EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
CABLETRON SYSTEMS, INC.,
CTRON ACQUISITION, INC.
AND
DIGITAL EQUIPMENT CORPORATION(1)
NOVEMBER 24, 1997
(1) Confidential Treatment has been requested as to certain portions of this
agreement. The term "Confidential Treatment" and the xxxx (*) is used throughout
this agreement in order to indicate that material has been omitted and
separatley filed with the Securities and Exchange Commission.
Exhibits
A - Initial Statement of Assets
B - Form of Reseller Agreement
C - Assignment and Assumption Agreement
D - Xxxx of Sale
E - Statements of Operations
F - List of NPB Employees
G - Assignment of Patents and Patent Applications
H - Assignment of Trademarks, Trademark Applications and Goodwill
Schedules
Schedule 1.1 (a) - Accounting Convention
Schedule 1.1 (b) - Agreed-Upon Procedures
Schedule 1.2 - Assigned Licenses
Schedule 1.3 - Assigned Patents
Schedule 1.4 - Assigned Trademarks
Schedule 1.5 - Products
Schedule 1.6 - Retained Patents
Schedule 1.7 - Licensing Programs
Schedule 2.1(a) - Encumbrances on Acquired Assets
Schedule 2.1(h) - Contracts
Schedule 2.1(i) - Permits
Schedule 2.1(x) - International Assets
Disclosure Schedule -- Exceptions to Representations and Warranties
Schedule 4.8 - Exceptions to Representation 4.8
Schedule 5.10(a) - Disability Schedule
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into on
November 24, 1997, by and among Cabletron Systems, Inc., a Delaware corporation,
Ctron Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of
Cabletron and Digital Equipment Corporation, a Massachusetts corporation. The
Buyer and the Seller are collectively referred to herein as the "Parties."
Whereas, Seller desires to sell certain assets of its network products
business to Buyer;
Whereas, Buyer desires to purchase certain assets of Seller's network
products business;
Whereas, as a condition to entering into the purchase and sale, the
parties have agreed to enter into a Reseller Agreement, pursuant to which Seller
will be appointed as a reseller of Buyer's products, including the products of
the network products business, and Seller has agreed to purchase certain minimum
amounts of such products;
Whereas, the parties wish to describe their respective rights and
obligations.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accounting Convention" means the accounting convention attached
hereto as Schedule 1.1(a).
"Acquisition" has the meaning set forth in the preamble above.
"Acquired Assets" has the meaning set forth in ss. 2.1.
"Acton Facilities" mean the parcels of real property designated as 50
and 000 Xxxxx Xxxx, Xxxxx, Xxxxxxxxxxxxx, and all improvements, fixtures and
fittings thereon, easements, rights-of-way, and other appurtenant rights
thereto.
"Agreed-Upon Procedures" means the agreed-upon procedures attached
hereto as Schedule 1.1(b).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preamble above.
"Asset Value" means the net value of the assets on the applicable
Statement of Assets established in accordance with the Accounting Convention.
"Assigned Copyrights" mean the copyright interests, registered or
unregistered, used primarily in the NPB or the Products or the Products Under
Development, or used solely in any other Acquired Assets.
"Assigned Intellectual Property" means the entire right, title and
interest in and to (i) the Assigned Patents, the Assigned Copyrights, the
Assigned Trademarks, and all applications for any of the foregoing, and the
Assigned Licenses, and (ii) trade secrets, know-how and other proprietary
information that is used primarily in the NPB or the Products or the Products
Under Development, excluding in all cases the Retained Patents, the Digital
Marks, and the Retained Software.
"Assigned Licenses" mean the license agreements set forth in Schedule
1.2 and licenses licensed specifically for a Product or a Product Under
Development and used primarily in the NPB.
"Assigned Patents" mean the Patents listed under the heading "Assigned
Patents" set forth in Schedule 1.3 and all foreign counterparts thereto, subject
to all encumbrances set forth in Schedule 2.1(a).
"Assigned Trademarks" mean the Trademarks set forth in Schedule 1.4.
"Assumed Liabilities" has the meaning set forth in ss. 2.3.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could reasonably form the
basis for any specified consequence.
"Buyer" means Cabletron Systems, Inc., Ctron Acquisition, Inc. and
Cabletron Systems, Inc.'s Subsidiaries, as and to the extent that the context
requires.
"Buyer 401(k) Plan" means the Cabletron Systems, Inc. 401(k) Plan.
"Cabletron" means Cabletron Systems, Inc.
"Cabletron Common Stock" means the common stock, $0.01 par value per
share, of Cabletron.
"Cabletron Marks" means the trademark "Cabletron" and the other
trademarks, logos and designs used by Buyer from time-to-time to signify Buyer's
products and services.
"Cabletron Shares" has the meaning set forth in ss. 2.5(b).
"Cabletron Stock Price" means the average, rounded to the nearest
one-thousandth of a dollar ($0.001), of the midpoints of the high and low sales
prices of Cabletron Common Stock as reported on the New York Stock Exchange
Composite Tape (as reported by the eastern edition of The Wall Street Journal
or, if not reported thereby, as reported by another authoritative source as
mutually agreed by the Buyer and the Seller) for the 10 consecutive trading days
during the period ending on and including the date hereof.
"Cause" has the meaning set forth in ss.5.10.
"Closing" has the meaning set forth in ss. 2.7.
"Closing Date" has the meaning set forth in ss. 2.7.
"Closing Date Statement of Assets" has the meaning set forth in ss.
2.6(a)(i).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Confidential Information" means any and all information concerning the
businesses and affairs of the Buyer (including, following the Closing,
information of the Seller related to the NPB) or Seller, as the case may be,
other than that information which is independently developed in the future,
already generally or readily obtainable by the public or is publicly known or
becomes publicly known through no breach of ss. 7 by the Seller or Buyer, as the
case may be.
"Contracts" has the meaning set forth in ss. 2.1(h).
"Data Networking Product" means a data networking or telecommunication
hardware product (and the software incorporated therein) specifically designed
for transporting data between two or more computing devices, such as hubs,
routers, switches, bridges, structured wiring, adapters, remote access devices
(e.g., access concentrators) and terminal servers, and logical extensions
thereof.
"Demand Plan" means Seller's twelve month product plan previously
delivered to Buyer based on the consolidated input of Seller's sales
organizations as of the ninth week of Seller's first quarter of fiscal year
1998.
"Digital Brand" has the meaning set forth in the Reseller Agreement.
"Digital Marks" has the meaning set forth in the Reseller Agreement.
"Disclosure Schedule" has the meaning set forth in ss. 3.
"Employee Plan" has the meaning set forth in ss. 3.24(a).
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins and wetlands), groundwater, water body sediments, drinking water supply,
stream sediments, ambient air (including indoor air), plant and animal life and
any other environmental medium or natural resource.
"Environmental Laws" mean the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Air Act, the Clean Water Act, and M.G.L. Chapter 21E, each as amended or
hereinafter in effect and any other federal, state, local or foreign law,
regulation or legal requirement, as now or hereinafter in effect, relating to:
(a) the Release, containment, removal, remediation, response, cleanup or
abatement of any sort of any Hazardous Materials; (b) the manufacture,
generation, formulation, processing, labeling, distribution, introduction into
commerce, use, treatment, handling, storage, recycling, disposal or
transportation of any Hazardous Materials; (c) exposure of persons, including
employees, to any Hazardous Materials; (d) the pollution, protection or clean up
of the Environment; or (e) noise.
"Environmental Permit" means any Permit or authorization from any
governmental authority required under, issued pursuant to, or authorized by any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in ss. 2.2.
"First Year" has the meaning set forth in ss. 2.5 below.
"First Year Product Credits" has the meaning set forth in ss. 2.5
below.
"FMLA" has the meaning set forth in ss. 5.10.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Hazardous Materials" means all substances defined as Hazardous
Substances, Hazardous Materials, Oils, Pollutants or Contaminants in the
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss.
200.5, or defined as such by, or regulated as such under, any Environmental Law.
"Hired Employees" has the meaning set forth in ss. 5.10.
"Indemnified Party" has the meaning set forth in ss. 9.5(a).
"Initial Employment Period" has the meaning set forth in ss. 5.10.
"Indemnifying Party" has the meaning set forth in ss. 9.5(a).
"Initial Statement of Assets" means the Statement of Assets as of June
28, 1997 attached hereto as Exhibit A.
"Knowledge" of an organization means actual knowledge of the Persons
within such organization having principal responsibility for the relevant
matters after reasonable investigation.
"Laws" means all laws, rules, regulations, codes, injunctions,
judgments, orders, decrees, rulings, interpretations, constitution, ordinance,
common law, or treaty, of any federal, state, local municipal and foreign,
international, or multinational government or administration and related
agencies.
"Leave Expiration Date" has the meaning set forth in ss. 5.10.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, whether incurred, and
whether due or to become due).
"Licensing Programs" mean the licenses on Schedule 1.7.
"Lien" means any mortgage, pledge, lien, security interest, claim,
equitable interest, encumbrance, restriction on transfer, conditional sale or
other title retention device or arrangement (including, without limitation, a
capital lease), or contractual restriction on the creation of any of the
foregoing, whether relating to any property or right or the income or profits
therefrom; provided, however, that the term "Lien" shall not include (i)
statutory liens for Taxes to the extent that the payment thereof is not in
arrears or otherwise due, (ii) encumbrances in the nature of zoning
restrictions, easements, rights or restrictions of record on the uses of real
property if the same do not materially detract from the value of the property
encumbered thereby or materially impair the use of such property in the business
of the NPB as currently conducted, (iii) deposits or pledges made in connection
with, or to secure payment of, worker's compensation, unemployment insurance,
old age pension programs mandated under applicable laws or other social security
regulations, (iv) rights of MCI and Xxxx Atlantic with respect to the Acton
Facilities, and (iv) mechanics', carriers', workmen's, repairmen's and similar
liens, that do not materially interfere with the ability to conduct business or
use the property as presently used.
"Load" means, with respect to the NPB, its backlog, quarter-to-date
revenues and orders booked and scheduled to ship in the relevant quarter. Load
is used by Seller in the Ordinary Course of Business as a leading indicator for
revenue.
"Local Transfer Impediment" has the meaning set forth in ss. 2.1.
"Losses" has the meaning set forth in ss. 9.2.
"Material Adverse Effect" means a material adverse effect in the
business, assets, financial condition and results of operations of the NPB or
the Acquired Assets, as the case may be, taken as a whole; provided, however,
none of the following items in and of themselves individually shall constitute a
Material Adverse Effect: (i) the differential between the current Load and the
historical Load requirements necessary to achieve Seller's planned second fiscal
quarter revenue, all as reflected in the Load report dated November 18, 1997
previously provided to Buyer, (ii) that a sufficient number of NPB Employees
have failed to become Hired Employees, such that Buyer is entitled to a [*] to
the Purchase Price, or (iii) any decrease in assets resulting in an Asset Value
determined with respect to the Closing Date Statement of Assets of less than $75
million.
"Multiemployer Plan" has the meaning set forth in ss. 3.26(c).
"NPB" means the business, operations and assets of the Seller with
respect to the design, having manufactured, sale, marketing, distribution,
maintenance and support (but not service) of the Products and the design of
Products Under Development.
"NPB Employees" has the meaning set forth in ss. 5.10.
"Offerees" has the meaning set forth in ss. 5.10.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Overseas Employees" means NPB Employees whose principal work location
is outside of the United States.
* Confidential Treatment
"Patent" means: (i) any United States or foreign patent, patent
application, patent disclosure or other patent right; (ii) any division,
continuation, continuation-in-part or similar extension of an application that
is a Patent; and (iii) any patent or other patent right that issues or is based
upon an application that is a Patent.
"Party" and "Parties" have the meanings set forth in the preamble
above.
"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, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Plan Eligibility Date" has the meaning provided in Section 5.10(b).
"Product Credits" means credits to be used by Seller on a first in,
first out basis and net of credits against the full value of the invoice for the
purchase of products on the Product Road Map from Buyer in a specified dollar
amount during a specified period of time pursuant to the Reseller Agreement.
"Product Road Map" has the meaning set forth in the Reseller Agreement.
"Products" mean the products listed in Schedule 1.5 "Products."
"Products Under Development" mean products developed or products under
development (but not including the Products) by Seller employees (including
contract employees) during the period when such employees were employed by
Seller's Network Products Business Unit and were engaged in the business of the
design, having manufactured, sale, marketing, distribution, maintenance, or
support of Data Networking Products.
"Purchase Price" has the meaning set forth in ss. 2.5.
"Purchase Price Adjustment" shall mean the aggregate adjustments to the
Purchase Price which occur pursuant to ss. 2.6.
"Registration Statement" has the meaning set forth in ss. 4.6.
"Related Entity" means any corporation, trust, partnership or other
entity that would be considered as a single employer with Seller under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code.
"Release" means any actual spilling, leaking, pumping, pouring,
emitting, dispersing, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing of any Hazardous Materials into the Environment.
"Remaining Accrued Vacation Dollars" has the meaning set forth in
ss. 2.6.
"Remediation Standard" means a numerical standard that defines the
concentrations of Hazardous Materials that may be permitted to remain in the
Environment after an investigation, remediation or containment of a release of
Hazardous Materials.
"Reports" has the meaning set forth in ss. 3.28.
"Reseller Agreement" means the Reseller Agreement entered into by the
Parties in the form of Exhibit B attached hereto.
"Restoration Pension Plan" means the Digital Equipment Corporation Cash
Account Pension Restoration Plan.
"Retained NPB Employees" has the meaning set forth in ss. 5.10.
"Retained Patents" means the Patents listed under the heading "Retained
Patents" in Schedule 1.6.
"Retained Software" means all right, title and interest in (i) any
software, including fragments or modules thereof, that is used by Seller
primarily outside the NPB, and (ii) general purpose standalone software
components (e.g., not data networking) that are used by Seller both within and
outside the NPB (e.g., compilers, run-time systems and libraries).
"SAVE Plan" means the Digital Equipment Corporation Savings and
Investment Plan.
"Second Year" has the meaning set forth in ss. 2.5.
"Second Year Product Credits" has the meaning set forth in ss. 2.5.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Seller" means Digital Equipment Corporation and its Subsidiaries, as
and to the extent the context requires.
"Seller Pension Plan" means the Digital Equipment Corporation Cash
Account Pension Plan.
"Statement of Assets" means a statement of assets sold prepared in
accordance with the Accounting Convention.
"Subsidiary" means with respect to any Person, (i) any corporation at
least a majority of whose outstanding voting stock is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries; (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
and (iii) any limited partnership of which such Person or any of its
Subsidiaries is a general partner. For the purposes of this definition, "voting
stock" means shares, interests, participations or other equivalents in the
equity interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of such
Person other than shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar, including FICA), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto and including any amendment thereof.
"Third Party Claim" has the meaning set forth in ss. 9.5(a).
"Trademarks" means any trademarks, service marks, trade dress, and
logos, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith.
"Welfare Plan" has the meaning set forth in ss. 3.26(a) below.
2. Acquisition of Assets by Buyer
2.1. Purchase and Sale of Assets. The Seller agrees to sell and
transfer to the Buyer, and the Buyer agrees to purchase from the Seller at the
Closing, subject to and upon the terms and conditions contained herein, free
and clear of any material Lien, except those encumbrances listed on
Schedule 2.1(a), all right, title, and interest in and to the following
properties and assets (the "Acquired Assets"):
(a) all assets reflected on the Initial Statement of Assets
other than those disposed of since June 28, 1997 and those acquired in
the Ordinary Course of Business since June 28, 1997 which appear on the
Closing Date Statement of Assets.
(b) all the inventory of the NPB, including raw materials,
work-in-process, and finished goods, as reflected on the Closing Date
Statement of Assets;
(c) all tangible personal property used primarily in the
NPB (including, without limitation, all machinery, equipment, test
equipment, supplies, manufactured and purchased parts, tools, jigs and
dies, computer software stored on a tangible medium, workstations and
personal computers, electronic, electrical and mechanical equipment and
other computer hardware used primarily in the NPB) owned by Seller
whether in the Seller's possession or in the possession of another
party such as a manufacturer or vendor of the Seller, including
fully-depreciated or fully-expensed tangible property used primarily in
the NPB; not including, however, furniture, file cabinets, and similar
office equipment and office supplies located in the Littleton facility
that are not transferred to the Acton Facilities but including
furniture, file cabinets, and similar office equipment and office
supplies located in Acton intended to compensate for the non-transfer
of Littleton equipment;
(d) the securities of Ipsilon Networks, Inc. owned by the
Seller;
(e) prepaid expenses and deposits;
(f) the Acton Facilities and the furniture and equipment
located therein or comparable substitutes;
(g) the Assigned Intellectual Property, remedies against
infringement thereof and rights to protection of interests therein;
(h) all rights under any contracts, indentures, mortgages,
instruments, Liens, guaranties, or other agreements of Seller, in each
case to the extent they relate to the NPB or the Acquired Assets, and
including, without limitation, those agreements set forth in Schedule
2.1(h) (the "Contracts"), provided, however, that no rights are granted
pursuant to this clause (h) with respect to intellectual property;
(i) all rights under all permits, authorizations, orders,
registrations, certificates, variances, approvals, consents and
franchises or any pending applications all to the extent related to the
NPB or the Acquired Assets, including without limitation all
governmental permits, licenses, authorizations, approvals and consents
described in Schedule 2.1(i) ("Permits");
(j) all technical data, designs, drawings, specifications,
documentation and manuals (or portions thereof) to the extent that they
are related to the NPB;
(k) the Licensing Programs, remedies against infringement
thereof and rights to protection of interests therein;
(l) all customer, distributor, supplier and mailing lists,
pricing and cost information, and business and marketing plans of
Seller (or portions thereof), all to the extent related to the NPB;
(m) all manufacturing MAC addresses used exclusively in
the operation of the NPB;
(n) all business records and financial management reports,
books, files, plans, appraisals, environmental audits and reports,
documents, correspondence, lists, plats, architectural plans, drawings,
notebooks, specifications, creative materials, advertising and
promotional materials, marketing materials, studies, reports, equipment
repair, maintenance or service records whether written or
electronically stored or otherwise recorded, in each case, that is used
exclusively in the NPB;
(o) all rights and interests of Seller as plan sponsor in
and with respect to the assets associated with the accounts of Hired
Employees under the SAVE Plan transferred to the Buyer 401(k) Plan as
contemplated in ss. 5.10;
(p) the goodwill associated with the NPB and the Acquired
Assets.
On the Closing Date, Seller shall transfer to Buyer all of the Acquired Assets
located outside of the United States, including those listed by country on
Schedule 2.1(x). If it is not possible to do so without adversely affecting the
ability of Seller to transfer, and Buyer to hire, the NPB Employees employed
outside of the United States, or if the Parties mutually agree that it is not
desirable to transfer to Buyer Acquired Assets located in a country other than
the United States on the Closing Date because of any law or regulation, the need
for the approval of any governmental entity, or the need for the review or
approval by any union, works council or similar body ("Local Transfer
Impediment"), Seller and Buyer shall take all actions reasonably necessary to
eliminate the Local Transfer Impediment and Seller shall take all actions
reasonably necessary to transfer the Acquired Assets and Buyer shall take all
actions reasonably necessary to hire the affected non-U.S. NPB Employees as soon
as possible. To this end, the parties agree to prepare and execute, to the
extent necessary, one or more international implementation agreements as soon as
possible after the date hereof to facilitate the transfer of non-U.S. assets and
employees.
2.2. Excluded Assets. There shall be excluded from the Acquired Assets
to be sold, assigned, transferred, conveyed and delivered to Buyer hereunder,
and to the extent in existence on the Closing Date, there shall be retained by
the Seller, assets, properties and rights including, but not limited to,
(collectively, the "Excluded Assets"):
(a) the Digital Marks;
(b) the Retained Patents;
(c) the Retained Software;
(d) cash, cash equivalents, accounts receivables and
short-term investments; and
(e) any of the rights of the Seller under this Agreement
(or under any other agreement between the Seller on the one hand and
the Buyer on the other hand.
2.3. Assumption of Liabilities. On the terms and subject to the conditions
set forth herein, from and after
the Closing, the Buyer will assume and satisfy or perform when due only the
following Liabilities (the "Assumed Liabilities"):
(a) all liabilities under the Contracts or Permits arising
after the Closing Date (including commitments by the Seller to purchase
goods in the Ordinary Course of Business which are unfulfilled as of
the Closing Date), except to the extent arising from any breach or
default occurring prior to the Closing Date;
(b) all liabilities under the Licensing Programs and under
the licenses granted pursuant to ss. 8.2 arising after the Closing
Date, except to the extent arising from any breach or default occurring
prior to the Closing Date;
(c) all other liabilities and obligations set forth in
Schedule 2.3(c) under an express statement (that the Buyer has
initialed) to the effect that the definition of Assumed Liabilities
will include the Liabilities and obligations so disclosed;
(d) all liabilities related to the Acquired Assets to the
extent arising from or related to any facts or circumstances occurring
after the Closing Date, including, without limitation, all Taxes with
respect to real property allocable to any period after the Closing
Date; and
(e) all liabilities related to the Hired Employees
arising from or related to any facts or circumstances occurring
after the Closing Date, except as otherwise expressly provided herein.
2.4. Liabilities Not Assumed. Except as expressly set forth in this
Agreement or any other written agreements between the Parties executed
contemporaneously herewith, the Buyer will not assume or perform any
Liabilities not specifically contemplated by ss. 2.3 hereof.
2.5. Purchase Price. The Buyer agrees to assume the Assumed Liabilities
at the Closing and pay to the Seller aggregate consideration consisting of the
following (the "Purchase Price"), subject to adjustment pursuant to ss. 2.6:
(a) Cash. At the Closing, $91,800,000 in cash (subject to
adjustment pursuant to ss.2.6) payable by wire transfer to the Seller
in accordance with written instructions of the Seller given to the
Buyer at least two business days prior to the Closing.
(b) Cabletron Stock. At the Closing, Buyer shall deliver to
the Seller certificates representing the number of whole shares of
Cabletron Common Stock equal to $50,000,000 divided by the Cabletron
Stock Price (the "Cabletron Shares").
(c) Product Credits. The following Product Credits:
(i) First Year Product Credits. Subject to
adjustment pursuant to ss. 2.6, $168,500,000 in First Year
Product Credits.
"First Year Product Credits" means Product
Credits which may be used by Seller to purchase from
Buyer, at prices set forth in the Reseller Agreement,
products that are ordered under the Reseller
Agreement during the period beginning on the Closing
Date and ending on the first anniversary of the
Closing Date (the "First Year") requesting delivery
at any time until thirty days after the end of the
First Year. Any First Year Product Credits not
expended in accordance with the preceding sentence
shall automatically expire and be of no further force
or effect immediately following the end of the First
Year; provided, however, Seller shall be permitted to
carryover to the Second Year unused First Year
Product Credits equal to the amount, if any, that
Seller's minimum purchase commitment (as described in
the Reseller Agreement) is reduced in the First Year
as contemplated by the Reseller Agreement.
(ii) Second Year Product Credits. Subject to
adjustment pursuant to ss. 2.6, $125,000,000 in Second Year
Product Credits.
"Second Year Product Credits" means Product
Credits which may be used by Seller to purchase from
Buyer, at prices set forth in the Reseller Agreement,
products that are ordered under the Reseller
Agreement during the period beginning on the first
anniversary of the Closing Date and ending on the
second anniversary of the Closing Date (the "Second
Year") requesting delivery at any time until thirty
days after the end of the Second Year. Any Second
Year Product Credits not expended in accordance with
the preceding sentence shall automatically expire and
be of no further force or effect immediately
following the end of the Second Year; provided,
however, Seller shall be permitted to use in the
twelve month period immediately following the Second
Year unused Second Year Product Credits equal to the
amount, if any, that Seller's minimum purchase
commitment (as described in the Reseller Agreement)
is reduced in the Second Year as contemplated
pursuant to the Reseller Agreement.
2.6. Ajustments to Purchase Price. The acceptance by the Buyer and Seller
of any adjustments to the Purchase Price pursuant to this ss. 2.6 shall be the
exclusive remedy of either Party in connection with an increase or decrease in
the Asset Value of the assets set forth on the Initial Statement of Assets,
notwithstanding any provisions of ss.9.
(a) Post-Closing Adjustment to Purchase Price
(i) Preparation of Closing Date Statement of
Assets
(A) Within 60 days after the Closing
Date, the Seller will cause Coopers & Xxxxxxx to
perform the Agreed-Upon Procedures and assist in the
preparation of a Statement of Assets (the "Closing
Date Statement of Assets") for the NPB as of the
Closing. The Closing Date Statement of Assets shall
be prepared based upon the Accounting Convention. The
Closing Date Statement of Assets will not reflect any
Liabilities. In addition, the Seller will permit the
Buyer (or its accountants) to participate in the
substantially complete physical count of inventory
and other tangible personal property and property,
plant and equipment. Buyer and Seller will share
equally the fees and expenses of Coopers & Xxxxxxx to
assist in the preparation of the Closing Date
Statement of Assets and the performance of the
Agreed-Upon Procedures.
(B) If the Buyer has any objections
to the Closing Date Statement of Assets, it will
deliver a written statement setting forth such
objections to the Seller within 45 days after
receiving the Closing Date Statement of Assets. The
Buyer and the Seller will use reasonable efforts to
resolve any such objections themselves. If the
Parties do not obtain a final resolution within 30
days after the Seller has received the statement of
objections, however, the Parties shall appoint
Deloitte & Touche, certified public accountants, to
resolve any remaining objections. If Deloitte &
Touche is unavailable, the Parties will select a
nationally-recognized accounting firm by lot (after
excluding their respective regular outside accounting
firms). The determination of any accounting firm so
selected will be set forth in writing and will be
conclusive and binding upon the Parties. The Seller
will revise the Closing Date Statement of Assets as
appropriate to reflect the resolution of any
objections thereto pursuant to this ss. 2.6(a)(i)(B).
The Closing Date Statement of Assets shall be deemed
final if Buyer fails to object within 45 days after
receipt or after any revisions are completed pursuant
to this ss. 2.6(a)(i)(B).
(C) In the event the Parties submit
any unresolved objections to an accounting firm for
resolution as provided in ss. 2.6(a)(i)(B) above, the
Buyer and the Seller will share equally the fees and
expenses of the accounting firm.
(D) As part of Buyer's review of the
Closing Date Statement of Assets or during the
resolution of any dispute, including by the
nationally-recognized accounting firm appointed to
resolve disputes of the Parties pursuant to ss.
2.6(a)(i)(B), Buyer and its accountants and other
representatives will be entitled to review the
methodology and back-up materials used in preparing
the Closing Date Statement of Assets in the presence
of appropriate financial staff of Seller at
reasonable times and upon reasonable notice.
(ii) Adjustment to Purchase Price. The Purchase
Price will be adjusted (in First Year Product Credits) as
follows:
(A) If the Asset Value as determined
in the Closing Date Statement of Assets, net of any
resolved disputes, exceeds the Asset Value as
determined in the Initial Statement of Assets by
$1,000,000 or more, the First Year Product Credits
will be increased by the amount by which the Asset
Value exceeds the Asset Value as determined with
respect to the Initial Statement of Assets.
(B) If the Asset Value as determined
in the Closing Date Statement of Assets, net of any
resolved disputes, is less than the Asset Value as
determined with respect to the Initial Statement of
Assets by $1,000,000 or more, the First Year Product
Credits will be decreased by the amount by which the
Asset Value is less than the Asset Value as
determined with respect to the Initial Statement of
Assets.
(b) Vacation Adjustment. The Purchase Price shall be
adjusted for accrued vacation benefits as follows:
(i) "Remaining Accrued Vacation Dollars" shall
mean the sum for all Hired Employees, of an amount for each
Hired Employee equal to (i) the total number of accrued
vacation hours not paid out to such employee pursuant to
ss.5.10(b)(v), multiplied by (ii) the hourly wage rate for
such employee.
Within 25 business days following the Closing Date, Seller
shall prepare and deliver to the Buyer a statement showing the
Remaining Accrued Vacation Dollars prepared in accordance with
Seller's standard accounting policies prepared on a consistent
basis with prior vacation accrual calculations. Within 20 days
following the delivery of such statement by Seller to Buyer,
Buyer may object to the calculation of the Remaining Accrued
Vacation Dollars in writing. If Buyer so objects to the
Remaining Accrued Vacation Dollars, the Parties shall attempt
to resolve such dispute by negotiation. If the parties are
unable to resolve such dispute within twenty days of any
objection by Buyer, the parties shall appoint Deloitte &
Touche, certified public accountants, to resolve any remaining
objections. If Deloitte & Touche is unavailable, the Parties
will select a nationally-recognized accounting firm by lot
(after excluding their respective regular outside accounting
firms). The determination of any accounting firm so selected
will be set forth in writing and will be conclusive and
binding upon the Parties.
If Buyer does not object to the calculation of Remaining
Accrued Vacation Dollars within the time period set forth
above or upon the final resolution of any dispute concerning
the Remaining Accrued Vacation Dollars (i) Seller shall pay to
Buyer the amount, if any, by which the Remaining Accrued
Vacation Dollars exceeds $1,500,000, or (ii) Buyer shall pay
to Seller the amount, if any, by which $1,500,000 exceeds the
Remaining Accrued Vacation Dollars, in each case as soon as
possible, but in any event within 10 business days.
2.7. The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing"), such Closing to be deemed to have occurred at
12:01 a.m. on the Closing Date, shall take place at the offices of Ropes & Xxxx
in Boston, Massachusetts, commencing at 10:00 a.m. eastern time on the business
day after all conditions in Sections 6.1 and 6.2 are satisfied (provided that
such date is reasonably acceptable to both Parties) or such other date as the
Parties may mutually determine (the "Closing Date").
2.8. Deliveries at the Closing. At the Closing, the Seller will deliver
to the Buyer properly executed and acknowledged, if appropriate (i) the various
certificates, instruments, and documents referred to in ss. 6.1 below; (ii) a
quitclaim deed relating to the Acton Facilities, (iii) assignments of the
Assigned Patents, Assigned Trademarks, Contracts and Permits, (iv) such other
instruments of sale, transfer, conveyance, and assignment as the Buyer and its
counsel may reasonably request in respect of the Acquired Assets, (v) the
Reseller Agreement, and (vii) the Xxxx of Sale in the form attached hereto as
Exhibit D. The Buyer will execute, acknowledge (if appropriate), and deliver the
Assignment and Assumption Agreement in the form attached hereto as Exhibit E and
will deliver the consideration specified in ss. 2.5(a) and 2.5(b) above.
Simultaneously with such delivery, the Buyer and Seller will use all
reasonable efforts and take all reasonable action as may be necessary to put
Buyer in possession and operating control of the Acquired Assets.
At any time and from time to time after the Closing, at the request of
Buyer and without further consideration, except as stated below, the Seller will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Buyer may reasonably
determine is necessary to transfer, convey and assign to Buyer, and to confirm
Buyer's title to or interest in the Acquired Assets, to put Buyer in actual
possession and operating control thereof and to assist Buyer in exercising all
rights with respect thereto.
2.9. Preliminary Allocation of Purchase Price The Parties agree that the
preliminary allocation of the Purchase Price for the Acquired Assets shall be as
determined by the allocation formula to be agreed by the parties; as may be
adjusted to reflect any Purchase Price Adjustments. The Seller and Buyer agree
that the allocation may be amended or modified by mutual agreement to establish
a final allocation prior to the filing of the applicable Tax Returns of Buyer
and Seller. The Seller and Buyer shall use such final allocation in all Tax
Returns.
3. Representations and Waranties of the Sellers. The Seller represents and
warrants to the Buyer that the statements contained in this ss. 3 are correct
and complete as of the date of this Agreement and, unless a date is specified in
such representation and warranty, will be correct and complete as of the Closing
Date as though made then, except as set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this ss. 3. Disclosure in one paragraph is not deemed
disclosure for any other paragraph.
3.1. The Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the state of its incorporation.
3.2. [Intentionally Omitted]
3.3. Authorization of Transaction. The Seller has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. All corporate actions or proceedings to be taken by or on the part of
the Seller to authorize and permit the execution and delivery by Seller of this
Agreement and the instruments required to be executed and delivered by Seller
pursuant hereto, the performance by Seller of its obligations hereunder, and the
consummation by Seller of the transactions contemplated herein, have been duly
and properly taken. This Agreement has been duly executed and delivered by the
Seller and constitutes the legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms and conditions.
3.4. Noncontravention. Except as set forth in ss. 3.4 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in ss. 2 above), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order or decree of any
government, governmental agency, or court to which the Seller is subject or any
provision of the charter or by-laws of the Seller or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Seller is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Lien upon
any of its assets), except in the case of (i) and (ii), for violations,
conflicts, breaches or defaults that would not have a Material Adverse Effect.
Except as set forth in ss. 3.4 of the Disclosure Schedule, the Seller does not
need to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in ss. 2 above) except for the
required filings under the Xxxx-Xxxxx-Xxxxxx and foreign pre-merger notification
requirements.
3.5. Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
3.6. Title of Assets. Except for Real Property and Intellectual Property
which are subject to xx.xx. 3.15 and 3.16 and except as set forth in ss.3.6 of
the Disclosure Schedule, the Seller owns or has a valid leasehold interest in
the Acquired Assets, free and clear of all Liens, except for Liens that would
not have a Material Adverse Effect.
3.7. All Assets Necessary to Conduct Business. The Acquired Assets and the
licenses granted in Section 8.2 comprise all of the assets, properties and
rights of every type and description, real, personal, tangible and intangible
necessary to the conduct of the NPB.
3.8. Financial Statements. The Initial Statement of Assets, attached hereto
as Exhibit D, was prepared in accordance with the Accounting Convention. Exhibit
E are unaudited summary statements of operations for the NPB for the fiscal
years ended July 1, 1995, June 29, 1996 and June 28, 1997 (together with the
Initial Statement of Assets, the "Financial Information"). The Initial Statement
of Assets was prepared in good faith and in accordance with the Accounting
Convention. The summary statements of operations were prepared in good faith and
derived from Seller's management reporting systems as maintained by Seller in
the ordinary course of business. No representation is made that the Financial
Information has been prepared in a manner consistent with GAAP or that the
Financial Information is indicative of the financial condition and the results
of operations that would have been achieved had the NPB been operated as a
stand-alone, non-affiliated entity.
3.9. Absence of Changes. Since the date of the Initial Statement of Assets
and except as disclosed in ss. 3.9 of the Disclosure Schedule, the Seller has
operated and conducted the business of the NPB only in the Ordinary Course of
Business and, with respect to, by and on behalf of the NPB, there has not been:
(a) any sale, lease, transfer, or assignment of assets,
tangible or intangible, other than sales of inventory in the Ordinary
Course of Business and other than in an amount not in excess of
$250,000;
(b) any acceleration, termination, modification, or
cancellation of any Contract listed in Schedule 2.1(h) involving
payments of more than $250,000;
(c) as of the date hereof the responsible managers of
the NPB have not received any notice that any major resellers or
distributors do not intend to continue with Buyer a business
relationship on terms at least as favorable as the relationship such
resellers or distributors, as the case may be, currently have with the
Seller with respect to NPB; and
(d) any damage, destruction, or loss (whether or not
covered by insurance) to the Acquired Assets in excess of $250,000.
3.10. Absence of Undisclosed Liabilities. The Seller has no Liability that
will be assumed by Buyer except as expressly set forth herein and in the
schedules and attachments hereto or in other written agreements between the
Parties.
3.11. Legal and Other Compliance. Except for Intellectual Property and
Environmental matters, which are addressed in ss.ss.3.16 and 3.25:
(a) the Seller is in compliance with all applicable Laws
the violation of which, either singularly or in the aggregate, would
have a Material Adverse Effect on the NPB or the Acquired Assets and,
to Seller's Knowledge, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply; and
(b) neither the ownership nor use of properties of the
NPB nor the conduct of the business of the NPB conflicts with the
rights of any other Person or violates, or with the giving of notice or
the passage of time or both will violate, conflict with or result in a
default, right to accelerate or loss of rights under, any terms or
provisions of any of their charter or by-laws or any Lien, law,
ordinance, rule or regulation, any order, judgment or decree to which
the NPB is a party or by which the NPB may be bound or affected, except
for such conflicts, violations and defaults which would not have a
Material Adverse Effect.
3.12. No Material Adverse Change. Since the date of the Initial Statement
of Assets, there has not been any change which has resulted in a Material
Adverse Effect and no event has occurred or circumstance exists that would
reasonably be likely to result in such a Material Adverse Effect.
3.13. Demand Plan. Seller has previously provided a Demand Plan for
the NPB to Buyer, which plan was prepared in good faith and in a manner
consistent with past practice by Seller. The Demand Plan is based upon a number
of assumptions and estimates that, while presented with numerical specificity
and considered reasonable by the Seller, are (i) inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the control of the NPB, and (ii) based upon assumptions
with respect to future business decisions that are subject to change.
Accordingly, actual results may vary from the Demand Plan, and these variations
may be material. Consequently, the Demand Plan is not a representation by Seller
that the results therein will be achieved.
3.14. Taxes. All Taxes required to have been withheld and paid with
respect to the NPB in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party have been
withheld and paid, and there are no Liens or other encumbrances on any of the
Acquired Assets that arose in connection with any failure (or alleged failure)
to pay any Tax.
3.15. Real Property
(a) The Acton Facilities are all of the real property
that are part of the Acquired Assets. Except as set forth in ss.
3.15(a) of the Disclosure Schedule, with respect to the Acton Facility:
(i) the Seller has good and clear record and
marketable title to the parcel of real property, free and
clear of any Lien, except for installments of special
assessments not yet delinquent and recorded easements,
covenants, and other restrictions which do not materially
impair the current use, occupancy, or value, of the property
subject thereto;
(ii) there are no pending or, to the Knowledge
of Seller, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other
matters which would materiality adversely affect the use,
occupancy, or value thereof;
(iii) the buildings and improvements of the Acton
Facilities are located within the boundary lines of the real
property being sold by Seller to Buyer, are not in violation
of applicable setback requirements, zoning laws and ordinances
which violations would materially impair the current use,
occupancy or value of the property subject thereto, do not
encroach on any easement which encroachment would materially
impair the current use, occupancy or value of the property
subject thereto, and the land does not serve any adjoining
property for any purpose which would materially impair the
current use, occupancy, or value of the property subject
thereto;
(iv) to the Knowledge of Seller each facility
located on such parcel has received all approvals of
governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof
and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(v) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to
any party or parties the right of use or occupancy of the
parcel or any portion thereof except for licensees or
concessions serving the premises;
(vi) there are no outstanding options or rights
of first refusal to purchase such parcel, or any portion
thereof or interest therein;
(vii) there are no parties (other than the NPB or
other employees of the Seller or MCI or Xxxx Atlantic) in
possession of such parcel;
(viii) each facility located on such parcel is
supplied with utilities and other services necessary for the
operation of such facility, as presently operated; and
(ix) each parcel has direct access to a public
road or has access to a public road via a permanent,
irrevocable, appurtenant easement benefitting such parcel
adequate for the current use.
3.16. Intellectual Property
(a) The Seller owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Assigned Intellectual
Property. Subject to obtaining all necessary consents as disclosed in
ss. 3.27 of the Disclosure Schedule, each item of Assigned Intellectual
Property owned or used by the Seller in connection with the business of
the NPB immediately prior to the Closing hereunder will be owned or
available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder except for facts and
circumstances specific to Buyer. Except as disclosed in ss. 3.16(a) of
the Disclosure Schedule, to the knowledge of the Seller, the Seller has
taken all necessary action to protect each item of Assigned
Intellectual Property, except for Assigned Licenses.
(b) Except as disclosed in ss. 3.16(b) of the Disclosure
Schedule, to the Knowledge of the Seller, the Seller in connection with
the NPB has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any intellectual property rights of
third parties (excluding patents pending but not yet issued as of the
Closing Date), and there has never been any written charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Seller
must license or refrain from using any intellectual property rights of
any third party). Except as disclosed in ss. 3.16(b) of the Disclosure
Schedule, to the Knowledge of the Seller, Seller has provided to Buyer
all documents concerning claims that a third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with
any Assigned Intellectual Property rights of the Seller, except with
respect to Assigned Licenses.
(c) Section 3.16(c) of the Disclosure Schedule
identifies each patent or registration which has been issued with
respect to the Assigned Intellectual Property, except for Assigned
Licenses, and identifies each pending patent application or application
for registration which has been made with respect to the Assigned
Intellectual Property, except for Assigned Licenses. With respect to
each item of Assigned Intellectual Property required to be identified
in section 3.16(c) of the Disclosure Schedule to the Knowledge of
Seller, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item other than in the course
of any proceedings in the U.S. Patent and Trademark Office (or any
international equivalent) relating to any pending patent or trademark
application.
(d) The Seller has delivered to the Buyer correct and
complete copies of all Assigned Licenses listed on Schedule 1.2. With
respect to each Assigned License, except as set forth in Section
3.16(d) of the Disclosure Schedule:
(i) to the Knowledge of Seller, the license,
sublicense, agreement, or permission covering the Assigned
License is legal, valid, binding, enforceable, and in full
force and effect and will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby;
(ii) to the Knowledge of Seller, it is not in
breach or default of any Assigned License;
(iii) to the Knowledge of Seller, no event has
occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or
acceleration thereunder; and, Seller has not provided written
notice of breach or default to any Licensor of an Assigned
License;
(iv) to the Knowledge of the Seller, it has not
repudiated any provision of an Assigned License, and it has
not received written notice from any Licensor of an Assigned
License that it has done so;
(v) to the Knowledge of Seller, each underlying
item of intellectual property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(e) Except as set forth in Section 3.16(e) of the
Disclosure Schedule, no action, suit, proceeding, hearing,
investigation, charge, complaint, written claim, or written demand is
pending or, to the Knowledge of the Seller, has been threatened in
writing, which challenges the legality, validity, or enforceability of
the underlying item of Assigned Intellectual Property, other than in
the course of any proceedings in the U.S. Patent and Trademark Office
(or any international equivalent) relating to any pending patent or
trademark application.
(f) Other than in connection with the sale, manufacture
or license of Products in the ordinary course, the Seller has not
granted any sublicense or similar right with respect to the Assigned
Licenses.
(g) To the Knowledge of Seller, the Assigned
Intellectual Property, together with the licenses granted pursuant to
ss. 8.2, constitutes all of the intellectual property necessary for the
design, sale, marketing, distribution, maintenance and support (but not
service) of the Products and having the Products manufactured;
(h) The Seller has granted no licenses with respect to
the Assigned Patents except for those set forth in ss. 3.16(h) of the
Disclosure Schedule.
3.17. Inventories. The inventory of the Seller in connection with the
business of the NPB consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is saleable,
suitable and usable for the production or completion of saleable products for
sale in the Ordinary Course of Business, except as reflected in the Initial
Statement of Assets and the Closing Date Statement of Assets. The inventory,
taken as a whole, reflected in the Initial Statement of Assets, is valued in
accordance with the Accounting Convention. Since June 28, 1997, no inventory has
been sold or disposed of except in the Ordinary Course of Business of the NPB.
3.18. Contracts. The Seller has delivered to the Buyer a correct and
complete copy of each material Contract (as amended to date) listed on Schedule
2.1(h). Except as disclosed in ss. 3.18 of the Disclosure Schedule, with respect
to each Contract: (i) the agreement is legal, valid, binding, enforceable, and
in full force and effect in all material respects; (ii) to the Seller's
Knowledge no party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the Contract; and (iii) to the
Seller's Knowledge no party has repudiated any provision of the Contract.
3.19. There are no outstanding powers of attorney executed on behalf of any
of the Seller in respect of the NPB.
3.20. Insurance and Risk Management. The NPB has been covered during the
past 2 years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period.
3.21. Litigation. Except as disclosed in ss. 3.21 of the Disclosure
Schedule, there are no judicial or administrative actions, claims, suits,
proceedings or investigations pending or, to the Knowledge of the Seller,
threatened, that would be reasonably likely to result in a Material Adverse
Effect and the Seller has no notice of any action seeking to enjoin the
consummation of the transactions contemplated hereby and to the Knowledge of the
Seller, there is no Basis for any such action, claim, suit, proceeding or
investigation. There are no judgments, orders, decrees, citations, fines or
penalties heretofore assessed against the Seller which have had a Material
Adverse Effect.
3.22. Product Warranties; Defects; Liability. To the Knowledge of the
Seller, each product manufactured, sold, leased, or delivered by the NPB has
been in conformity in all material respects with all applicable federal, state,
local or foreign laws and regulations, contractual commitments and all express
and implied warranties. Section 3.22 of the Disclosure Schedule includes copies
of the standard terms and conditions of sale or lease for the NPB (containing
applicable guaranty, warranty, and indemnity provisions).
3.23. Employees.
(a) As of the date hereof, to the Knowledge of Xxxxxx
Xxxxxxx or Xxxxx Xxxxxxxx no employee on the key employee list
previously provided by Seller to Buyer has any plans to terminate
employment with the Seller or not accept employment with Buyer. The
Seller has not experienced any material labor disputes or work stoppage
in the United States due to labor disagreements with regard to the
business of the NPB. With respect to the operations of the NPB in the
United States, the Seller is not nor has it ever been a party to any
collective bargaining agreements and the NPB has not been the subject
of any organizational activity.
(b) With respect to Overseas Employees, there is no
existing material labor dispute or work stoppage due to labor
disagreements specifically with regard to the business of the NPB.
3.24. Employee Benefits.
(a) Seller Plans. Seller has provided to Buyer a
description of the material terms of each material Employee Plan which
is maintained by Seller or any Related Entity which benefits any NPB
employee of the Seller (a "Seller Plan"). For purposes of this
Agreement, the term "Employee Plan" means any U.S. plan, program,
agreement, policy or arrangement (a "plan"), whether or not reduced to
writing, that is: (i) a welfare benefit plan within the meaning of
Section 3(1) of ERISA (a "Welfare Plan"); (ii) a pension benefit plan
within the meaning of Section 3(2) of ERISA; (iii) a stock bonus, stock
purchase, stock option, restricted stock, stock appreciation right or
similar equity-based plan; or (iv) any other deferred-compensation,
retirement, welfare-benefit, bonus, incentive or fringe benefit plan or
arrangement.
(b) The SAVE Plan. The SAVE Plan is qualified under
Section 401(a) of the Code and its associated trust is exempt from tax
under section 501(a) of the Code and each has been administered in all
material respects in accordance with its terms and with applicable law.
Seller has received a favorable determination letter from the IRS with
respect to the SAVE Plan. There has been no non-exempt "prohibited
transaction" within the meaning of Code Section 4975(c) involving the
assets of the SAVE Plan. All required contributions on account of the
SAVE Plan have been made or accrued by the Seller in accordance with
GAAP. Section 3.24 of the Disclosure Schedule sets forth each and every
pending or, to the knowledge of Seller, threatened lawsuit, claim or
other controversy relating to the SAVE Plan, other than claims for
benefits in the normal course. Seller has delivered to Buyer the SAVE
Plan document and delivered or made available to Buyer all related SAVE
Plan documents.
(c) No Liability. No circumstance exists and no event
(including any action or the failure to do any act) has occurred with
respect to any Employee Plan (including, for purposes of this ss. 3.24
only, any non-U.S. employee plan) maintained or formerly maintained by
Seller or any Related Entity, or to which Seller or any Related Entity
is or has been required to contribute, that could subject Buyer to
Liability, or the assets of the NPB to any lien, under ERISA or the
Code, nor will the transactions contemplated by this Agreement give
rise to any such Liability or lien.
(d) Multiemployer Plans. With respect to Hired
Employees, neither Seller nor any Related Entity has or had any
liability to make payments or contributions to a multiemployer plan as
that term is defined in ERISA section 3(37), and has no actual or
potential liability under ERISA section 4201 for any complete or
partial withdrawal from a multiemployer plan.
3.25. Environment.
(a) Except as disclosed in ss. 3.25 of the Disclosure
Schedule:
(i) the Seller in connection with the business
of the NPB and the Acton Facilities has complied and is in
compliance with all applicable Environmental Laws the
violation of which could have a Material Adverse Effect;
(ii) the Seller in connection with the business
of the NPB and the Acton Facilities has obtained, and is and
has been in material compliance with the conditions of, all
Environmental Permits required for the continued conduct of
the business of the NPB in the manner now conducted;
(iii) the Seller in connection with the business
of the NPB and the Acton Facilities has filed all required
applications, notices and other documents necessary to effect
the timely renewal or issuance of all Environmental Permits
for the continued conduct of the business of the NPB and the
Acton Facilities in the manner now conducted;
(iv) the Seller in connection with the present
or past assets, properties, businesses, leaseholds or
operations of the business of the NPB or the Acton Facilities
has not received nor is subject to, nor within the past three
years has been subject to, any outstanding order, decree,
judgment, complaint, agreement, claim, citation, or notice or
is subject to any ongoing judicial or administrative
proceeding indicating that the Seller or the past and present
assets of the NPB or the Acton Facilities are or may be: (A)
in violation of any Environmental Law; or (B) responsible for
the on-site or off-site storage or Release of any Hazardous
Materials;
(v) to the Knowledge of Seller, no proceeding
related to the matters covered by subsection (iv) have been
threatened within three years prior to the Closing Date;
(vi) Section 3.25 of the Disclosure Schedule
lists all property presently or previously leased, owned or
operated by the Seller in connection with the business of the
NPB that has been used in the business of the NPB or by any
other Person (including a prior owner or operator) for the
intentional disposal of Hazardous Materials;
(vii) Section 3.25 of the Disclosure Schedule
sets forth a list of all underground storage tanks owned or
operated at any time at the Acton Facilities or currently
owned and operated by the Seller in connection with the
business of the NPB; and
(viii) There have been no Releases of Hazardous
Materials on or underneath the Acton Facilities or any of the
real property owned or leased by the business of the NPB that
would be reasonably likely to have a Material Adverse Effect.
(b) For purposes of this ss. 3.25 only, all references
to the "Seller" are intended to include any and all other entities to
which the Seller is considered a successor under applicable
Environmental Laws. The representations and warranties in this section
are the only representations and warranties with respect to
Environmental Laws or environmental matters notwithstanding any other
language in this Agreement of general applicability.
3.26. Government Contracts. The Contracts listed on Schedule 2.1(h) do not
include any governmental contracts.
3.27. Consents. Section 3.27 of the Disclosure Schedule sets forth a
true, correct and complete list of the identities of any Person whose consent or
approval is required with respect to any matter, agreement or contract (other
than immaterial matters, agreements or contracts) and the matter, agreement or
contract to which such consent relates in connection with the transfer,
assignment or conveyance by the Seller of any of the Acquired Assets.
3.28. Investment Intent. Seller is acquiring the Cabletron Shares
for its own account and not with a view to, or for resale in connection with,
any unregistered distribution thereof, and Seller has no present intention to
sell, convey, dispose of or otherwise distribute any interest in or risk related
to the Cabletron Shares except pursuant to an effective Registration Statement
or in a manner consistent with the requirements of the Securities Act. Seller
understands that the Cabletron Shares have not been registered under the
Securities by reason of a specific exemption from the registration provisions of
the Securities Act. Seller has had the opportunity to review the information set
forth in all of Cabletron's reports filed with the Securities and Exchange
Commission since December 31, 1995 (the "Reports"). In making its decision to
acquire the Cabletron Shares, Seller has relied solely upon the Reports and
other publicly available information, has not been provided with or relied upon
any material nonpublic information concerning Cabletron and has carefully
considered the risks regarding Cabletron set forth in detail in the Reports. The
Seller is a sophisticated investor with knowledge and experience in business and
financial matters and is able to bear the economic risk and lack of liquidity
inherent in holding the Cabletron Shares.
4. Representations and Warranties of the Xxxx. The Buyer represents and
warrants to the Seller that the statements contained in this ss. 4
are true, correct and complete as of the date of this Agreement
and, unless a date is specified in such representation and
warranty, will be true, correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted
for the date of this Agreement throughout ss. 4).
4.1. Organization of the Buyer. Each of Cabletron and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation.
4.2. Authority for Agreement. Each of Cabletron and Acquisition has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. All corporate actions or proceedings to be
taken by or on the part of Cabletron and Acquisition to authorize and permit the
execution and delivery by Cabletron and Acquisition of this Agreement and the
instruments required to be executed and delivered by Cabletron and Acquisition
pursuant hereto, the performance by Cabletron and Acquisition of their
respective obligations hereunder, and the consummation by Cabletron and
Acquisition of the transactions contemplated herein, have been duly and properly
taken. This Agreement has been duly executed and delivered by Cabletron and
Acquisition and constitutes the legal, valid and binding obligation of Cabletron
and Acquisition, enforceable against each in accordance with its terms and
conditions.
4.3. Litigation. Buyer has no notice of any action seeking to
enjoin the consummation of the transactions contemplated hereby and to the
Knowledge of the Buyer, there is no Basis for any such action, claim, suit,
proceeding or investigation.
4.4. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in ss. 2 above), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Cabletron and Acquisition is subject or
any provision of their respective charter or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which either Cabletron or Acquisition is a party or by
which either is bound or to which any of either Cabletron's or Acquisition's
assets is subject (or result in the imposition of any lien upon its assets),
except for violations, breaches or defects that would not make a material
adverse effect on Cabletron or Acquisition. Cabletron and Acquisition do not
need to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in ss. 2 above), except for required
filings under the Xxxx-Xxxxx-Xxxxxx Act and foreign pre-merger notification
requirements, which filings have been made.
4.5. Brokers' Fees. Neither Cabletron nor Acquisition has any Liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated.
4.6. Registration Statement. The Form S-3 registration statement (the
"Registration Statement") pursuant to which the Cabletron Shares to be issued
pursuant to this Agreement will be registered with the Commission shall not, at
the time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the Commission, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements included therein, in light of the circumstances under which they
were made, not misleading. The Registration Statement shall comply in all
material respects as to form with the requirements of the Securities Act and the
rules and regulations thereunder. Notwithstanding the foregoing, Buyer makes no
representation or warranty with respect to any information supplied by the
Seller or the officers and directors of the Seller and its Subsidiaries which is
contained in, or furnished in connection with the preparation of, the
Registration Statement.
4.7. SEC Reports and Financial Statements. Cabletron has timely
filed with the Commission all forms, reports and other documents which it
believes were required to be filed by it since December 31, 1995 under the
Securities Exchange Act and the Securities Act (as such documents have been
amended since the time of their filing, collectively, the "Buyer SEC
Documents"). The Buyer SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the time filed, complied
in all material respects with the applicable requirements of the Securities
Exchange Act or the Securities Act, as the case may be. The consolidated
financial statements of Buyer included in the Buyer SEC Documents comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the Commission with respect thereto, have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q of the Commission)
and fairly present in all material respects (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments which are not
material in amount) the consolidated financial position of Buyer and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
4.8. No Material Adverse Change. Except as disclosed in Schedule
4.8, since the date of the most recent Form 10-Q filed by Buyer with the
Commission, Buyer has conducted its operations only in the Ordinary Course of
Business. There has not been any change which has resulted in a material adverse
effect on the business, assets, financial condition, and results of operations
of Buyer and no circumstances exists that would be reasonably likely to result
in such a material adverse effect.
4.9. Employee Benefits. The Buyer 401(k) Plan is qualified under Section
401(a) of the Code and its associated trust is exempt from Tax under section
501(a) of the Code and each has been administered in accordance with its terms
and with applicable law. All required contributions on account of the Buyer
401(k) Plan have been made or accrued by the Buyer in accordance in accordance
with GAAP. Section 4.8 of the Disclosure Schedule sets forth each and every
pending or, to the knowledge of Buyer, threatened lawsuit, claim or other
controversy relating to the Buyer 401(k) Plan, other than claims for benefits in
the ordinary course. Buyer has made the Buyer 401(k) Plan and related documents
available to Seller. The Company has received a favorable determination letter
from the IRS with respect to the Buyer 401(k) Plan.
5. Covenants. The Parties agree as follows:
5.1. General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss. 6 below and including the diligent defense in good faith of any action or
proceeding which may threaten the consummation of the transactions contemplated
hereby).
5.2. Notices and Consents. The Seller will give any notices to third
parties, and Buyer and Seller will use reasonable efforts to obtain any third
party consents, that are required to transfer the Acquired Assets to Buyer, and
any other consent that the Buyer may reasonably request. Each of the Parties
promptly will file Notification and Report Forms and related material that may
be required to be filed with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx
Act, and will make any further filings pursuant thereto that may be necessary or
requested in connection therewith. Notwithstanding any other provision of this
Agreement to the contrary, until any third party consent is obtained, or if an
attempted assignment thereunder would be ineffective or would affect the rights
of the Seller thereunder so that Buyer would not in receive all such rights,
Seller and Buyer will cooperate with each other to provide for the benefits of,
and to permit Buyer to assume all liabilities under, any such right, claim,
Permit or Contract any and all rights of Seller against a third party thereto
arising out of the breach or cancellation thereof by such third party; and any
transfer or assignment to Buyer by Seller of any property or property rights or
any contract or agreement which shall require the consent or approval of any
third party shall be made subject to such consent or approval being obtained.
5.3. Operation of Business. The Seller will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business in respect of the NPB prior to Closing. Without limiting the generality
of the foregoing, prior to Closing, Buyer and Seller will use all reasonable
efforts to (A) keep available to Buyer the services of the NPB's present
employees, agents and independent contractors, and (B) preserve for the benefit
of Buyer the goodwill of the NPB's customers, suppliers and others having
business relations with it and (C) cooperate in establishing the terms of the
SCI Systems, Inc. contract.
5.4. Preservation of Business. The Seller will use all reasonable efforts
to keep the business and properties of the NPB substantially intact, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees,
other than the substitution of the Acton Facilities for the Littleton facility
and as otherwise contemplated hereby or by other written agreements between the
parties.
5.5. Access. The Seller will permit representatives of the Buyer to
have access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the NPB, to all premises, properties,
personnel, business, financial management records, contracts and documents of or
pertaining to the NPB.
5.6. Notice of Developments. Each Party will give prompt written notice
to the other Party of any specific events occurring subsequent to the execution
of this Agreement and prior to the Closing Date causing a breach of any of its
own representations and warranties in ss. 3 and ss. 4 above. Disclosure by any
Party pursuant to this ss. 5.6, however, shall be deemed to amend or supplement
the Disclosure Schedule for the purpose of determining whether the
representations and warranties of the Seller are true and correct as of the
Closing Date for all purposes, including for purposes of Section 9.2 and 9.3,
but excluding for purposes of satisfying the conditions set forth in Section
6.1(a).
5.7. Exclusivity. So long as Buyer (upon Seller's request)
re-affirms its intention to consummate the transactions contemplated hereby, the
Seller will not (and the Seller will not cause or permit any of its
Subsidiaries, officers, directors, agents or Affiliates to) (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person,
or enter into or consummate any transaction, relating to the acquisition of any
portion of the Acquired Assets (other than sales in the Ordinary Course of
Business) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contract with respect to any of the foregoing.
5.8. Insurance. The Seller shall assist (including by providing existing
title and/or title insurance information in Seller's possession or control to
Buyer) Buyer in obtaining title insurance policies at Buyer's expense.
5.9. Surveys. With respect to the Acton Facilities, the Seller shall
assist the Buyer in procuring a current survey at Buyer's expense, of the Acton
Facilities, prepared by a licensed surveyor and conforming to current ALTA
Minimum Detail Requirements for Land Title Surveys.
5.10. Employee Matters.
(a) Continued Employment.
(i) Buyer agrees to offer within five business
days of receiving Seller's final list of [*] Retained NPB
Employees employment to all of the NPB Employees (determined
as of a date two weeks prior to the Closing Date), up to a
maximum of [*] NPB Employees less the Retained NPB Employees.
"NPB Employees" means all of those individuals who, two weeks
prior to the proposed Closing Date, are actively employed by
Seller, any Affiliate of Seller or its Subsidiaries, as
* Confidential Treatment
regular (not temporary) employees and who are among those
persons listed on Exhibit H on the date hereof. Seller shall
provide Buyer with a proposed list of [*] NPB Employees to be
retained by Seller (the "Retained NPB Employees") at least
three weeks prior to the proposed Closing Date. No persons
listed on the key employee list previously agreed to by the
Parties shall become Retained NPB Employees without the
consent of Buyer which shall not be unreasonably withheld,
conditioned or delayed. A final list of [*] Retained NPB
Employees shall be completed two weeks prior to the proposed
Closing Date. A certain number of the Retained NPB Employees
are to be included in the Digital Personnel Team pursuant to
the Reseller Agreement. For the purposes of this Section
5.10(a), any person who would otherwise be an NPB Employee,
but is, on the Closing Date: (i) on a leave of absence
approved by Seller or on disability, provided such leave of
absence is expected in good faith not to exceed thirteen weeks
in total, (ii) on a leave of absence pursuant to the Family
and Medical Leave of 1993 (the "FMLA") or similar applicable
non-U.S. law, (iii) on a leave of absence for military service
or (iv) as otherwise set forth in Schedule 5.10(a)
(collectively, "Permissible Leave of Absence") shall be
considered an NPB Employee. Notwithstanding anything to the
contrary contained herein, Buyer shall not otherwise be
required to offer employment to any individual who is not on
the active payroll on the Closing Date, excluding any person
on a Permissible Leave of Absence, including without
limitation any person whose leave has exceeded his/her
authorization or entitlement under the FMLA or similar
applicable non-U.S. law or who is otherwise on leave of
absence from which reinstatement is not guaranteed by law or
who is on unauthorized leave of absence or whose employment
has terminated or who has retired under the Seller Pension
Plan, before the Closing Date. Those to whom Buyer is
obligated to offer employment hereunder are hereafter referred
to as the "Offerees."
(ii) Seller shall provide Buyer with a list of
all NPB Employees with current work telephone numbers and home
addresses as soon as possible after the date of execution of
this Agreement. Within five business days of receiving
Seller's final list of [*] Retained NPB Employees, Buyer shall
offer employment in writing to all Offerees, such employment
to commence as of the Closing Date, except that, in the case
of any Offeree on a Permissible Leave of Absence, such
employment will commence following the Leave Expiration Date,
as hereafter defined. Buyer shall be required to hire only
those Offerees who on or before the Closing Date have not
explicitly refused the terms of employment offered by Buyer.
Offerees who actually commence employment with the Buyer are
hereafter referred to as the "Hired Employees" and,
individually, as a "Hired Employee". If Buyer hires an NPB
Employee after the Closing Date, except as provided in
paragraph (c) below, or any other individual previously
* Confidential Treatment
employed by Seller or any Affiliate of Seller, such person
shall not constitute a Hired Employee. The terms and
conditions of Buyer's offer to hire Offerees shall be made in
writing and shall include pertinent conditions as determined
in the sole discretion of Buyer, subject to the following:
(A) Buyer will employ the Hired
Employees at will, except in those cases in which
Buyer and a Hired Employee enter into a written
contract of employment on or before the Closing Date;
provided, however, that Buyer agrees not to terminate
any Hired Employee other than for Cause during the
six month period immediately following the Closing
Date (the "Initial Employment Period"). For these
purposes, "Cause" shall mean materially deficient job
performance, material violation of any published
employment policy or practice of the Buyer or other
misconduct that could be harmful to the business,
interests or reputation of the Buyer or any
Subsidiary of Buyer for whom the Hired Employee is
providing services, each as determined by the Buyer
in its reasonable judgment.
(B) Each of the Hired Employees
shall initially be assigned to such position as shall
be determined by Buyer, but with responsibilities and
duties reasonably comparable to those of the Hired
Employee immediately prior to the Closing Date,
except as otherwise mutually agreed by Buyer and the
Hired Employee.
(C) Commencing on the date each
Hired Employee commences active employment with the
Buyer and except as otherwise expressly provided
herein, Hired Employees in the United States shall be
eligible to participate in all Employee Plans offered
to comparably situated employees of Buyer in the
United States to the extent such participation is
permitted by applicable plan terms and generally
applicable Buyer policies. For purposes of seniority
and vacation, personal and sick time accrual, each
Hired Employee shall receive credit with Buyer for
service while employed by Seller. With respect to
Overseas Employees, comparable provisions will be
made, in all cases in accordance with local law.
(iii) Buyer shall have no duty to hire any
Offeree who has not met, as of the date such Offeree's
employment was to begin pursuant to this Section 5.9(a), the
conditions set forth in Buyer's written offer of employment or
who has explicitly rejected Buyer's offer of employment or
resigned on or before the Closing Date. Such terms and
conditions may include the requirement that the Offeree report
to work on such date, following the Closing Date, as is
specified in Buyer's written offer of employment, unless the
Offeree is on a Permissible Leave of Absence or, on the
Closing Date, is absent due to vacation or personal illness or
injury as hereinafter provided. An Offeree who has not
explicitly rejected Buyer's offer of employment or resigned,
but is on a Permissible Leave of Absence on the Closing Date
shall be treated as a Hired Employee for purposes of this
Agreement as of 12:01 a.m. of the day following the date the
leave expires (which date of expiration is elsewhere referred
to as the "Leave Expiration Date"), provided, however, that
(i) the Offeree had not explicitly rejected the Buyer's offer
of employment or resigned on or before the Closing Date; (ii)
the Offeree applies for instatement to employment with the
Buyer in a timely manner, in accordance with the terms of
his/her leave, applicable law and this ss.5.10; (iii) the
Offeree has met, as of the Leave Expiration Date, all other
applicable conditions precedent to employment; (iv) the
Offeree, in the case of leave due to the Offeree's personal
illness or injury, has been medically cleared to return to
active employment without restrictions or with restrictions
which constitute a reasonable accommodation under applicable
law, (iv) the termination of the leave is not the result of
the misconduct of or a failure to act by such Offeree, and (v)
for Offerees on disability or personal leave, that such
Offeree returns to work within 13 weeks of the onset of such
disability or leave (or as set forth in Schedule 5.10(a)). An
Offeree who has not explicitly rejected Buyer's written offer
of employment or resigned prior to Closing shall not be deemed
to have failed to report to work on the date specified in such
offer if the Offeree is absent due to vacation approved by
Seller in advance of the Closing Date and in accordance with
Seller's generally applicable policies or as a result of a
personal illness or injury which results in the Offeree being
absent from work for five (5) or fewer consecutive work days
on or after the Closing Date, but such Offeree shall not
become a Hired Employee until the date on which he/she
actually commences employment with the Buyer.
(iv) Seller shall terminate the employment of
or accept the retirement of each NPB Employee (other than
Retained NPB Employees) effective as of the date immediately
preceding the date such NPB Employee is to commence employment
with the Buyer as set forth herein.
(b) Employee Benefits.
(i) Defined Benefit Pension Plan. Each Hired
Employee will cease accruing benefits in the Seller Pension
Plan and the Restoration Pension Plan as of the Closing Date,
or such Hired Employee's Leave Expiration Date, if later,
(such applicable date hereinafter referred to as the "Plan
Eligibility Date"),and Seller shall take all necessary action
to ensure that each Hired Employee is fully vested in his or
her accrued benefit as of the Plan Eligibility Date under the
Seller Pension Plan and the Restoration Pension Plan.
(ii) Defined Contribution Plan. As of the Plan
Eligibility Date of a Hired Employee, such Hired Employee will
cease contributing to the SAVE Plan, and the Seller shall take
all necessary action to ensure that such Hired Employee is
fully vested in his or her account balance under the SAVE Plan
and the Restoration SAVE Plan. Each Hired Employee shall be
eligible to participate in the Buyer 401(k) Plan upon
commencement of employment with Buyer in accordance with the
terms of the Buyer 401(k) Plan (including any term of general
application excluding a class of employees from eligibility
for such plan). The Buyer 401(k) Plan shall recognize as
service credit for purposes of eligibility for participation
and vesting all service credited under the SAVE Plan for a
Hired Employee as of the Hired Employee's Plan Eligibility
Date.
(iii) Transfer of Assets of the Save Plan. As
soon as practicable after the Closing Date, Seller will amend
its SAVE Plan to spin off and transfer an amount equal to the
account balances of the Hired Employees in the SAVE Plan
valued as of the most recent valuation date preceding the date
the transfer is made to the Buyer 401(k) Plan. Notwithstanding
anything in this subparagraph to the contrary, if Buyer is
unable in good faith to arrange for the transfer to the Buyer
401(k) Plan, such transfer shall not be executed until
appropriate arrangements are made. The transfer will be
accomplished in full compliance with the applicable provisions
of ERISA, the Code, and regulations and rulings promulgated
thereunder. Seller and Buyer agree to cooperate fully and to
file in a timely manner whatever reports, forms, and notices
as are necessary under applicable law as a result of, and to
effect, the transfer. The transfer will be accomplished by way
of a single transfer of plan assets constituting cash and
liabilities, except that any outstanding participant loans
from the SAVE Plan to Hired Employees that are not in default
may be transferred in kind to the extent not repaid prior to
the transfer. Seller agrees to provide to Buyer in a timely
manner all information for each Hired Employee, including
without limitation, accrued benefits under the SAVE Plan as of
the date of transfer, vesting service, and any other employee
information required by Buyer to determine benefits payable
from the Buyer 401(k) Plan.
(iv) Welfare Plans.
(A) Each Hired Employees shall
cease participating in all Welfare Plans, programs,
payroll practices or arrangements maintained by
Seller as of 12:01 a.m. on such Hired Employee's Plan
Eligibility Date, unless a different date is required
by law. Under all of such plans, programs or
arrangements, a Hired Employee's service as
recognized under the comparable Seller plans,
programs, payroll practices and arrangements will be
credited as service with Buyer for purposes of
determining participation and benefit levels
thereunder to the same extent as credited by Seller,
unless otherwise prohibited by law or the terms of
any of Buyer's plans and programs that cannot
reasonably be amended.
(B) Buyer will offer coverage for
medical and dental benefits, group life insurance,
and short-term and long-term disability insurance
coverage as of 12:01 a.m. on the day following the
Plan Eligibility Date to each Hired Employee and his
or her dependents (as that term is defined by the
respective Buyer plans) in accordance with the terms
of the relevant Buyer benefit plans (including any
term excluding a class of employees from eligibility
for such plan), except to the extent provided for
herein or, with respect to Overseas Employees, as
required by law. Buyer will waive any applicable
waiting periods for participation under such plans
and will impose no limitation on coverage or
participation with respect to a pre-existing
condition of a Hired Employee or his or her
dependents, provided that such Hired Employee or
dependent of a Hired Employee has satisfied any
pre-existing condition limitation under the
comparable Seller Plan, and that such Hired Employee
or his or her dependent enroll in the relevant Buyer
benefit plan upon initial eligibility as specified in
such plans. Buyer and Seller shall coordinate (or
cause insurance carriers or third party
administrators to coordinate) medical benefits claims
for Hired Employees under their respective plans so
as to carry out the provisions above with respect to
Buyer's medical benefits and carry out the other
applicable provisions of this Agreement.
(v) Vacation. Except as otherwise required by
law, within 35 days after Closing, Seller shall pay each Hired
Employee, by lump sum payment, for the amount of their accrued
but unused vacation as of such Hired Employee's Plan
Eligibility Date to the extent such accrued vacation exceeds
ten days. Any remaining accrued vacation not paid for in this
manner shall be retained by such Hired Employees under Buyer's
vacation policy and shall be available for use by them
immediately. Each Hired Employee shall begin to accrue
vacation, in addition to such Hired Employee's retained
vacation accrual, under, and subject to, the Buyer vacation
policy as of the date such Hired Employee commences employment
with Buyer. Each Hired Employee with 20 or more years of
service with Seller as of such Hired Employee's Plan
Eligibility Date shall receive a beginning accrual, upon
commencement of employment with Buyer, of 5 days personal/sick
time and shall thereafter, along with all other Hired
Employees, accrue sick/personal time under, and subject to,
the Buyer personal/sick time policy.
(vi) One-time Pension Replacement Payment.
Buyer shall make a cash payment to each Hired Employee upon
such Hired Employee's commencement of employment with Buyer in
an amount equal to the grossed-up value (assuming an effective
average tax rate of 35% for all Hired Employees) of the
product of 4% multiplied by such Hired Employee's
"compensation" (as determined under the Seller Pension Plan
and subject to the annual limit on compensation under Code
section 401(a)(17)) for the 1997 calendar year, provided that
such Hired Employee shall as a condition of employment with
Buyer agree to repay such amount in full to Buyer in the event
such Hired Employee's employment with Buyer terminates during
the six-month period immediately following the Closing Date.
(vii) Matching Contribution. As soon as
practicable following the close of the 1998 calendar year,
Buyer shall make a cash payment to each Hired Employee who is
employed by Buyer as of the last day of the 1998 calendar year
in an amount equal to the grossed-up value (assuming an
effective average tax rate of 35% for all Hired Employees) of
a 30% match on the first 6% of the Hired Employee's
compensation (as determined under the Buyer 401(k) Plan and
subject to the annual limit on compensation under Code section
401(a)(17)) deferred by the Hired Employee under the Buyer
401(k) Plan for the 1998 calendar year, provided, however,
that Buyer shall have no obligation to make any such cash
payment in the event that Buyer provides an equivalent level
of matching contribution (without regard to any gross-up) for
the benefit of Hired Employees under the Buyer 401(k) Plan.
(c) Termination at Law. In the event that any Hired
Employees outside the United States are entitled by law to severance
payments, Seller and Buyer shall share the costs of these severance
payments equally.
(d) Overseas Employees. On the Closing Date, Seller
shall transfer the employment of the Overseas Employees identified by
country on Exhibit F. To the extent that, by operation of law or any
agreement binding Seller, the transfer of employment of any Overseas
Employee requires the Buyer to assume any pension or similar obligation
related to an employee's tenure as an employee of Seller, Seller will
transfer to Buyer or its designated Subsidiary on the Closing Date the
monies necessary to fund the obligation or will otherwise make
available to the relevant Overseas Employees all of their accrued
benefits in their pension plans. If the Parties mutually agree that is
not desirable or it is not possible for Seller to transfer to Buyer the
employment of any Overseas Employee on the Closing Date because of a
Local Transfer Impediment, Seller and Buyer shall take all actions
reasonably necessary to eliminate the Local Transfer Impediment and
Seller shall take all actions reasonably necessary to transfer the
employment of all Overseas Employees located in the affected country as
soon as possible.
(e) Prior to Closing, Seller shall disclose full and
accurate details of any employee benefit plans including pension and
insurance benefits payable to the Overseas Employees.
5.11. Access to Records.
(a) General. For a period of seven years after the
Closing Date, the Seller and its representatives shall have reasonable
access to any books and records of the NPB in the possession of Buyer
to the extent that such access may reasonably be required by the Seller
in connection with matters relating to or affected by the operations of
the NPB prior to the Closing Date. For a period of seven years after
the Closing Date, the Buyer and its representatives shall have
reasonable access to any books and records related to the NPB in the
possession of Seller to the extent that such access may reasonably be
required by the Buyer in connection with matters relating to or
affected by the operations of the NPB after the Closing Date. Such
access shall be afforded upon receipt of reasonable advance notice and
during normal business hours. If either Party desires to dispose of any
of such books and records prior to the expiration of such seven-year
period, such Party shall, prior to such disposition, give the other
Party a reasonable opportunity, at such other Party's expense, to
segregate and remove such books and records as such other Party may
select.
(b) Product-Related Claims. Seller agrees to use
reasonable efforts to provide Buyer prior to Closing with any written
materials in Seller's possession or control that are relevant to any
intellectual property infringement, epidemic field failure, product
liability or other material related claims previously made by third
parties concerning any Product. In the event that, in the future, any
of the Products becomes the subject of any intellectual property
infringement, epidemic field failure, product liability or other
material related claim, Seller agrees to use reasonable efforts to (i)
provide to Buyer any written materials or other information in Seller's
possession or control which are relevant to such claim, and (ii)
provide such other assistance as may be reasonably requested by Buyer.
Buyer shall reimburse Seller for all out-of-pocket expenses incurred by
Seller, subject to prior approval of major expenses and excluding any
expenses for which Seller is required to provide indemnification
pursuant to Section 9. Notwithstanding the foregoing, Seller shall have
no obligation to provide any materials or disclose any information
which it is prohibited by law or by contract from providing or
disclosing to Buyer.
(c) Contracts. Seller agrees to use reasonable efforts
to deliver to Buyer prior to Closing a correct and complete copy of
each Contract not previously delivered to Buyer.
(d) Licensing Programs; Assigned Patents and
Trademarks. Seller agrees to use reasonable efforts to provide Buyer
prior to Closing with any written materials in Seller's possession or
control that are relevant to the Licensing Programs. Seller agrees to
use reasonable efforts to provide Buyer prior to Closing with any
written materials in Seller's possession or control that are relevant
to any infringement or alleged infringement of any Assigned Patent or
Assigned Trademark.
(e) Environmental Reports. The Seller shall deliver or
otherwise make available for inspection the Buyer true, complete and
correct copies as result of any reports, studies, analyses, test or
monitoring in Seller's possession, prepared since November 1, 1989 for
the Acton Facilities pertaining to Hazardous Materials in, on, beneath
or adjacent to said facilities or regarding the compliance with
applicable Environmental Laws as said facilities.
5.12. Transfer of Acquired Assets Located Outside the United
States. Buyer and Seller understand and agree that Acquired Assets located
outside the United States are the property of and Overseas Employees are
employed by Seller operating in the countries listed in Schedule 2.1(x) and
Exhibit F, and that transfers of such assets and of the employment of such
persons, as provided for in this Agreement, shall be made to Buyer operating in
each of the respective countries, the identity and address of which shall be
designated to Seller prior to the Closing Date. Buyer agrees that it will cause
its Subsidiaries to take all actions and execute and deliver any documents or
instruments necessary to complete the transfer of Acquired Assets located
outside of the United States and the employment of Overseas Employees on the
Closing Date.
5.13. Assistance in Effecting Transfer of Overseas Assets and
Employees. Buyer shall cooperate with Seller in their efforts to eliminate any
Local Transfer Impediment affecting the transfer of Acquired Assets or the
employment of any Overseas Employee. In the event of an occurrence of a
continuing Local Transfer Impediment, prior to the transfer of any Acquired
Assets or Overseas Employees, Seller and Buyer shall take all action reasonably
necessary to allow Buyer to enjoy the benefit of the Acquired Assets and the
Overseas Employees.
5.14. Bulk Sales Compliance. Buyer hereby waives compliance by Seller with
the provisions of the Bulk Sales Law of any state.
5.15. Transfer Taxes. Seller and Buyer agree to share equally all Taxes
in connection with the transfer of the Acquired Assets hereunder other than
Taxes measured by or based upon either Party's income.
5.16. Manufacture of NPB Products. After the Closing, Seller agrees to
manufacture the Products at Seller's manufacturing facilities in Taiwan and Ayr,
Scotland [*] following Closing and at arm's length negotiated prices for up to
an additional twelve months. Seller shall provide a 12 months manufacturer's
warranty for products delivered from such facilities. Buyer agrees to assume a
certain manufacturing agreement currently being renegotiated between the Seller
and SCI Systems, Inc. provided the final agreement is acceptable to Buyer and
the term is not more than one year. Buyer agrees to advise Seller promptly after
the provision of the final agreement whether such agreement is acceptable to
Buyer.
5.17. Transitional Services. Seller will provide transitional payroll,
business systems, accounting and facilities services and leased facilities at
the pro rata fully loaded costs currently allocated for such services plus any
incremental costs incurred by Seller to offer such services to Buyer for up to
one year following the Closing or any closing in any foreign country.
5.18. Littleton Occupancy. Seller agrees that, if necessary, it
will enter into a building occupancy agreement with respect to the portion of
Littleton facility currently used in connection with the NPB to Buyer for up to
5 months following Closing, while the Acton Facilities are being re-fitted, at a
rate consistent with current fully loaded occupancy costs.
5.19. Acton Occupancy. Buyer agrees that, if necessary, it will
enter into a building occupancy agreement with respect to the Acton Facilities
for up to 5 months following Closing at a rate consistent with Seller's former
fully loaded occupancy costs.
5.20. Space for Telecommunications. Buyer agrees to arrange for
Seller to occupy at a nominal cost the portion of the larger of the Acton
Facilities which houses the MCI and Xxxx Atlantic telecommunications
infrastructures for as long as it houses such infrastructures.
5.21. Refit of Acton Facilities. Buyer has paid Seller as part of
the cash portion of the Purchase Price $2,000,000 towards the cost of refitting
the Acton Facilities for the anticipated use thereof by Buyer. Buyer and Seller
will agree on a general understanding regarding the nature and scope of the
refit work and Seller hereby agrees that it shall be responsible to cause such
refitting of the Acton Facilities to be undertaken and completed using
appropriate and responsible designers and contractors to complete such refit as
soon as reasonably possible. Throughout such refitting Seller shall communicate
with Buyer regarding details of the refitting and in cooperation with Buyer make
such changes to the refit work as is needed from time to time for Buyer's
anticipated use of the Acton Facilities. Buyer shall be responsible to pay for
* Confidential Treatment
any cost of the refitting which exceeds $2,000,000. However, Seller agrees to
promptly advise Buyer as soon as Seller first anticipates that there is likely
to be any cost overrun or should a cost overrun occur. Thereafter Seller shall
proceed as directed by Buyer to suspend, alter or complete the refitting. Seller
shall provide a written accounting of funds expended on the refit and shall not
be entitled to any fee for its services with respect to assisting Buyer with or
overseeing the refitting.
5.22. Distributors and Resellers. Seller agrees to use reasonable efforts
to assist Buyer in negotiating prior to Closing satisfactory agreements with the
NPB's major third party distributors and resellers.
5.23. Retention Program. Seller shall grant the right to receive
bonuses of up to [*] to NPB Employees before the Closing Date as an incentive
for such employees to remain in the employment of Seller between the date hereof
and the Closing Date, to become Hired Employees and to remain in the employment
of Buyer (the "New Bonuses"). Seller has previously granted the right to receive
so-called "stay-put" bonuses to certain NPB Employees the payment of which are
presently expected to extend beyond the Closing Date (the "Existing Bonuses";
together with the New Bonuses, the "Bonuses"). Seller shall remain responsible
for the total amount of the Existing Bonuses and the New Bonuses paid to the NPB
Employees, regardless of whether such amounts are paid before or after such NPB
Employees become Hired Employees.
5.24. Licences. Prior to Closing, Seller shall disclose to Buyer the
existence of any grant of any license or sublicense of any rights or
modification of any rights under or with respect to, or entered into any
settlement regarding any infringements of its rights to, any Assigned
Intellectual Property all arising after the date hereof other than in connection
with the sale, manufacture or license of Products in the ordinary course.
5.25. Employment Contracts. Prior to Closing, Seller shall disclose to
Buyer the existence of any material employment contract or collective bargaining
agreement entered into, written or oral, or modification of the terms of any
existing such contract or agreement all arising after the date hereof.
5.26. Litigation. Prior to Closing, each Party shall disclose to the other
the existence of any of the following matters which arise after the date hereof:
any judicial or administrative actions, claims, suits, proceedings or
investigations pending or, to the Knowledge of the such Party, threatened, that
would be reasonably likely to result in a Material Adverse Effect or a material
adverse effect to the Buyer, as the case may be. Prior to the Closing, each
Party shall disclose to the other any notice to such party of any action seeking
to enjoin the consummation of the transactions contemplated hereby and to the
Knowledge of such Party, the existence of any Basis for any such action, claim,
suit, proceeding or investigation. Each Party agrees to use its reasonable
efforts to defend against any action, suit, or proceeding before any court or
* Confidential Treatment
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (i) prevent consummation of any of the transactions contemplated
by this Agreement or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation.
5.27. Form 8-K Financial Statements. Seller agrees to engage its
outside accountants to assist, at the Buyer's expense, in the preparation and
audit of the financial statements required by Buyer for its 8-K. Buyer agrees to
notify Seller of the financial statements required within 5 days of the date
hereof. Provided that Buyer complies with the foregoing, Seller agrees to
deliver such financial statements within 60 days after the Closing Date. Such
financial statements shall be prepared in accordance with GAAP.
5.28. Registration Statement. Prior to Closing Buyer shall prepare
and file with the Commission the Registration Statement with respect to the
Cabletron Shares to be issued pursuant to this Agreement and shall use its
reasonable efforts to cause the Registration Statement to become effective upon
or promptly following Closing and remain effective for a period of at least 90
days (or such shorter period during which the Seller shall have sold all
Cabletron Shares), provided that the Buyer shall have the right to delay or
suspend such Registration Statement two times for an aggregate period of 60 days
under the following circumstances: (i) in the event of any event or circumstance
which necessitates the making of any changes in the Registration Statement, or
any document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
or (ii) the Buyer is in possession of material information that it deems
advisable not to disclose in a Registration Statement. Buyer agrees not to issue
any securities of Cabletron pursuant to an effective registration statement
under the Securities Act for the first thirty days for which the Registration
Statement is effective. Seller shall have the right to assign the rights under
this ss. 5.28 to any purchaser of not less than one-third of the Cabletron
Shares from Seller in a private placement. For purposes of ss.5.28, the period
during which the Registration Statement is suspended or delayed shall be deemed
a period during which the Registration Statement is not effective.
5.29. Listing of Cabletron Shares. Buyer shall use all reasonable efforts
to cause the Cabletron Shares to be issued pursuant to this Agreement to be
approved for listing on The New York Stock Exchange (or the principal exchange
on which Cabletron's Common Shares are then trading).
5.30. Cabletron Shares. The Cabletron Shares will be imprinted with a
legend substantially in the following form:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended.
Such legend shall be removed from the certificates representing the Cabletron
Shares upon Seller's request in order to deliver any shares sold pursuant to the
Registration Statement or whenever the legend is not required by applicable law.
Prior to effectiveness of the Registration Statement, Seller must furnish the
Buyer before any transfer of Cabletron Shares with (i) a written opinion
reasonably satisfactory to the Buyer in form and substance from counsel
reasonably satisfactory to the Buyer by reason of experience to the effect that
the holder may transfer Cabletron Shares as desired without registration under
the Securities Act and (ii) a written undertaking executed by the desired
transferee reasonably satisfactory to the Buyer in form and substance agreeing
to be bound by the restrictions on transfer contained herein.
5.31. Future Assurances. From time to time after the Closing Date, at
the request of either Party hereto and at the expense of such Party, the Parties
hereto shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such action as Buyer may
reasonably determine is necessary to transfer, convey and assign to Buyer, and
to confirm Buyer's title to or interest in the Acquired Assets, to put Buyer in
actual possession and operating control thereof and to assist Buyer in
exercising all rights with respect thereto. The Seller hereby constitutes and
appoints Buyer and its successors and assigns as its true and lawful attorney in
fact in connection with the transactions contemplated by this instrument, with
full power of substitution, in the name and stead of the Seller but on behalf of
and for the benefit of the Buyer and its successors and assigns, to demand and
receive any and all of the assets, properties, rights and business hereby
conveyed, assigned, and transferred or intended so to be, and to give receipt
and releases for and in respect of the same and any part thereof, and from time
to time to institute and prosecute, in the name of the Seller or otherwise, for
the benefit of the Buyer or its successors and assigns, proceedings at law, in
equity, or otherwise, which the Buyer or its successors or assigns reasonably
deem proper in order to collect or reduce to possession or endorse any of the
Acquired Assets and to do all acts and things in relation to the assets which
the Buyer or its successors or assigns reasonably deem desirable.
6. Conditions to Obligation to Close
6.1. Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) Representations and Warranties. The representations
and warranties set forth in ss. 3 above shall be true, correct and
complete when made and shall be deemed to have been made again at and
as of the Closing Date and shall then be true, correct and complete,
except where such failure to be true, correct and complete would not,
in the aggregate, have a Material Adverse Effect. In addition, the
written disclosure pursuant to ss.5.6 by Seller shall be taken into
account in determining whether the representations and warranties of
the Seller are true and correct as of the Closing Date for all
purposes, including for purposes of Section 9.2 and 9.3, but excluding
for purposes of satisfying the condition set forth in this Section
6.1(a);
(b) Performance by Sellers. The Seller shall have
performed and complied with all of its covenants, agreements and
obligations hereunder in all material respects through the Closing;
(c) Consents. [Intentionally omitted];
(d) Absence of Litigation. No action, suit, or
proceeding shall be pending before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction which would in Buyer's good faith judgment be reasonably
likely to result in an unfavorable injunction, judgment, order, decree,
ruling, or charge (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect) that would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii)
cause the transactions contemplated by this Agreement to be rescinded
following consummation;
(e) Anti-trust Matters. All applicable waiting periods
(and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or otherwise been terminated and any other material consents,
approvals or filings under any national, supranational or international
merger control law the absence of which would prohibit the consummation
of a material portion of the transactions contemplated under this
Agreement shall have been obtained or made;
(f) Certificates. The Seller shall have delivered to the
Buyer a certificate signed by an authorized officer to the effect that
each of the conditions specified above in ss. 6.1 are satisfied
in all respects;
(g) Additional Agreements. The Seller shall have
entered into agreements in form and substance set forth in Exhibits B,
C, D, G and H attached hereto and the same shall be in full force and
effect; and
(h) No Material Adverse Change. There shall not have
been any change which has resulted in a Material Adverse Effect and no
event has occurred or circumstance exists that would reasonably be
expected to result in such a Material Adverse Effect.
The Buyer may waive any condition specified in this ss. 6.1 if it executes a
writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.
6.2. Conditions to Obligations of the Sellers. The obligation of the Seller
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) Representations and Warranties. The representations
and warranties set forth in ss. 4 above shall be true, correct and
complete (in all material respects in the case of those representations
and warranties which are not by their express terms qualified by
reference to materiality) when made and shall be deemed to have been
made again at and as of the Closing Date and shall then be true,
correct and complete (in all material respects, in the case of those
representations and warranties which are not by their express terms
qualified by reference to materiality). In addition, the written
disclosure pursuant to ss.5.6 by Buyer shall be taken into account in
determining whether the representations and warranties of Buyer are
true and correct as of the Closing Date for all purposes, including for
purposes of Section 9.4, but excluding for purposes of satisfying the
condition set forth in this Section 6.2(a);
(b) Performance by Buyer. The Buyer shall have performed
and complied with all of its covenants, agreements and obligations
hereunder in all material respects through the Closing;
(c) Absence of Litigation. No action, suit, or
proceeding shall be pending before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction which would in Seller's good faith judgment be reasonably
likely to result in an unfavorable injunction, judgment, order, decree,
ruling, or charge (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect) that would (i) prevent
consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation;
(d) Consents. [Intentionally omitted.];
(e) Certificates. The Buyer shall have delivered to the
Seller a certificate signed by the Chief Financial Officer of Buyer to
the effect that each of the conditions specified above in ss.
6.2(a)-(c) is satisfied in all respects;
(f) Anti-trust Matters. All applicable waiting periods
(and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or otherwise been terminated and any other consents, approvals
or filings under any national, supranational or international merger
control law the absence of which would prohibit the consummation of a
material portion of the transactions contemplated under this Agreement
shall have been obtained or made; and
(g) Additional Agreements. The Buyer shall have entered
into agreements in form and substance set forth in Exhibits B, C, D, G
and H attached hereto and the same shall be in full force and effect.
7. Confidentiality. Each Party will treat and hold as such all of the
Confidential Information and refrain from using any of the Confidential
Information except in connection with the transactions contemplated by
this Agreement or the Reseller Agreement. In the event that either
Party is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose
any Confidential Information, such Party will notify the other Party
promptly of the request or requirement so that the other Party may seek
an appropriate protective order or waive compliance with the provisions
of this ss. 7. If, in the absence of a protective order or the receipt
of a waiver hereunder, such Party is, on the advice of counsel,
required to disclose any Confidential Information, such Party may
disclose the Confidential Information; provided, however, that such
Party shall use reasonable efforts to obtain, at the request of the
other Party, an assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be
disclosed as the other Party shall designate.
8. Other Post-Closing Agreements
8.1 Noncompetition.
(a) Seller agrees that, except as set forth below (1)
[*], it and its affiliates will not design or manufacture (or have
designed or manufactured for it) and (2) [*] it and its affiliates
will not private label with any Digital Brand any products which are
substantially similar in function and performance to:
(i) The NPB hardware products (and the
software incorporated therein) being transferred to Buyer,
including without limitation, those hubs, routers, switches,
bridges, structured wiring (DECconnect), adapters, remote
access devices (e.g., access concentrators) and terminal
servers being transferred, and logical extensions thereof (one
example of the "logical extension" of a product is a fast
ethernet switch to a gigabit ethernet switch);
* Confidential Treatment
(ii) Buyer data networking and
telecommunication hardware products (and the software
incorporated therein) identified in the initial Product
Roadmap (as defined in the Reseller Agreement), and logical
extensions thereof;
(iii) Data networking or telecommunication
hardware products (and the software incorporated therein)
specifically designed for transporting data between two or
more computing devices, such as hubs, routers, switches,
bridges, structured wiring, adapters, remote access devices
(e.g., access concentrators) and terminal servers, and logical
extensions thereof.
(iv) NPB network management software being
transferred to Buyer (clearVISN), and logical extensions
thereof (other than embedded "client" modules that have no
standalone function); and
(v) Those portions of Buyer's SPECTRUM
software identified in the initial Product Roadmap which are
substantially similar to NPB software products and simple
extensions thereof,(including without limitation, clearVISN
and planned extensions of clearVISN) and logical extensions
thereof.
(b) Notwithstanding Section 8.1(a) above: (i) Seller
shall be permitted to embed networking capabilities of its own
development or from third parties in products which are not and are not
marketed primarily as data networking or telecommunication hardware
products. The parties acknowledge that products contemplated within
this exclusion include, but are not limited to, firewall and tunnel
products, proxy servers and extensions and follow-ons thereto, (ii)
Seller also shall be permitted to private label with any Digital Brand
and resell client and server products (which are not and are not
marketed primarily as data networking or telecommunication hardware
products) developed and manufactured by a third party OEM which contain
third party networking component products independently selected by the
OEM to meet Digital or customer specified form, fit, function,
performance and cost, so long as Digital specifications do not (1)
specify a required supplier or (2) result in effectively limiting the
OEM's choices to a single supplier (unless in either case the customer
specifically requested a specific supplier) of any networking
components to be incorporated into such OEM manufactured client or
server products.
(c) The covenants set forth in Section 8.1(a): (i) are
subject to pre-existing contractual obligations existing as of the
Closing Date and not transferred to Buyer under this Agreement
involving annual sales by Seller of not greater than $5 million for any
individual product and $15 million in the aggregate and (ii) do not
apply to any products in Seller's current portfolio being retained by
Seller (and logical extensions thereof) provided such products are not
substantially similar in function and performance to the products
described in Sections 8.1(a)(i) and (ii) above.
(d) Seller further agrees that during the initial term
of the Reseller Agreement it will not directly or indirectly without
the prior written consent of Buyer, recruit, offer employment, employ,
engage as a consultant, lure or entice away or in any other manner
persuade or attempt to persuade any person to leave the employ of Buyer
who is a Hired Employee; provided, however, this provision shall not
apply to (i) any Hired Employee terminated by Buyer; (ii) any Hired
Employee whose employment with Buyer voluntarily terminates within two
years of the Closing Date after the later of twelve months from the
Closing Date or six months after cessation of such person's employment
with Buyer; and (iii) any Hired Employee whose employment with Buyer
voluntarily terminates more than two years after the Closing Date four
months after cessation of such person's employment with Buyer. Buyer
agrees to consider in good faith requests for exceptions to this
provision. Seller agrees that it will not directly or indirectly
without the prior written consent of Buyer, employ or engage as a
consultant any NPB Employee who is both not a Retained NPB Employee and
not a Hired Employee for one year following the later of separation or
the Closing Date.
8.2. Intellectual Property Licenses.
(a) Buyer hereby grants to Seller a non-exclusive,
royalty-free, perpetual, irrevocable, worldwide license to make, use
and sell products and services using the Assigned Intellectual
Property, but excluding (i) the Assigned Trademarks except as permitted
under the Reseller Agreement, and (ii) the Software Source Code License
Agreement between Seller and Proteon Inc. dated June 30, 1995 and any
other Assigned License to the extent not sublicensable. The foregoing
license to Seller does not include the right of Seller to grant
sublicenses except (i) to a directly or indirectly wholly-owned
subsidiary of Seller for use consistent with this section, (ii) to a
third party solely for the purpose of manufacturing products or
performing services on behalf of Seller or a directly or indirectly
wholly-owned subsidiary of Seller bearing the Digital Marks, or (iii)
to Intel Corporation pursuant to the form of agreement referenced in
the Settlement Agreement between Seller and Intel Corporation dated
October 27, 1997.
(b) Seller hereby grants to Buyer a non-exclusive,
royalty-free, perpetual, irrevocable, worldwide license to make, use
and sell products and services using the Retained Patents. The
foregoing license to Buyer does not include the right of Buyer to grant
sublicenses, except (i) to a directly or indirectly wholly-owned
subsidiary of Buyer for use consistent with this section, or (ii) to a
third party solely for the purpose of manufacturing products or
performing services on behalf of Buyer or a directly or indirectly
wholly-owned Subsidiary of Buyer bearing the Digital Marks or Cabletron
Marks.
(c) Seller hereby grants Buyer a limited,
non-exclusive, royalty-free, perpetual, worldwide license to Seller's
remaining Patents, trade secrets, know-how and other proprietary
information to the extent necessary to make, use or sell the Products
or the Products Under Development. The foregoing license to Buyer does
not include the right of Buyer to grant sublicenses, except (i) to a
directly or indirectly wholly-owned subsidiary of Buyer for use
consistent with this section, or (ii) to a third party solely for the
purpose of manufacturing Products or Products Under Development on
behalf of Buyer or a directly or indirectly wholly-owned Subsidiary of
Buyer.
(d) Each Party covenants that it shall not commence
litigation against the other for infringement of any Patent committed
prior to the Closing Date. The foregoing covenant does not prevent
either Party from initiating a compulsory counterclaim arising from an
infringement claim brought by the other.
(e) Each Party covenants that it shall not commence
litigation against the other for infringement of any product existing
as of the Closing Date of any Patent committed after the Closing Date.
The foregoing covenant does not prevent either Party from initiating a
compulsory counterclaim arising from an infringement claim brought by
the other.
(f) Seller hereby grants Buyer a non-exclusive,
royalty-free, worldwide license to copy, have copied, make derivative
works with respect to, use, distribute and sublicense the Retained
Software solely as part of the Products, the Products Under Development
and logical extensions thereof.
(g) In the event Seller ceases to manufacture or
otherwise supply to Buyer any integrated circuits or other components
used in the Products that cannot be obtained at a reasonable price from
another source, Buyer shall automatically have a license under Seller's
applicable intellectual property in order to produce such integrated
circuits or components solely for use in data and telecommunications
network hardware products sold by Buyer.
(h) The licenses granted in this section 8.4 may not be
transferred or assigned by either party without the consent of the
licensor except to a successor in connection with any sale of all or
substantially all of the assets of the licensee or the relevant
division or unit of the licensee, or in connection with any merger or
business combination where the licensee is not the surviving entity.
8.3. Chargeback Provisions.
(a) Buyer agrees to promptly forward any request by a
third party for payment of a Chargeback Item to Seller for payment by
Seller directly unless Buyer believes it is in its best interests to
pay the Chargeback Item itself. Seller agrees to reimburse Buyer in
accordance with this Section 8.3 for any Chargeback Item that Buyer
pays up to $5,000 per item and up to an aggregate of $50,000 per month
for a period not to exceed six months after Closing. To the extent of
any reimbursement paid to Buyer for a Chargeback Item pursuant to this
ss. 8.3, Buyer shall not be entitled to any recovery under ss. 9.2.
The Chargeback Items shall mean any of the following liabilities of the
NPB existing at Closing: (i) market development fund commitments to
resellers, stock rotations commitments, pricing errors to customers,
warranty (including spares) on Products sold prior to the Closing Date,
sales returns on Products, and other similar commitments to customers
or resellers of the NPB; and (ii) miscellaneous reimbursement expenses
of Hired Employees. On no more than a monthly basis, Buyer shall submit
to Seller an itemized written list identifying in reasonable detail any
Chargeback Items for which Buyer seeks reimbursement by Seller. Seller
shall have 20 calendar days to dispute any item on such list. At the
end of such twenty day period, Seller agrees to pay Buyer within 10
business days for all undisputed Chargeback Items set forth on such
list. For any items on such list that remain in dispute, Buyer and
Seller shall attempt for five calendar days to mutually resolve such
disputes. At the end of such five day period, either Party may appoint
Deloitte & Touche, certified public accountants, to resolve the
remaining disputes related to the Chargeback Items. If Deloitte &
Touche is unavailable, the Parties will select a nationally-recognized
accounting firm by lot (after excluding their respective regular
outside accounting firms). The determination of any accounting firm so
selected will be set forth in writing and will be conclusive and
binding upon the Parties. In the event the Parties submit any disputes
to an accounting firm for resolution as provided in this section, the
Buyer and the Seller will share equally the fees and expenses of the
accounting firm. Within 10 business days after the determination of any
accounting firm so selected, Seller shall pay Buyer for any disputed
Chargeback Items which such accounting firm determined Seller was
liable to Buyer.
(b) Buyer and Seller agree to effect the payment of the
Bonuses to Hired Employees pursuant to this ss. 8.3(b). One week prior
to the date upon which each Bonus payment is to be made to Hired
Employees, Buyer shall deliver an invoice to Seller setting forth the
amount of such Bonuses to be paid on such date. Seller shall pay Buyer
the amount of such invoice by wire transfer at least two days before
the payment date. Assuming that Buyer has received the payment due from
Seller, Buyer shall pay the Bonuses to the applicable Hired Employees
on the payment date. Buyer shall not be entitled to indemnification
under ss. 9.2 for amounts received by Seller under this ss. 8.3(b).
Buyer shall promptly forward to Seller reasonably satisfactory evidence
of each Bonus payment.
8.4. Unique ASICs.
(a) Seller presently produces certain ASICs
(Application Specific Integrated Circuits) at its Hudson, Massachusetts
facility that are used solely in the Products (the "Unique ASICs"). As
part of its agreement with Intel Corporation ("Intel"), Seller
presently anticipates that it will transfer the facilities and rights
to make the Unique ASICs to Intel. Seller will retain the right to
purchase the Unique ASICs from Intel.
(b) Seller agrees to supply such Unique ASICs to Buyer
pursuant to the Reseller Agreement. Seller agrees that neither it nor
its Affiliates will sell any of the Unique ASICs to any Person other
than Buyer.
(c) As promptly as possible following the closing of
Seller's transaction with Intel, Seller agrees to provide Buyer with a
written description of the procedure pursuant to which Seller can make
an end-of-life final purchase of such Unique ASICs, including the
amount of notice, if any Intel is required to provide to Seller and the
other parameters concerning the procedure. Seller agrees to notify
Buyer immediately in the event that Intel informs Seller that it
intends to cease production of a Unique ASIC in order that Buyer may
make a "last buy" purchase of such Unique ASIC. In connection with such
notice, Seller shall provide Buyer with a forecast for its purchases of
the Product incorporating such Unique ASIC for the remaining term of
the Reseller Agreement. In the event that Buyer purchases a sufficient
quantity of the Unique ASIC to satisfy the forecast (in addition to the
quantity that Buyer has purchased for its other needs), Seller agrees
to repurchase any such Unique ASICs purchased to satisfy Seller's
forecasted need that remain unused at the end of the term of the
Reseller Agreement at Buyer's cost.
8.5. Open Patents.
(a) With respect to the Assigned Patents identified in
Schedule 1.3 with an "*" (the "Open Patents"), Buyer acknowledges that
these patents relate to certain emerging network standards and that
Seller has made certain commitments to standards organizations
regarding the availability of nonexclusive licenses under the Open
Patents at reasonable royalty rates. Seller has provided Buyer with all
written materials related to Seller's interactions with standard
organizations regarding the Open Patents. Buyer agrees to honor
Seller's commitments to the standards organizations and to make
licenses to the Open Patents available in accordance with the policies
of the relevant standards organizations, provided that Buyer reserves
the right to use the Open Patents "defensively" against any Person
asserting that Buyer's products infringe patents held by such Person.
9. Indemnification
9.1. Survival of Representations and Warranties. All of the representations
and warranties of the Buyer and the Seller (except for those contained in
ss.ss.3.3 (Authorization of Transaction) 3.6 (Title to Assets) and 3.14 (Taxes))
contained herein or in any document, certificate or other instrument required to
be delivered hereunder shall survive the Closing (even if the other Party knew
or had reason to know of any misrepresentation or breach of warranty at the time
of Closing) and continue in full force and effect until 15 months after the
Closing Date. The representations and warranties of Seller contained in
ss.ss.3.3 and 3.6 shall survive the Closing and shall continue in full force and
effect for 5 years after the Closing Date and in ss.3.14 shall survive the
Closing and shall continue in full force and effect for the applicable statute
of limitations. The termination of any representation and warranty shall not
affect any claim for breaches of representations or warranties (or any
allegation by a third party that, if established, would constitute a breach of a
representation or warranty) if written notice thereof is given to the breaching
party or parties prior to such termination date. All covenants and indemnities
of any Party in this Agreement or in any document or certificate delivered
hereunder shall, unless otherwise specifically provided therein, remain in full
force and effect forever. This Section 9 is subject to Section 5.6.
9.2. Indemnification Provisions for Benefit of the Buyer. Seller agrees to
indemnify, defend and hold harmless Buyer and its directors, officers and
Affiliates against and in respect of all Liabilities, obligations, judgments,
Liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, expenses, fees, costs, amounts
paid in settlement (including reasonable attorneys' and expert witness fees and
disbursements in connection with investigating, defending or settling any action
or threatened action), arising out of any claim, damages, complaint, demand,
cause of action, audit, investigation, hearing, action, suit or other proceeding
asserted or initiated or otherwise existing in respect of any matter
(collectively, the "Losses") that results from:
(a) the breach of any representation or warranty made
by Seller herein, or resulting from any misrepresentation or breach of
warranty, all determined as if all materiality and knowledge provisions
were not contained therein (for this purpose only those qualifiers
containing the defined term "Knowledge" shall constitute knowledge
qualifiers), or nonfulfillment of any agreement or covenant of Seller
contained herein or in any agreement or instrument required to be
entered into in connection herewith or from any misrepresentation in or
omission from any schedule, document, certificate or other instrument
required to be furnished by Seller hereunder; provided, however, that
the Seller shall be liable under this ss.9.2(a) in respect of Losses if
the aggregate of such Losses exceeds $10,000,000 in which case the
Seller will be liable for all Losses relating back to the first dollar;
provided, that for Losses pursuant to this ss.9.2(a), individual claims
that are less than $200,000 shall be excluded for all purposes and,
provided, further, that the maximum liability of Seller for aggregate
Losses arising from the breach of any representations or warranties
shall not exceed $50,000,000;
(b) any Liability of the Seller (including any
liability of the Seller existing prior to or resulting from actions
taken or events occurring prior to Closing), other than an Assumed
Liability (including any Liability that becomes a Liability of the
Buyer under any bulk transfer law of any jurisdiction, under any common
law doctrine of de facto merger or successor liability, or otherwise by
operation of law).
In the event that Seller may be obliged to indemnify Buyer under both subsection
(a) and subsection (b) of this ss. 9.2, their obligations under subsection (b)
shall be controlling and the limitations provided in xx.xx. 9.1 and 9.2(a)
hereof relating to their obligations in respect of Losses resulting from the
inaccuracy of any representation and warranty, or any misrepresentation, breach
of warranty or non-fulfillment of an agreement or covenant as described in ss.
9.2(a), shall not apply. Buyer shall provide Seller written notice for any claim
made in respect of the indemnification provided in this ss. 9.2, whether or not
arising out of a claim by a third party. Notwithstanding the foregoing, Assumed
Liabilities shall in no event be considered a Loss under this ss. 9.2.
9.3. Seller's Environmental Indemnification.
(a) Notwithstanding any other provision of this
Agreement to the contrary (other than ss. 5.6, ss. 9.7 and the proviso
of ss. 9.2 relating to a cap on total Losses), this ss. 9.3 shall
control and limit Seller's obligation to indemnify Buyer for
environmental matters. Seller shall defend, indemnify, and hold
harmless Buyer from and against any and all Losses to the extent it
relates to the NPB or the Acquired Assets resulting from: (i) cleanup
of Hazardous Materials Released, disposed of or discharged on or prior
to the Closing Date on or beneath the Acton Facilities on or prior to
the Closing Date; (ii) the failure of the Seller prior to the Closing
Date to be in compliance with any Environmental Laws in effect as of
and enforceable as of the Closing Date; (iii) the disposal, treatment,
storage or recycling of Hazardous Materials, on or prior to the Closing
Date, at any real property other than the real property being
transferred to Buyer as part of the Acquired Assets; and (iv) any
breach of the representations made in ss. 3.25 (claims for such breach
to be subject to the time and monetary limitations of xx.xx. 9.2 and
9.2(a) except to the extent that such claims are also subject to ss.
9.2(b).
(b) Notwithstanding subsection (a) above, Seller shall
only be required to defend, indemnify, and hold harmless Buyer to the
extent that: (i) cleanup of the Hazardous Materials is required by a
Governmental Entity or recommended by a Massachusetts Licensed Site
Professional ("LSP") as required under an applicable Environmental Law
that is in effect as of and is enforceable as of the Closing Date;
(iii) the Remediation Standards that must be met in order to satisfy
the requirements of the applicable Environmental Law or Governmental
Entity (A) are no more stringent than the Remediation Standards that
were in effect as of and were enforceable as of the Closing Date under
the applicable Environmental Law that is the source of the obligation
to conduct a cleanup, or, where no such Remediation Standards had been
promulgated and were enforceable as of the Closing Date, Remediation
Standards that were applied, within one year prior to the Closing Date,
on a case-by-case basis, to properties that are most similar to the
property that is subject to a cleanup and (B) are also those
Remediation Standards that would be the least stringent permanent
solution (provided that this does not preclude a Class C Response
Action Outcome pursuant to the Massachusetts Contingency Plan, 310 CMR
40.000, where a permanent solution is not technically feasible) set
forth in the Remediation Standards that would be applicable given the
use of the property as of the date before the Closing Date; (iv) such
cleanup is for substances that were designated as Hazardous Materials
and would have been subject to cleanup under an applicable
Environmental Law had such cleanup been initiated on or before the
Closing Date; and (v) such cleanup is conducted using the most cost
effective methods for investigation, remediation and/or containment
consistent with applicable Environmental Law or the Requirements of a
Governmental Entity. To the extent that the Losses incurred in
connection with a cleanup covered by subsection (a) are in excess of
the Losses that would be incurred for a cleanup meeting the conditions
set forth in this subsection (b), Seller shall have no obligation to
indemnify Buyer for such excess Losses.
(c) Notwithstanding anything to the contrary herein,
Seller and Buyer covenant to each other that the Seller indemnity in
this ss. 9.3 shall be subject to the following limitations: (i) if the
cost of cleanup or correcting a non-compliance with law subject to
indemnify by Seller are increased after the Closing Date due to an or
omission by a person other than Seller or Seller's agents, Seller shall
not be responsible for any such increase in costs incurred; (ii) Seller
shall not be responsible for any capital improvements and repairs and
modifications to capital improvements associated with the property or
the facilities of the Company made after the Closing Date; (iii) if
Seller is undertaking performance of its obligations pursuant to this
ss. 9.3, Seller shall not be responsible for the costs associated with
Buyer's oversight of Seller's performance, including the cost of
Buyer's oversight of Seller's legal counsel, consultants, or employees;
and (iv) Seller shall not be responsible for any costs that are
incurred by Seller in performing it indemnity obligations under this
ss. 9.3 due to any change related to the property or the Company
resulting or arising from the closure or sale of a facility or
business, the construction of new structures or equipment, a
modification to existing structures or equipment, the excavation or
movement of soil, or a change in use of the facilities from
manufacturing to any other use.
(d) To the extent that Buyer makes a claim for breach
of the representation set forth in ss. 3.25, or for a non-compliance
with applicable Environmental Law, and such matter relates to a cleanup
of Hazardous Materials at the Acton Facilities, the provisions of this
ss. 9.3 shall govern the rights and obligations of the parties.
(e) Indemnification shall be available under this ss.
9.3 only with respect to those specific claims for which Buyer has
provided written notice to Seller by the fifth anniversary of the
Closing Date. Such notice must include, based on reasonably available
evidence, the following: (i) location; (ii) the extent of contamination
and the impacted media, if known; and (iii) a copy of any notices filed
with or received from any Governmental Entity, LSP or other Person, or,
if no such notice has been filed or received, the basis upon which the
claimant seeks indemnification. Claims brought pursuant to this ss. 9.3
shall be subject to the procedures for indemnification set forth in ss.
9.5 if such claims are third party claims. Buyer shall be responsible
for managing any cleanup of the Acton Facilities or any matters
relating thereto, notwithstanding Seller's indemnification obligations
pursuant to this Section 9.3. Buyer agrees that: (i) it shall promptly
provide copies to Seller of all notices, correspondence, draft reports,
final reports, intended submissions and final submissions, proposed and
final workplans, governmental responses thereto, and other documents or
information of similar import; (ii) it shall afford Seller a reasonable
opportunity to comment and consult on any such intended submissions,
draft reports, proposed workplans and similar documents; (iii) it shall
provide Seller notice of any meetings with the governing regulatory
authority concerning any matter subject to the indemnity hereunder,
including, but not limited, any meetings related to the establishment
of applicable Remediation Standards; (iv) it shall provide Seller
reasonable notice of any intended field work to be conducted at the
Acton Facilities, shall allow Seller and its agents, employees,
consultants, attorneys and other representatives to observe and monitor
such field work and to obtain split samples at Seller's request; and
(v) it shall promptly provide Seller with the results of any such field
work. Seller shall be responsible for its own costs and expenses with
respect to its participation in any matters covered hereunder.
9.4. Inbdemnification Provisions for Benefit of the Seller. Buyer hereby
agrees to indemnify, defend and hold harmless Seller and its directors, officers
and Affiliates against and in respect of all Liabilities, obligations,
judgments, Liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, damages, expenses, fees, costs,
amounts paid in settlement (including reasonable attorneys' and expert witness
fees and disbursements in connection with investigating, defending or settling
any action or threatened action) arising out of any claim, complaint, demand,
cause of action, audit, investigation, hearing, action, suit or other proceeding
asserted or initiated in respect of any matter that results from (i) the
inaccuracy of any representation or warranty made by Buyer herein, or resulting
from any misrepresentation, breach of warranty, all determined as if all
materiality and knowledge qualifiers were not contained therein (for this
purpose, only those qualifiers containing the defined term "Knowledge" shall
constitute knowledge qualifiers) or nonfulfillment of any agreement or covenant
of Buyer, contained herein or in any agreement or instrument required to be
entered into in connection herewith or from any misrepresentation in or omission
from any schedule, document, certificate or other instrument required to be
furnished by Buyer hereunder; provided, however, that the Buyer shall be liable
under this ss.9.4(i) in respect of Losses if the aggregate of such Losses
exceeds $2,500,000 in which case the Buyer will be liable for all Losses
relating back to the first dollar; provided, that individual claims that are
less than $200,000 shall be excluded from the calculation of Losses from this
ss.9.4(i), and, provided, further, that the maximum liability of Buyer for
aggregate Losses arising from breach of representations or warranties shall not
exceed $50,000,000; and (ii) any Liability of the Buyer, including without
limitation, any Assumed Liability.
In the event that Buyer may be obliged to indemnify Seller under both subsection
(i) and subsection (ii) of this ss. 9.4, their obligations under subsection (ii)
shall be controlling and the limitations provided in xx.xx. 9.1 and 9.4(i)
hereof relating to their obligations in respect of Losses resulting from the
inaccuracy of any representation and warranty, or any misrepresentation, breach
of warranty or non-fulfillment of an agreement or covenant as described in ss.
9.4(i), shall not apply. Seller shall provide Buyer written notice for any claim
made in respect of the indemnification provided in this ss. 9.4, whether or not
arising out of a claim by a third party.
9.5. Matters Involving Third Parties.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this ss. 9, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party forfeits any rights or defenses.
(b) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party so long
as (i) the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Losses the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the extent
it is required to do so, (ii) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder, and (iii) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently and the
representation of both parties by the same counsel is not inappropriate
due to actual or potential conflicts of interest between them. The
Indemnified Party agrees to cooperate fully with the Indemnifying Party
and its counsel in the defense against any Third Party Claim, and to
the extent that any Party assumes the defense of any Third Party Claim
as provided herein, such Party agrees to conduct the defense of such
Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with ss. 9.5(b) above,
(i) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party
Claim, (ii) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party
(which consent shall not unreasonably be withheld), (iii) the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim unless
written agreement is obtained releasing the Indemnified Party from all
liability thereunder, and (iv) the Indemnifying Party will not consent
to the entry of any judgement or enter into any settlement with respect
to a Third Party Claim seeking an injunction or other equitable relief
on the sale of a product of the Indemnified Party that generated
$10,000,000 or more of revenue for the Indemnified Party in the twelve
months from the date of such proposed consent, without the prior
written consent of the Indemnified Party (which consent shall not
unreasonably be withheld, conditioned or delayed).
(d) In the event any of the conditions in ss. 9.5(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against any Third Party Claim, and will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying
Party, which shall not be unreasonably withheld; (ii) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of one counsel in defending against the Third Party Claim
(including attorneys' fees and expenses), and (iii) the Indemnifying
Parties will remain responsible for any Losses the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim to the fullest extent provided
in this ss. 9.
9.6. Exslusive Remedy. Except for remedies of specific performance,
the foregoing indemnification provisions shall be the exclusive remedy of the
Buyer and the Seller with respect to the transactions contemplated by this
Agreement; provided, however, the limitation on remedies provided in this ss.
9.6 shall in no way limit either Parties remedies under the Reseller Agreement.
9.7. Tax Effect. The amount of Losses payable by the Seller
pursuant to this ss. 9 as a result of a claim by the Buyer shall be (i) reduced
by the amount of any Tax benefit actually realized by the Buyer (for itself or
on behalf of the Indemnified Party) and (ii) increased by the amount of any
increased Taxes (including by reason of reduced amortization deductions)
actually incurred by the Buyer (for itself or on behalf of the Indemnified
Party) as a result of Seller's indemnification payment of Losses for such
claims. The parties agree that to the extent allowed by applicable law, the
Seller's indemnification payment of Losses shall be reported as an adjustment to
the Purchase Price.
10. Termination
10.1. Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) either Party may terminate this Agreement if the
Closing shall not have occurred prior to February 28, 1998; provided,
however, that this date shall be automatically extended to March 31,
1998 in the event that the FTC or DOJ issues a second request with
respect to filing under the Xxxx-Xxxxx-Xxxxxx Act;
(c) either Party may terminate this Agreement if
consummation of the transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction; or
(d) either Party may terminate this Agreement if the
other Party shall have materially breached any representation, warranty
or covenant contained in this Agreement and such breach would
reasonably be expected to have a Material Adverse Effect, in the case
of Seller, or a material adverse effect on the aggregate benefits
Seller would receive hereunder as contemplated hereby in the case of
Buyer and such breach shall not be amenable to cure.
10.2. Effect of Termination. If any Party terminates this Agreement
pursuant to ss. 10.1 above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party except for
any Liability of any Party then in breach and except as set forth in ss. 10.3.
10.3. Termination Fee. If either Party shall terminate this
Agreement for any reason whatsoever, Buyer shall pay a fee of $7,500,000 in cash
to Seller within one business day after such termination. Such fee shall not be
subject to set-off or any other claim and is in addition to all other remedies
available and is payable regardless of fault.
11. Miscellaneous.
11.1. Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will provide the other Party with the opportunity to review in
advance the disclosure).
11.2. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3. Entire Agreement. This Agreement (including the documents
referred to herein), between the Parties and any other written agreements
entered into between the Parties contemporaneously herewith constitute the
entire agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.
11.4.Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that the Buyer may (i) assign any or all
of its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder;
provided that Buyer shall continue to be liable hereunder.
11.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) one business day following the date sent when
sent by overnight delivery and (iii) five business days following the date
mailed when mailed by registered or certified mail return receipt requested and
postage prepaid at the following address:
If to the Seller:
Xxxxx Xxxxxxxx
Vice President
Digital Equipment Corporation
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Copy to:
Xxxx Xxxx
Vice President, Asst. General Counsel
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
If to the Buyer:
Cabletron Systems, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Copy to:
Xxxxx X. Fine
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
11.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the Commonwealth of Massachusetts
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Massachusetts or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts.
11.9. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. The consummation of the transactions contemplated by this
Agreement at Closing shall not be deemed to have resulted in a waiver of any
breach of a representation or warranty (whether or not such party knew or had
reason to know of such misrepresentation or breach of warranty) unless such
waiver was expressly set forth in a writing signed by Buyer and Seller. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
11.10. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11. Expenses. Except as otherwise provided herein, each of the
Buyer and the Seller will bear his or its own costs and expenses (including
legal and accounting fees and expenses) and the Seller will bear all of the
costs and expenses (including legal and accounting fees and expenses) of the NPB
incurred in connection with this Agreement and the transactions contemplated
hereby.
11.12. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with particularity and describes the relevant facts in detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
11.13. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
11.14. Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
11.15. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE SELLER HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT TO ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR PASSED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN TORT OR CONTRACT OR OTHERWISE.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
CABLETRON SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: President
CTRON ACQUISITION, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: President
DIGITAL EQUIPMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President and
General Manager
Products Division
EXHIBIT 2.1
CABLETRON SYSTEMS, INC.
DISCLOSURE SCHEDULE
INDEX
Exhibits
Exhibit A - Initial Statement of Assets
Exhibit B - Form of Reseller Agreement
Exhibit C - Assignment and Assumption Agreement
Exhibit D - Xxxx of Sale
Exhibit E - Statements of Operations
Exhibit F - List of NPB Employees
Exhibit G - Assignment of Patents and Patent Applications
Exhibit H - Assignment of Trademarks, Trademark Applications and
Goodwill
Schedules
Schedule 1.1 (a) - Accounting Convention
Schedule 1.1 (b) - Agreed-Upon Procedures
Schedule 1.2 - Assigned Licenses
Schedule 1.3 - Assigned Patents
Schedule 1.4 - Assigned Trademarks
Schedule 1.5 - Products
Schedule 1.6 - Retained Patents
Schedule 1.7 - Licensing Programs
Schedule 2.1(a) - Encumbrances on Acquired Assets
Schedule 2.1(h) - Contracts
Schedule 2.1(i) - Permits
Schedule 2.1(x) - International Assets
Schedule 4.8 - Exceptions to Representation 4.8
Schedule 5.10(a) - Disability Schedule
Disclosure Schedule of Cabletron Systems, Inc.
Disclosure Schedule of Digital Equipment Corporation
8 December 1997
Xx. Xxxxxx X. Xxxx, President
Mr. Xxxxx Xxxxxxxxxxx, Chief Financial Officer
Cabletron Systems, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxxx, XX 00000-0000
Dear Don and Xxxxx:
This letter agreement is being furnished to Cabletron Systems, Inc. and Ctron
Acquisition, Inc. (collectively, the "Buyer") by Digital Equipment Corporation
("Seller") to amend the Asset Purchase Agreement ("Agreement") between the Buyer
and Seller dated November 24, 1997. All terms used herein shall have the
meanings ascribed to them in the Agreement.
The Agreement is herby amended as follows:
1. Section 1 of the Agreement is amended by adding the following definition
"Adjusted Cabletron Stock Price" means the average, rounded to th nearest
one-thousandth of a dollar ($0.001), of the midpoints of the high and low
sales prices of Cabletron Common Stock as reported on the New York Stock
Exchange Composite Tape (as reported by the eastern edition of The Wall
Street Journal or, if not reported thereby, as reported by another
authoritative source as mutually agreed by the Buyer and the Seller) for
the ten (10) consecutive trading days during the period ending on the
trading day immediately preceding the Closing Date.
2. Section 2.5(a) of the Agreement is amended in its entirey to read as
follows: Cash At the Closing, (x) $91,800,000 in cash (subject to
adjustment pursuant to Section 2.6) and (y) in the event of the Cabletron
Stock Price is greater than the Adjusted Cabletron Stock Price, an
additional amount of cash consideration equal to the amount by which the
difference, if any, between the aggregate value of the Cabletron Shares
determined with reference to the Cabletron Stock Price and the value of
the Cabletron Shares determined with refernce to the Adjusted Cabletron
Stock Price exceeds $7,500,000, all of such cash payable by wire transfer
to the Seller in accordance with instructions of the Seller given to the
Buyer prior to the Closing.
3. The first paragraph of Section 2.5(c)(ii) of the Agreement is amended
in its entirety to read as follows: Second Year Product Credits. Subject
to adjustment pursuant to Section 2.6, (x) $125,000,000 is Second Year
Product Credits and (y) in the event the Cabletron Stock Price is greater
than the Adjusted Cabletron Stock Price, a dollar amount of additional
Second Year Product Credits, equal to the differnce, if any, between the
aggregrate value of the Cabletron Shares detemined with reference to the
Cabletron Stock price and the value of the Cabletron Shares determined
with reference to the Adjusted Cabletron Stock Price, up to $7,500,000.
4. Section 2.5 of the Agreement is amended by adding thereto the following
Section 2.5(d): At Buyer's option, in lieu of delivering to Seller at
Closing the Cabletron Shares, Buyer may elect to furnish Seller, so long as
Buyer so notifies Seller at least two business days prior to Closing, with
additional cash consideration, payable in accordance with the provisions
of Section 2.5(a), equal to the value of the Cabletron Shares detemined
with reference to the Adjusted Cabletron Stock Price.
Except as expressly modified herein, the Agreement shall remain in full force
and effect in accordance with its terms.
Pleeas indicate your agreement with the terms hereof by dating and signing the
duplicate copy of this letter enclosed and returning it by facsimile, followed
originally executed copy, to Xxxx X. Xxxx, Vice President, Assistant General
Counsel, Secretary and Clerk at Digital Equipment Corporation, 000 Xxxxxxxxxx
Xxxx (XXX0-0/X00), Xxxxxxx, XX 00000. facsimile number 000-000-0000.
Sincerely,
Digital Equipment Corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
Senior Vice President and General Manager
Products Division
Acknoweledged and agreed to:
Cabletron Systems, Inc.
CTRON Acquisition, Inc.
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
President
