTS" shall have the meaning set forth in the recitals. "PROPRIETARY RIGHTS" means all copyrights, trademarks, trade secrets, patents, industrial rights and all other intellectual and proprietary rights. "PURCHASER" shall have the meaning set forth in the preamble. "PURCHASER INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 8.2(b). "PURCHASER INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 8.2(a). "RECEIVING PARTY" shall have the meaning set forth in SECTION 10.1. "RIGHTS AND ASSETS" shall have the meaning set forth in SECTION 1.1 and shall comprise the rights and assets listed on SCHEDULE 1.1. "SECOND SET OF INVENTORY" shall have the meaning set forth in SECTION 1.3. "SELLER" shall have the meaning set forth in the preamble. "SELLER'S CONFIDENTIAL INFORMATION" means Confidential Information of Seller in the Background Technology. "SELLER INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 8.2(a). "SELLER INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 8.2(b). "STATEMENT OF WORK" shall have the meaning set forth in SECTION 2.1 and is attached hereto as EXHIBIT C and incorporated herein by reference. "TAX" and "TAXES" means any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Exhibit A - Page 2 profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Entity responsible for the imposition, assessment or collection of any Tax (domestic or foreign). "TECHNOLOGY" collectively means any creations, technology, inventions, discoveries, works of authorship or other creations that were conceived, created or reduced to practice. "TOOLING AND PRODUCTION EQUIPMENT" means the tooling and other production equipment owned by Seller and set forth on SCHEDULE 1.1 that can be used in the manufacture of the Products. "TRANSACTIONS" shall mean the transactions contemplated by this Agreement. "TR NEXTGEN DESIGN" means the Technology (excluding the VR(2) IP) embodied in Seller's WS30 and EDT40 products as of *** including design drawings, schematics, PCB gerber files, Bill of Materials, AVL, Wingnut ASIC specification, VHDL files, Netlist, firmware, annotated source code, diagnostics code, MAIs, test software description, source code and test/alignment stations specifications, as further specified on SCHEDULE 1.1. "UNIT" and "UNITS" shall have the meaning set forth in SECTION 1.2. "VR(2) IP" means inventions, ideas, concepts, discoveries, know-how, algorithms, improvements, drawings, schematics, specifications, routines, trade secrets, software, manufacturing processes and assembly techniques, whether or not patentable, embodied in or utilized in the design, use and/or fabrication of VR(2) channel ASICs embodying Seller's VR(2) channel technology and/or VR(2) channel technical information, including any patent applications, patents, patent rights, trademarks, service marks, trade secrets, copyrights, registered designs, topography and/or semiconductor mask work registrations and rights and/or any applications for any of the foregoing, unregistered design rights and/or any derivative works. "WORK PRODUCT" means: (a) the TR Nextgen Design; and (b) the Technology embodied in modifications to the TR Nextgen Design that are: (i) developed by Seller as a result of Seller's performance of the Design Services; and (ii) delivered to Purchaser pursuant to SECTION 2 of this Agreement and the Statement of Work. The term "Work Product" specifically excludes the Background Technology. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Exhibit A - Page 3 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. LIST OF OMITTED EXHIBITS AND SCHEDULES Exhibit B - Form of Bill of Sale Exhibit C - Statement of Work Exhibit D - Designated Personnel Exhibit E - Initial Forecast of Expenses Schedule 1.1 - Rights and Assets Schedule 1.3 - Bill of Materials The exhibits referenced in the agreement have not been included because they are either disclosed in such agreement or would not be material to an investment decision; they will be furnished supplementally to the Commission upon request. EX-2.2 3 a2053423zex-2_2.txt EX-2.2 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. EXHIBIT 2.2 SUPPLY AGREEMENT THIS SUPPLY AGREEMENT is effective this 15th day of June 2001 (the "EFFECTIVE DATE"), between OVERLAND DATA, INC., a California corporation, having a place of business at 8975 Balboa Avenue, San Diego, CA 92123 ("SELLER") and SEAGATE REMOVABLE STORAGE SOLUTIONS LLC, a Delaware limited liability company, having a place of business at 1650 Sunflower Ave., Costa Mesa, California ("BUYER"). In consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt of which is acknowledged by both parties, the parties agree as follows: ARTICLE I. DEFINITIONS For purposes of this Agreement, the following terms and all other terms defined in this Agreement shall have the meanings so defined: 1.1 ASIC. The term "ASIC" means an application specific integrated circuit. 1.2 CORE TECHNOLOGY. The term "Core Technology" means the patent rights as described and claimed in United States Patent Nos. 5712863, 5815514 and 5931968. 1.3 DOCUMENTATION. The term "Documentation" means all present and future manuals, notebooks, quick reference guides, comments and publications of every nature, and all corrections, modifications and revisions thereto, relating to Products. 1.4 IMPROVEMENTS AND MODIFICATIONS. The term "Improvements and Modifications" means any and all changes in the design or Specifications of any of the Products or the Core Technology, including the addition of new features or capacities. 1.5 CORE TECHNOLOGY IMPROVEMENTS. The term "Core Technology Improvements" means the improvements and modifications to the Core Technology where implementation of such improvements and modifications would infringe upon the patent claims of the Core Technology. 1.6 INTELLECTUAL PROPERTY. The term "Intellectual Property" means copyright rights (including, without limitation the right to use, reproduce, modify, distribute, publicly display and publicly perform the copyrighted work), trademark rights (including, without limitation, trade names, trade marks, service marks and trade dress) patent rights (including, without limitation, the exclusive right to make, use or sell), trade secrets, moral rights, rights of publicity, goodwill and all other intellectual property rights as may exist now and/or hereafter come into existence and all renewals and extensions thereof, regardless of THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 1 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. whether such rights arise under the laws of the United States or any other country or jurisdiction. 1.7 INVENTION. The term "Invention" means any idea, design, concept, technique, invention, discovery, algorithm or improvement relating to the Products, whether or not patentable. 1.8 NEXT GENERATION TRAVAN CARTRIDGE. The term "Next Generation Travan Cartridge" means the next and future generations of Travan Cartridges, including (1) TR6 Cartridge, and (2) TR7 Cartridge, and (3) off-path Travan technology based Cartridges, all of which are presently expected to have a capacity of greater than 20 GB (compressed). 1.9 NEXT GENERATION TRAVAN DRIVE. The term "Next Generation Travan Drive" means a non-read-while-write drive which reads and writes data onto a Next Generation Travan Cartridge. 1.10 PRODUCTS. The term "Products" means any present or future Travan VR2 ASIC. 1.11 SPECIFICATIONS. The term "Specifications" means the specification for the Product as described in EXHIBIT B attached hereto. 1.12 TRAVAN VR2 ASIC. The term "Travan VR2 ASIC" means an ASIC embodying the VR2 technology, which is a modification of existing ASIC designs of Seller specifically adapted for incorporation into Next Generation Travan Drives which utilize non-read-while-write technology, such ASIC specification for which is attached as EXHIBIT B. ARTICLE II. SALE AND PURCHASE OF PRODUCTS 2.1 SALE AND PURCHASE. Seller agrees to sell and Buyer agrees to buy Products and such other items as may be mutually agreed upon subject to the terms of this Agreement. Buyer will purchase Products pursuant to this Agreement by issuing purchase orders from time to time. 2.2 RESTRICTIONS. Throughout the term of this Agreement and for five years thereafter, Buyer will not (i) market, offer to sell, or sell any Products purchased from Seller, except as part of Next Generation Travan Drives, to third parties. 2.3 TERM OF AGREEMENT. This Agreement will commence on the Effective Date and, except as otherwise provided in this Agreement, will terminate one year from the Effective Date. The term of this Agreement will automatically renew for an additional one-year term on each anniversary of the Effective Date unless either party provides the other party with written notice of such party's intention not to renew at least 90 days prior to such anniversary. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 2 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 2.4 PURCHASE ORDERS. Buyer will order Products by submitting purchase orders to Seller in writing by priority or overnight U.S. mail, facsimile, overnight private courier, or other electronic means mutually agreed upon between the parties (the "PURCHASE ORDERS"). Each Purchase Order will contain the item ordered, description, quantity, date for delivery or performance, destination, and total price of the Purchase Order. Seller will have 10 business days after receipt of a Purchase Order to reject the Purchase Order. Acceptance by Seller is limited to the provisions of this Agreement and Seller's Acknowledgement. Seller will not ship any Products to Buyer without prior receipt of a Purchase Order. 2.5 FORECASTS. Buyer will provide Seller monthly rolling forecasts of Buyer's anticipated requirements for the Products for the six-month period following the date of the forecast, including the first two months of such forecast as a firm purchase order. Buyer will not be bound by the forecast for any period beyond the first two months and will have no liability to Seller for any differences between a forecast requirement for any period beyond the first two months of such forecast and the actual Purchase Orders for such months submitted by Buyer. 2.6 PRECEDENCE. Each Purchase Order issued under this Agreement will be made part of, and be incorporated into, this Agreement. Unless otherwise specifically agreed to in writing between Buyer and Seller, the terms and conditions of this Agreement will take precedence and govern any accepted Purchase Order, or any additional terms stated on any such Purchase Order, notwithstanding any contrary terms and conditions in the printed portion of Buyer's Purchase Order form or Seller's Order Acknowledgment. 2.7 CANCELLATION OF PURCHASE ORDERS. Buyer may cancel the undelivered portion of any purchase order upon written notice of cancellation to Seller. Upon receipt of notice of cancellation, Seller shall immediately stop work on the undelivered portion of the affected Purchase Order and make no further commitments for materials or services to complete such affected Purchase Order. a. In the event of such notice of cancellation (unless such cancellation is due to the default of Seller), Buyer will pay Seller for direct, reasonable and actual out-of-pocket expenses, excluding overhead and similar items, and any other expenses for which Seller is obligated to reimburse its foundry, which either Seller or its foundry incurred directly as a result of preparations to deliver such canceled Products. b. In connection with such cancellation of Purchase Orders, Buyer may require Seller to transfer title and deliver to Buyer, in the manner and on the terms hereinafter set forth for non-cancelled orders any completed Products from such cancelled order. c. In no event shall Buyer's liability to Seller as a result of cancellation of a Purchase Order exceed the total price of the cancelled portion of such Purchase Order. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 3 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 2.8 CAPACITY AND ALLOCATION. Seller will use commercially reasonable efforts to satisfy Buyer's Purchase Orders and forecasted requirements. In the event that Seller's capacity to produce the Products is constrained for any reason, Seller will allocate such constrained supply among the accepted purchase orders of its customers at its sole discretion, and Buyer shall be released from Purchase Order obligations for amounts in excess of Product allocated to Buyer. 2.9 SHIPPING. Buyer reserves the right to designate means of shipping. Shipping methods will be as stated on Buyer's Purchase Order. No changes will be made unless authorized in writing by Buyer. F.O.B. point will be Seller's foundry facility. All shipments will be adequately packaged to prevent any damage during normal transportation. 2.10 TITLE AND RISK OF LOSS. Title to, and risk of loss of, the Products will pass to Buyer upon transfer of the Products to the F.O.B. point of shipment. Buyer will make any claims against Seller for shortages in quantities shipped within 30 days from the date of shipment. 2.11 FORCE MAJEURE. Neither party will be considered in default or liable for any failure to perform its obligations under this Agreement if such failure arises out of an act of nature, war, strikes, lockouts, trade disputes, fires, quarantine restrictions, Governmental action or any other causes beyond the reasonable control of that party. The affected party will immediately notify the other in writing if a force majeure event delays performance and will state the revised date for performance. Should Seller's inability to perform because of a force majeure event continue for a period in excess of 30 days, Buyer will not be obligated to purchase, at a later date, that portion of the Products that Seller is unable to deliver because of a force majeure event. ARTICLE III. PRICES AND TERMS OF PAYMENT 3.1 PRICES. All Buyer purchases will be based on the prices in attached EXHIBIT A. Upon any automatic renewal pursuant to the provisions of SECTION 2.3, the parties will execute and date another revision of EXHIBIT A setting forth Product pricing for such renewed term. 3.2 PAYMENT TERMS. Payment terms are *** after receipt of Seller's invoice. Bills of lading and shipping notices will be forwarded with Seller's invoice as needed. Seller's invoice will specify Buyer's Purchase Order number. All sales of Product will be F.O.B. foundry facility. 3.3 TAXES. Unless otherwise stated in writing by Seller, all prices quoted will be exclusive of all national, federal, state, local or any other governmental use, sales, excise, occupational, property (ad valorem) and similar taxes or duties now in force or enacted in the future. If any such tax, fee or charge of any nature whatsoever is imposed on the transaction, such tax THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 4 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. will be paid by Buyer in addition to the prices quoted or invoiced. If Seller is required to pay any such tax, fee or charge at the time of sale or thereafter, Buyer will promptly reimburse Seller after Seller provides Buyer with evidence of the amounts paid. 3.4 CREDITS. Amounts owed to Buyer due to rejections of Products, or discrepancies on paid invoices will be, at Seller's option, fully credited against future invoices payable by Buyer, or paid by Seller within 30 calendar days from Seller's receipt of a debit memo or other written request for payment from Buyer. 3.5 NO SET-OFFS. Buyer will not set off any amount owing at any time from Seller or any of Seller's affiliated companies to Buyer or its subsidiaries or affiliates against any amount payable at any time by Buyer in connection with this Agreement and/or any Purchase Order issued pursuant to this Agreement. 3.6 METHOD OF PAYMENT. All payments under this Agreement for the Products purchased by Buyer will be made in United States dollars by (i) check, or (ii) wire transfer to the account specified in Seller's Acknowledgement. A finance charge of 1.5% per month will be assessed on any amounts which are past due. ARTICLE IV. WARRANTIES 4.1 WARRANTY OBLIGATION. Seller warrants that for a period of one year (the "WARRANTY PERIOD") from the date of shipment of the Products that such Products will (a) be in compliance with the material terms of the Specification attached hereto as EXHIBIT B, and (b) be of good workmanship and free from substantial defects. Seller further warrants that Seller has title to the Products. Seller does not warrant that all defects will be corrected. The foregoing warranty will be subject to Buyer or the end-user installing and using the Products in accordance with the Specifications. Further, the foregoing warranty will not extend to any Products which have been subject to mishandling, misuse, accident, improper installation, application or use, nor does such warranty extend to any Products that have been modified, repaired or altered by persons other than Seller. Seller's sole obligation under this warranty is limited to either (i) correction or modification of any substantial defect(s) to the extent that such defect(s) can be documented, isolated, reproduced and corrected, or (ii) product replacement. 4.2 FUNCTIONAL TEST VECTORS. Seller shall provide Buyer with functional test vectors for the Products. It is the intent of the parties that the functional test vectors will be provided as tools to assist Buyer in verifying that the Products meet the Specifications. 4.3 REMEDY. If Seller receives notice, verbal followed by written, from Buyer within the Warranty Period of failure of Products to satisfy the above warranties, then, one of the THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 5 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. following remedies will be selected upon mutual agreement of the parties: (i) Seller will replace the Products upon receipt from Buyer of the Products which prove to be defective, (ii) Seller will correct at no charge to Buyer any defective or non-conforming Products, (iii) Buyer will return such defective or non-conforming Products to Seller and recover from Seller the amount paid to Seller by Buyer thereof, or (iv) Buyer will correct the defective or non-conforming Product itself and charge Seller with the cost of such correction upon prior approval of Seller. If, for Products alleged to be defective or non-conforming and which are returned to Seller by Buyer, Seller determines that the parts returned by Buyer are not defective, Seller will return such non-defective parts to Buyer at Buyer's expense and Buyer will refund all shipping charges previously paid by Seller. THE ABOVE REMEDIES ARE THE SOLE AND EXCLUSIVE REMEDIES OF BUYER FOR A BREACH OF THE WARRANTY BY SELLER FOR THE PRODUCTS. 4.4 EXCLUSIONS. The foregoing warranty will not apply to adjustments, modifications, replacements, or repair caused by: (i) accident, transportation, mishandling, neglect, misuse or alterations by persons other than Seller; (or (II) the use or operation of the Products in violation of the Specification. 4.5 DISCLAIMER. SELLER DOES NOT WARRANT THAT THE PRODUCTS WILL MEET BUYER'S REQUIREMENTS OR THAT THE PRODUCT WILL OPERATE IN THE COMBINATIONS WHICH BUYER MAY SELECT FOR USE. THE PRODUCTS ARE PROVIDED WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE . FURTHER, SELLER DOES NOT WARRANT, GUARANTEE, OR MAKE ANY REPRESENTATIONS REGARDING USE, OR THE RESULTS OF USE, OF THE PRODUCTS. THE ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE OF THE PRODUCTS IS ASSUMED BY BUYER. ARTICLE V LIMITATION OF LIABILITY 5.1 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, SELLER WILL NOT BE RESPONSIBLE OR LIABLE UNDER ANY PROVISION OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, PRODUCT LIABILITY, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOSS OR INACCURACY OF DATA, COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR TECHNOLOGY, OR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING, WITHOUT LIMITATION, LOSS OF REVENUES AND LOSS OF PROFITS REGARDLESS OF WHETHER SELLER HAS BEEN ADVISED OF THE EXPECTATION OR EXISTENCE OF SUCH DAMAGES. ANY LIABILITY OF SELLER UNDER ANY THEORY WHATSOEVER WILL BE LIMITED EXCLUSIVELY TO PRODUCT REPLACEMENT OR, IF UNENFORCEABLE, TO PAYMENT OF AN THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 6 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. AMOUNT NOT GREATER THAN AMOUNTS ACTUALLY RECEIVED BY SELLER PURSUANT TO THIS AGREEMENT OR ***, WHICHEVER IS GREATER. ARTICLE VI CONFIDENTIAL DATA AND DISCLOSURES 6.1 CONFIDENTIAL INFORMATION. Each party agrees that any information identified, and marked as confidential ("CONFIDENTIAL INFORMATION"), including this Agreement and any schedules and exhibits thereto and the VR2 Technical Information, which is made available to the other party in accordance with this Agreement shall be kept confidential. Each party will use the other party's Confidential Information only for the purposes contemplated and permitted by this Agreement. Neither party will disclose the other party's Confidential Information to any third party except as may be required (i) by court order (provided that the party subject to such court order gives prompt written notice thereof to the party whose Confidential Information will be disclosed and cooperates in any motion or action to prevent or limit the required disclosure), (ii) pursuant to any discovery obligation in litigation provided that a mutually agreeable protective order has been entered by the court, and (iii) pursuant to any applicable Securities and Exchange Commission ("SEC") filing rules, regulations and/or requirements ("SEC DISCLOSURE"), provided, however, that if a party desires to so disclose the Confidential Information of the other party, the filing party (a) will provide 30 days written notice to the other party of its intent to file such other party's Confidential Information so as to enable the other party to indicate which portions of its Confidential Information to excerpt (the "EXCERPTED PORTIONS") and the general reasons therefor, and (b) will make application to the SEC for confidential treatment of the Excerpted Portions unless the filing party provides a written opinion of counsel addressed to the other party that disclosure of certain of the Excerpted Portions is mandatory under applicable SEC rules and regulations and that filing of such a request for confidential treatment would be improper. Each Party further agrees to protect the other party's Confidential Information from unauthorized use or disclosure in the same manner as it protects its own similar Confidential Information (but in no event with less than reasonable care), and to limit access to the other party's Confidential Information to those of its employees and agents who need such access for purposes contemplated and permitted by this Agreement. This obligation of confidentiality shall last for four (4) years from the date the Confidential Information is disclosed to the recipient, regardless of the termination date of this Agreement. 6.2 EXCLUSIONS. The obligations in this Article VI will not apply to any information which is (i) publicly available, except as disclosed in violation of this Agreement; or (ii) lawfully received by any party from a third party who is or who was not bound in a confidential relationship to the other party; or (iii) already properly and lawfully in possession of any party prior to the date of this Agreement or the date of its disclosure, or information which such party demonstrates with appropriate documentation was known prior hereto; or (iv) THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 7 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. required by law or governmental regulation or necessary for the purpose of enforcement of this Agreement; or (v) independently developed by one party without use of any Confidential Information of the other party by employees who have had no access to such Confidential Information; or (vi) not marked as "Confidential" or other similar legends indicating the confidential nature of the information. 6.3 THIRD PARTY MANUFACTURERS. Notwithstanding the above, Buyer may share such Confidential Information with a third party, but only to the extent necessary for that third party to integrate Product into Buyer's product. Prior to such disclosure Buyer will insure that the third party signs a confidentiality agreement incorporating restrictions on disclosure of Confidential Information substantially similar to restrictions in this Section 6.3. ARTICLE VII INTELLECTUAL PROPERTY RIGHTS 7.1 INTELLECTUAL PROPERTY RIGHTS TO THE PRODUCTS AND CORE TECHNOLOGY. All right, title and interest in or to the Intellectual Property of the Products, including the Core Technology and including any and all Inventions, Improvements and Modifications to the Products and Core Technology developed by or for Seller, shall be solely owned by Seller. 7.2 IMPROVEMENTS AND MODIFICATIONS TO THE CORE TECHNOLOGY DEVELOPED BY BUYER. If Buyer desires to develop or develops any Core Technology Improvements, the parties must mutually agree upon the ownership or licensing to Seller of such Core Technology Improvements prior to the implementation of such Core Technology Improvements in the Product by either party. 7.3 IMPROVEMENTS AND MODIFICATIONS TO THE PRODUCT (EXCLUDING THE CORE TECHNOLOGY) DEVELOPED BY BUYER. All right, title and interest in or to the Intellectual Property of the Product, excluding the Core Technology and including any and all Inventions, Improvements and Modifications to the Products (excluding Core Technology) developed by or for Buyer, shall be solely owned by Buyer. ARTICLE VIII LICENSE GRANT 8.1 LICENSE GRANT. Subject to the terms and conditions of this Agreement, Seller hereby grants to Buyer a *** 8.2 TRADEMARK USAGE. Buyer will comply with all applicable laws and governmental regulations pertaining to the proper use and designation of Seller's lawful trademarks. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 8 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. ARTICLE IX INDEMNITY 9.1 INDEMNITY BY SELLER. Seller will indemnify and hold harmless Buyer and its directors, officers, employees, agents, successors and assigns from and against any and all liability, damages, losses, claims, demands, actions, judgments, costs, attorneys' fees, disbursements and expenses incurred in connection with any action, claim or demand against Buyer by reason of injury to or death of any person or damage to or destruction of property arising out of or resulting from the negligent, reckless or willful acts or omissions of Seller, its employees, subcontractors or agents in supplying the Products to Buyer pursuant to this Agreement. Seller will not be responsible for any such losses, damages, liabilities, claims, actions, judgments, costs, demands, attorneys' fees, disbursements and expenses caused by the sole negligence or willful misconduct of Buyer, its directors, officers or employees. If an action, claim or demand is filed against Buyer for which Seller is to be responsible under this provision, Buyer will promptly notify Seller in writing of such action, claim or demand. Upon receipt of such notice from Buyer, if Seller acknowledges in writing to Buyer that Seller is obligated to indemnify Buyer under the terms of this SECTION 9.1 in connection with such action, claim or demand, then Seller will be entitled, if it so elects, to take control of the defense and investigation of such action, claim or demand and to employ and engage attorneys of its own choice to handle and defend the same at Seller's sole cost, risk and expense and Buyer will thereafter cooperate in all reasonable respects with Seller and its attorneys in the investigation, trial and defense of such action, claim or demand and any appeal arising therefrom. Buyer may also, through independent counsel and at its own cost, participate in such investigation, trial and defense of such action, claim or demand and any appeal arising therefrom. Seller may effect no settlement without the prior written approval of Buyer, which approval will not be unreasonably withheld. Seller also agrees to carry fire and extended coverage insurance, and to be responsible for any of Buyer's property while in Seller's possession, to maintain such property in good condition, and not to dispose of such property except in accordance with Buyer's instructions and the terms hereunder. 9.2 INDEMNITY BY BUYER. Buyer will indemnify and hold harmless Seller and its directors, officers, employees, agents, successors and assigns from and against any and all liability, damages, losses, claims, demands, actions, judgments, costs, attorneys' fees, disbursements and expenses incurred in connection with any action, claim or demand against Seller by reason of losses, injury to or death of any person or damage to or destruction of property arising out of or resulting from any sales or use of devices incorporating the Products, or the negligent, reckless or willful acts or omissions of Buyer, its employees, subcontractors or agents in the use or sale of the Products. Buyer will not be responsible for any such losses, damages, liabilities, claims, actions, judgments, costs, demands, attorneys' fees, disbursements and expenses caused by the sole negligence or willful misconduct of Seller, THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 9 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. its directors, officers or employees. If an action, claim or demand is filed against Seller for which Buyer is to be responsible under this provision, Seller will promptly notify Buyer in writing of such action, claim or demand. Upon receipt of such notice from Seller, if Buyer acknowledges in writing to Seller that Buyer is obligated to indemnify Seller under the terms of this SECTION 9.2 in connection with such action, claim or demand, then Buyer will be entitled, if it so elects, to take control of the defense and investigation of such action, claim or demand and to employ and engage attorneys of its own choice to handle and defend the same at Buyer's sole cost, risk and expense and Seller will thereafter cooperate in all reasonable respects with Buyer and its attorneys in the investigation, trial and defense of such action, claim or demand and any appeal arising therefrom. Seller may also, through independent counsel and at its own cost, participate in such investigation, trial and defense of such action, claim or demand and any appeal arising therefrom. Buyer may effect no settlement without the prior written approval of Seller, which approval will not be unreasonably withheld. Buyer also agrees to carry fire and extended coverage insurance, and to be responsible for any of Seller's property while in Buyer's possession, to maintain such property in good condition. 9.3 LIABILITY FOR INJURIES TO PERSONNEL. Each party will be solely responsible for, and will indemnify the other party against, all claims, losses, litigation, damages and expenses resulting from injuries to or the death of any of its personnel occurring while any such person is traveling to or from any of the other party's facilities, or is otherwise engaged in activities incident to this Agreement. ARTICLE X. INTELLECTUAL PROPERTY INFRINGEMENT 10.1 REPRESENTATIONS. Seller represents and warrants that it knows of no trade secret misappropriation that has occurred and has no reason to believe that a misappropriation will occur with regard to any Product or Documentation delivered to Buyer, and it knows of no patent, trademark, copyright or other proprietary rights infringement by the Products on the Effective Date of this Agreement. 10.2 DEFENSES. Seller will indemnify, defend any suit or proceeding brought against, Buyer or its customers based on a claim that the Products, or any part thereof, as supplied by Seller and used within the scope of this Agreement constitutes an infringement of any U.S. patent, copyright, trademark, trade secret or any other proprietary right of any third party or embodied in the Products as supplied by Seller, provided that (i) Buyer notifies Seller in writing within 30 days of the claim, (ii) Seller has sole control of the defense and all related settlement negotiations, and (iii) Buyer provides Seller with the assistance, information and authority necessary to perform the above. Seller will have no liability or obligation to defend any such claim of infringement based on: (a) use of a superseded or altered version of the Product if such infringement would have been avoided by the use of a current THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 10 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. unaltered version of the Product supplied by Seller; (b) any customized Products, to the extent such customization was at the request of Buyer; or (c) the combination, operation, or use of the Products supplied by Seller pursuant to this Agreement with other devices and components not supplied by Seller if such infringement would have been avoided by the use of the Products solely without such devices or components. 10.3 REMEDIES. If the Product is held or is believed by Seller to infringe, Seller will have the option, at its expense, to (i) modify the Product to be non-infringing; (ii) obtain for Buyer and its customers a license to continue using the Product; or (iii) replace the Product with non-infringing alternatives which conform to the Product specification. THIS SECTION STATES SELLER'S ENTIRE LIABILITY FOR INFRINGEMENT. ARTICLE XI [INTENTIONALLY OMITTED.] ARTICLE XII. TERMINATION 12.1 TERMINATION. Either party may terminate this Agreement immediately (i) in the event of a material breach, including any failure by Buyer to make payments of any amounts to Seller when due, of any term of this Agreement by the other party which continues uncured for a period of *** after the non-breaching party provides written notice to the breaching party; (ii) upon any breach of the provisions of Article VI (Confidential Data and Disclosures); or (iii) upon a breach by a party of any provision of Article XII (Compliance with Laws).. 12.2 INSOLVENCY. Either party may terminate this Agreement or suspend performance, if at any time during the term of this Agreement the other party will becomes insolvent or is unable to meet its obligations as they become due; makes a general assignment for the benefit of creditors; petitions, applies for, suffers or permits with or without its consent the appointment of a custodian, receiver, trustee in bankruptcy or similar officer for all or any substantial part of its business or assets; avails itself or becomes subject to any proceeding under the Federal Bankruptcy Code or any similar state, federal or foreign statute relating to bankruptcy, insolvency, reorganization, receivership, arrangement, adjustment of debts, dissolution or liquidation, which proceeding is not dismissed within sixty (60) days of commencement thereof. 12.3 ACCRUED OBLIGATIONS. Termination of this Agreement will not relieve either party of any then-accrued payment obligation under this Agreement, unless payment is disputed.. Any and all payments by either party to the other accrued pursuant to this Agreement as of the date of termination will remain due and payable in accordance with the terms hereof. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 11 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 12.4 CONSEQUENCES OF TERMINATION. Upon termination of this Agreement for any reason whatsoever, each party will immediately deliver to the other all Confidential Information and other materials related to, embodying, or associated with, any of the Documentation, the VR2 Technical Information, and the Intellectual Property made available to, or produced by, Buyer pursuant to the terms of this Agreement. Any termination of this Agreement will not eliminate any liability arising out of the conduct prior to the actual date of termination, and either party may, following such termination, pursue such remedies as may be available with respect to such liabilities. In addition, the obligations of ARTICLE IV and SECTIONS 5.1, 6.1, 6.2, 7.1, , 9.1, 12 and 13, will survive any termination of this Agreement. Within 30 calendar days after termination of this Agreement for any reason whatsoever, each party will certify in writing to the other that it has satisfied all of its obligations under this Section. ARTICLE XIII. COMPLIANCE WITH LAWS 13.1 CERTAIN LAWS. Parties hereby acknowledge and agree that certain laws of the United States, including the Foreign Corrupt Practices Act, 15 U.S.C. sections 78dd-1, ET SEQ., prohibit any person subject to the jurisdiction of the United States from making any payment of money or anything of value, directly or indirectly, to any foreign political party or candidate for foreign political office for the purpose of obtaining or retaining business. Parties hereby represent and warrant that, in the performance of their duties pursuant to this Agreement, each has not made, and will not make, any such proscribed payment. Each party will indemnify and hold harmless the other from and against any and all claims, losses and liabilities attributable to any breach by that party of its obligations under this SECTION 13.1. 13.2 UNITED STATES EXPORT CONTROLS. Without limiting the generality of SECTION 13.1, each party specifically acknowledges that certain of the Confidential Information ("TECHNICAL DATA") may be subject to United States export controls, pursuant to the Export Administration Regulations, 15 C.F.R. Parts 768-799. Each party will comply strictly with any applicable requirements of the Export Administration Regulations with respect to all such Technical Data. ARTICLE XIV. ARBITRATION 14.1 GOVERNING LAW. This Agreement will be governed in all respects solely and exclusively by the laws of the State of California, U.S.A. without regard to conflict of laws principles. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 12 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. The United Nations Convention on the International Sale of Goods will not apply to this Agreement. 14.2 DISPUTE RESOLUTION. In any disputes, controversies, or claims arising out of, relating to, or in connection with this Agreement or between the parties, including the determination of the scope of the agreement to arbitrate, the parties agree to first endeavor to settle the dispute in an amicable manner by good faith discussions and bargaining between the parties. If the parties are unable to resolve the controversy, upon request of one party, the parties agree to submit the dispute to an arbitrator for final and binding arbitration at a location to be determined by the non-requesting party. The arbitration will comply with and be governed by provisions of the California Arbitration Act before an arbitrator experienced in the matter to be decided. 14.3 ARBITRATION EXCEPTION; INJUNCTIVE RELIEF AVAILABILITY. Notwithstanding the foregoing, any claim relating to either of the parties' confidential information, trademarks, or other proprietary technology or intellectual property may be, at either parties' election, be determined by a court located in San Francisco, California, to whose exclusive jurisdiction the parties hereby consent. Each party shall be authorized and entitled to obtain preliminary and permanent injunctive relief, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which a party may be entitled. 14.4 ANCILLARY RELIEF. Nothing herein will prevent a party, prior to appointment of the arbitrator, from making application to any court of competent jurisdiction, for any provisional remedy available at law or in equity. Such application for relief will not constitute a waiver of this agreement to arbitrate. Upon appointment, the arbitrator will have exclusive authority to order provisional or interim relief, except that any relief ordered by the arbitrator may be immediately and specifically enforced by a court otherwise having jurisdiction. The parties waive objection to venue and consent to the personal jurisdiction of the federal courts of San Francisco, California, U.S.A. in any action to enforce this agreement to arbitrate or any order or award of the arbitrator, or for the provisional or interim remedies provided for in this Agreement. 14.5 EXPENSES. In any arbitration proceeding pursuant to this Agreement, each party will bear the expenses of its witnesses. All other costs of arbitration, including, without limitation, the fees and expenses of the arbitrators, the cost of the record or transcripts thereof, if any, administrative fees, the attorneys' fees of the parties, and all other fees and costs will be allocated to the parties to the arbitration as determined by the arbitrator, except that the prevailing party in such arbitration will be entitled to recover its reasonable attorneys' fees and expenses. 14.6 DISCOVERY. In any arbitration proceeding pursuant to this Agreement, discovery will be limited to written requests for the production of specific documents. The period for requesting documents will be 30 days commencing upon the day that the answer is due under the Rules. The responding party will have 15 days to produce the requested THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 13 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. documents by sending copies to the requesting party or its representative via a recognized international courier service. The parties will also voluntarily produce all documents that they intend to use at the arbitration hearing and a list of intended witnesses before the close of discovery subject to supplementation for purposes of rebuttal or good cause shown. The parties waive any right to seek any discovery not provided for in this Agreement irrespective of whether the laws of any country provide for different or additional discovery in international arbitration. The arbitrator will hold a pre-hearing conference within three days of the close of discovery and will schedule and hold the final hearing within 30 days of the close of discovery. Except as set forth in Section 14.3, EACH PARTY HERETO HEREBY AGREES THAT THE ARBITRATION PROCEDURE PROVIDED IN THIS AGREEMENT WILL BE THE SOLE AND EXCLUSIVE METHOD OF RESOLVING ANY DISPUTES, CONTROVERSIES OR CLAIMS ARISING IN CONNECTION WITH, OR OUT OF THIS AGREEMENT, OR OTHERWISE BETWEEN THE PARTIES TO THIS AGREEMENT. ARTICLE XV. EPIDEMIC PRODUCT FAILURE 15.1 EPIDEMIC PRODUCT FAILURE. For the purposes of this Agreement, "Epidemic Product Failure" means *** The parties agree, however, that in no event shall an Epidemic Product Failure be deemed to occur during a Product ramp-up period *** from the first shipment of Products to Buyer. In the case of an Epidemic Product Failure, Buyer and Seller shall cooperate to implement the following procedure: 15.1.1 Buyer shall promptly notify Seller upon discovery of the failure. 15.1.2 Within five (5) working days Seller shall give an initial response indicating its preliminary plans for diagnosing the problem. 15.1.3 Seller and Buyer shall jointly exert all commercially reasonable efforts to diagnose the problem and plan a work-around or more permanent solution. 15.1.4 Seller shall prepare and consult with Buyer regarding a recovery plan as well as an appropriate work-around, as an interim solution, if the parties mutually decide that such an interim solution is required. 15.2 MANUFACTURING LICENSE. Seller hereby grants to Buyer a *** license to manufacture or have manufactured the Products (the "Manufacturing Rights") which Buyer may exercise at any time upon notice to Seller and upon the occurrence of either of the following: 15.2.2 A Recovery Plan is not mutually agreed to in writing by the parties within thirty (30) days from the date of initial notification of the problem by Buyer to Seller. For THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 14 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. the purposes of this Agreement, a "Recovery Plan" means a plan for which each party has devoted all commercially reasonable efforts to determine the root cause of the problem, and which includes (i) identification of the corrective action, and (ii) written milestones for the performance of the corrective action. 15.2.3 Notwithstanding the terms of Section 2.8 hereof, if Seller consistently or continuously fails to supply Buyer with Products meeting the Specifications in the quantities (i) contained on a firm forecast of Buyer, and (ii) included in a firm non-cancelable Purchase Order submitted by Buyer and accepted by Seller pursuant to the terms of Section 2.4 ("Purchase Orders") hereof. For the purposes of this Section 15.2.3, Seller shall be deemed to have failed consistently in performing its obligations to supply Products *** 15.2.4 If Buyer does exercise its Manufacturing Rights pursuant to this Section 15.2, the provisions of Section 15.3 shall additionally apply. 15.3 ROYALTIES AND REPORTING PROVISIONS. In the event that Buyer exercises its Manufacturing Rights as provided in Section 15.2, and in the event that the parties have not previously executed a VR2 Core License Agreement , the parties shall negotiate in good faith prior to the first sale of the Products manufactured by or for Buyer (i) the Product royalties to be paid to Seller by Buyer, (ii) the payment procedures and (iii) the sales and royalty reporting obligations of Buyer. In general, Buyer shall additionally permit Seller to conduct an audit, no more than *** and upon prior written notice to Buyer, to examine such books, records and accounts of Buyer to verify royalties due to Seller hereunder. The parties currently intend to negotiate and execute a VR2 Core License Agreement for the Products which shall contain such additional terms as are described in this Section 15.3. ARTICLE XVI. MISCELLANEOUS 16.1 INDEPENDENT CONTRACTORS. Buyer and Seller hereby declare and agree that each is engaged in an independent business and will perform its obligations under this Agreement as an independent contractor and not as the agent or employee of the other; that the persons performing work for each party hereunder are not agents or employees of the other. Neither party will have the right or authority to assign or create any obligation of any kind, express or implied, on behalf of the other party, or to act for or on behalf of the other party, to make commitments of any kind or bind it in any way, to accept any service of process upon, or to receive any notices of any nature whatsoever in its behalf. 16.2 ASSIGNMENT. Except as otherwise expressly proved in this Agreement, neither party may assign its rights or delegate its duties under this Agreement without the prior written consent of the other party; provided, however, that any party may assign its rights and delegate its duties, either in whole or in part, under this Agreement to any wholly owned or THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 15 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. controlled affiliate, provided that such assignment includes an express assumption of the assignor's obligations hereunder. Any attempted assignment or delegation in contravention of this SECTION 16.2 will be void and of no effect. 16.3 NOTICE. Except as otherwise provided in this Agreement, all notices will be deemed to have been given when in writing and delivered in person, sent by electronic facsimile transmission, deposited in the United States Mail, postage prepaid, certified mail, return receipt requested or sent by a express courier service which provides documented delivery, and addressed as follows: (i) if to Seller, Overland Data, Inc., 8975 Balboa Avenue, San Diego, CA 92123; and (ii) if to Buyer: Seagate Removable Storage Solutions LLC, 1650 Sunflower Avenue, Costa Mesa, CA 92626. These addresses may be changed by written notice given by such party to the other pursuant to this SECTION 16.3. 16.4 NO THIRD PARTY BENEFICIARIES. Except as otherwise provided in this Agreement, the provisions of this Agreement are for the benefit solely of the parties and not for any other person. 16.5 WAIVERS. Waiver by either party of any breach by the other party will not be deemed a waiver of any other default. The failure or delay of either party to assert any of its rights under this Agreement will not be deemed a waiver of that party's right thereafter to enforce each and every provision of this Agreement 16.6 AMENDMENTS. No provision of this Agreement will be deemed waived, amended or modified by either party, unless such waiver, amendment or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment or modification. 16.7 HEADINGS. The section and paragraph headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. 16.8 SEVERABILITY. If any provision of this Agreement or the application of any such provision to any person or circumstance, is declared judicially to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the parties that this Agreement will be deemed to have been amended by modifying such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is legal and enforceable and that achieves the same objective. 16.9 COUNTERPARTS. This Agreement may be executed in several duplicate originals , each of which will be deemed an original but all of which together will constitute one and the same instrument. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 16 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. 16.10 ENTIRE AGREEMENT. This Agreement embodies the entire agreement of Buyer and Seller respecting the Products and supersedes all prior agreements, understandings and communications, whether written or oral, between the parties with respect to its subject matter. IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed as of the Effective Date. SELLER: OVERLAND DATA, INC. BUYER: SEAGATE REMOVABLE STORAGE SOLUTIONS LLC By: /s/ Vernon A. LoForti By: /s/ David L. Waite --------------------------- ------------------------------- Name: Vernon A. LoForti Name: Donald L. Waite Title: Vice President and Chief Title: President Financial Officer Date: 6-15-01 Date: 6-15-01 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 17 CONFIDENTIAL TREATMENT REQUESTED BY OVERLAND DATA, INC. LIST OF OMITTED EXHIBITS Exhibit A - Travan-TM- VR(2)-TM- ASIC Pricing Exhibit B - Single Channel with Four Decoders VR(2)-TM- ASIC Specification The exhibits referenced in the agreement have not been included because they are either disclosed in such agreement or would not be material to an investment decision; they will be furnished supplementally to the Commission upon request. EX-99.1 4 a2053423zex-99_1.txt EX-99.1 EXHIBIT 99.1 PRO FORMA FINANCIAL INFORMATION The design and assets that are the subject of the disposition being reported by this Form 8-K were acquired by the Company in connection with the acquisition of certain assets from Tecmar Technologies International, Inc., and certain of its affiliates, effective February 23, 2000 (the "Tecmar Acquisition"). The pro forma statements of operations have been presented to give effect to the sale transaction as if it had occurred at the beginning of the periods presented. However, because the Company did not own the assets related to the disposition until February 23, 2000, the following Unaudited Pro Forma Condensed Consolidated Statement of Operations for the fiscal year ended June 30, 2000 present the results for the Company as if that acquisition had not occurred. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2001 gives effect to the disposition as if it had occurred on March 31, 2001. This Pro Forma Financial Information is presented for illustrative purposes only. It is not necessarily indicative of the results of the remaining operations or financial position which actually would have been reported had the disposition occurred as the beginning of the periods presented, nor is it necessarily indicative of the Company's future financial results of operations. 1 OVERLAND DATA, INC. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET MARCH 31, 2001 (IN THOUSANDS)
Historical Adjustments Pro-forma ---------- ----------- --------- ASSETS ------ Current assets: Cash and cash equivalents $ 12,971 $ - $ 12,971 Accounts receivable, net 22,964 - 22,964 Inventories 27,066 (1,778) (a) 25,288 Deferred income taxes 3,391 810 (c) 4,201 Other current assets 2,689 - 2,689 --------- ---------- ---------- Total current assets 69,081 (968) 68,113 Property and equipment, net 5,503 (112) (a) 5,391 Other assets 491 - 491 --------- ---------- ---------- $ 75,075 $ (1,080) $ 73,995 ========= ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 12,917 $ - $ 12,917 Accrued liabilities 5,767 - 5,767 Accrued payroll and employee compensation 2,629 160 (b) 2,789 --------- ---------- ---------- Total current liabilities 21,313 160 21,473 Other liabilities 1,393 - 1,393 --------- ---------- ---------- Total liabilities 22,706 160 22,866 --------- ---------- ---------- Shareholders' equity: Common stock 32,762 - 32,762 Accumulated other comprehensive income (298) - (298) Retained earnings 19,905 (1,240) 18,665 --------- ---------- ---------- Total shareholders' equity 52,369 (1,240) 51,129 --------- ---------- ---------- $ 75,075 $ (1,080) $ 73,995 ========= ========== ==========
FOOTNOTES (a) Represents the reduction of inventory to net realizable value and the impairment of assets to be disposed as a result of the sale of the Designs and the exit of the entry-level tape drive business. (b) Represents accrued severance related to a reduction in force associated with exiting the entry-level tape drive business. (c) Represents the tax benefit related to the charges discussed in footnotes (a) and (b). 2 OVERLAND DATA, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 2000 (IN THOUSANDS)
Historical Adjustments Pro-forma ---------- ----------- --------- Net revenues: Product sales $ 122,703 $ (2,523) (a) $ 120,180 Royalties & services 276 - 276 ---------- ---------- ---------- Total net revenues 122,979 (2,523) 120,456 Cost of goods sold 92,460 (4,140) (a) 88,320 ---------- ---------- ---------- Gross Profit 30,519 1,617 32,136 Operating expenses: Sales and marketing 14,272 (641) (a) 13,631 Research and development 7,253 (772) (a) 6,481 General and administrative 6,183 (487) (a) 5,696 ---------- ---------- ---------- Total operating expenses 27,708 (1,900) 25,808 ---------- ---------- ---------- Income from operations 2,811 3,517 6,328 Other income: Interest income, net 714 43 (a) 757 Other expense, net (109) - (109) ---------- ---------- ---------- Income before income taxes 3,416 3,560 6,976 Provision for income taxes 1,349 1,406 (b) 2,755 ---------- ---------- ---------- Net income $ 2,067 $ 2,154 $ 4,221 ========== ========== ========== Net income per share: Basic $ 0.20 $ 0.21 $ 0.42 ========== ========== ========== Diluted $ 0.19 $ 0.20 $ 0.39 ========== ========== ========== Number of shares used in computing per share amounts: Basic 10,123 10,123 10,123 ========== ========== ========== Diluted 10,688 10,688 10,688 ========== ========== ==========
FOOTNOTES (a) Represents the operations of the Tecmar Acquisition. (b) The adjustment to income taxes represents the adjustment required to cause the consolidated effective tax rate to be equal to the rate recorded by the Company. 3 OVERLAND DATA, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NINE MONTHS ENDED MARCH 31, 2001 (IN THOUSANDS)
Historical Adjustments Pro-forma ---------- ----------- --------- Net revenues: Product sales $ 117,597 $ (2,659) (a) $ 114,938 Royalties & services 734 - 734 --------- ---------- ---------- Total net revenues 118,331 (2,659) 115,672 Cost of goods sold 86,708 (2,933) (a) 83,775 --------- ---------- ---------- Gross Profit 31,623 274 31,897 Operating expenses: Sales and marketing 12,068 (482) (a) 11,586 Research and development 7,553 (1,784) (a) 5,769 General and administrative 6,132 (147) (a) 5,985 --------- ---------- ---------- Total operating expenses 25,753 (2,413) 23,340 --------- ---------- ---------- Income from operations 5,870 2,687 8,557 Other income: Interest income, net 350 2 (a) 352 Other income, net 395 51 (a) 446 --------- ---------- ---------- Income before income taxes 6,615 2,740 9,355 Provision for income taxes 2,613 1,082 (b) 3,695 --------- ---------- ---------- Net income $ 4,002 $ 1,658 $ 5,660 ========= ========== ========== Net income per share: Basic $ 0.39 $ 0.16 $ 0.55 ========= ========== ========== Diluted $ 0.37 $ 0.15 $ 0.52 ========= ========== ========== Number of shares used in computing per share amounts: Basic 10,371 10,371 10,371 ========= ========== ========== Diluted 10,931 10,931 10,931 ========= ========== ==========
FOOTNOTES (a) Represents the operations of the Tecmar Acquisition. (b) The adjustment to income taxes represents the adjustment required to cause the consolidated effective tax rate to be equal to the rate recorded by the Company. 4 -----END PRIVACY-ENHANCED MESSAGE-----