EXHIBIT 2.2
-----------
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
First Amendment to Asset Purchase Agreement (the "Amendment"), dated as of
February 7, 1998 by and among Cabletron Systems, Inc., a Delaware corporation
and Ctron Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Cabletron Systems, Inc., and Digital Equipment Corporation, a
Massachusetts corporation.
Whereas, pursuant to an Asset Purchase Agreement between Seller and the
Buyer dated as of November 24, 1997, as amended (the "Purchase Agreement") the
Seller agreed to sell and the Buyer agreed to purchase the Acquired Assets
relating to Seller's Network Products Business;
Whereas, on the date hereof, the parties are conducting the Closing of the
transactions contemplated by the Purchase Agreement with respect to the business
of the NPB in the United States, including the hiring by Buyer of the NPB
employees and the assignment of the Acquired Assets located in the United
States, including the inventory and any distributor or other reseller contracts
of the NPB worldwide, but excluding the hiring by Buyer of the NPB Employees and
the assignment of the Acquired Assets (other than the inventory) located outside
the United States;
Whereas, in connection with the Closing, on the date hereof the parties are
entering into certain other agreements, including a certain Transitional
Services Agreement and a certain International Operating Agreement, and a
certain Contract Supply and Manufacturing Agreement, each by and among the
parties to the Purchase Agreement; and
Whereas, the parties desire to make certain amendments to the Purchase
Agreement and set out certain other agreements related to the Closing.
Now, Therefore, in consideration of the premises and of the mutual
agreements, provisions, covenants and conditions contained in this Agreement,
Seller and the Buyer hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used herein and not otherwise
-----------
defined in this Agreement shall have the meanings assigned such terms in the
Purchase Agreement.
SECTION 2. Closing. Except as expressly set forth herein, the Closing of
-------
the transactions contemplated by the Purchase Agreement has occurred on the date
hereof in accordance with the terms of the Purchase Agreement. The transactions
consummated at the Closing include, without limitation, (i) in the United
States, (a) the hiring by Buyer of the Hired Employees whose principal work
location is the United States, and (b) the assignment of the Acquired Assets
located in the United States, and (ii) throughout the world, (a) the assignment
of all Acquired Assets that constitute inventory, and (b) the assignment of any
Contracts with any distributor or other reseller of the NPB, but specifically
excluding the hiring by Buyer of the NPB Employees whose principal work location
is outside of the United States and the assignment of the Acquired Assets (other
than inventory) located outside the United States. Notwithstanding anything to
the contrary in the Purchase Agreement, the Closing shall be deemed to have
occurred at 11:59 p.m. on the Closing Date.
SECTION 3. Consideration.
-------------
(a) This Amendment hereby terminates and renders null and void a letter
agreement dated December 8, 1997 among Buyer and Seller which amended the
Purchase Agreement.
(b) The Purchase Agreement is hereby amended as follows:
(i) Section 2.5(a) is amended in its entirety to read as follows:
Cash. $132,725,000.00 in cash (subject to adjustment pursuant to Section
----
2.6). Notwithstanding the preceding sentence, at the Closing Buyer will pay
$127,832,452.70 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 which amount represents payment in full of the cash
portion of the Purchase Price minus adjustments for monies owed between the
Parties. These adjustments are set forth in detail in Schedule 3.
(ii) Section 2.5(b) is hereby deleted.
(iii) The first paragraph of Section 2.5(C)(ii) is amended in its
entirety to read as follows:
Second Year Product Credits. Subject to adjustment pursuant to Section
2.6, $132,500,000 in Second Year Product Credits.
(iv) Section 2.1(d) is amended in its entirety to read as follows:
(d) the securities of Ipsilon Networks, Inc. owned by the Seller (or the
$4,999,999.80 cash value of such securities);
(v) Section 2.6(a)(ii) is amended to add the following new subsection:
(a)(ii) Solely for purposes of this Section 2.6(a)(ii), the Asset Value
shall be deemed not to include up to $1.5 million in Stage 1 Assets.
SECTION 4. Financial Statements. Section 5.27 of the Purchase Agreement is
--------------------
amended in its entirety to read as follows:
-2-
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 as set forth in
Schedule 1 (the "Financial Statements"). Seller agrees to deliver such
Financial Statements by February 23, 1998. For each day beyond February
23, 1998 that Seller is late in delivering such Financial Statements,
Seller agrees to pay Buyer $25,000. For each day prior to February 20,
1998 that Seller is early in delivering such Financial Statements, Buyer
agrees to pay Seller $25,000. Seller agrees to make reasonably available
the Seller financial staff that prepared the Financial Statements during
the days immediately following delivery of the financial statements for the
purposes of conducting diligence and making any necessary amendments. The
Financial Statements shall be prepared in accordance with United States
Generally Accepted Accounting Principles. In addition, Seller agrees to
use all reasonable efforts to assist Buyer in obtaining such comfort
letters, consents and other similar items from Seller's outside accountants
required by Buyer in a timely fashion in connection with its use of the
Financial Statements, both in connection with the 8-K and future filings
with the Securities Exchange Commission which contain or incorporate by
reference the Financial Statements, including a Registration Statement on
Form S-4 which Buyer anticipates filing in connection with its acquisition
of Yago Systems, Inc.
SECTION 5. Transfer Taxes. Schedule 2 sets forth the amounts of the
--------------
various Transfer Taxes to be paid in connection with the Closing. In the event
that Transfer Taxes are required to be paid by either party subsequent to the
Closing, the party not making such payment agrees to reimburse or otherwise pay
in cash the party making the payment for one-half of such Transfer Taxes. This
provision is intended to supplement, and not replace, any provisions in the
Purchase Agreement concerning Transfer Taxes.
SECTION 6. Amended Schedules. The following Exhibits and Schedules to the
-----------------
Purchase Agreement are amended as set forth in the Exhibits and Schedules
attached hereto: Exhibit A, Schedule 1.2, Schedule 1.3, Schedule 1.6, Schedule
2.1(a), Schedule 2.1(h), Schedule 2.1(x) and Disclosure Schedule (S)(S)3.4,
3.15(a) and 3.16(a).
Patents in Dispute
------------------
The Parties are in dispute as to whether Patent Number PD25665 (Buffer
Management Scheme With Packet Based Flow Control Algorithm) should be
assigned to Buyer or retained by Seller pursuant to the Asset Purchase
Agreement. The Parties agree to further investigate the source and use of
this patent in order to resolve this issue by mutual agreement following
the Closing.
SECTION 7. Closings in Foreign Countries. The parties agree to continue
-----------------------------
to use all reasonable efforts to consummate the closing of the transactions
contemplated by the Purchase Agreement in countries other than the United
States. Where reasonably practicable (including economic effect), the parties
will agree to close the transactions in any particular country at the end of
Seller's fiscal month or fiscal week. In the event that despite the use of all
reasonable efforts by both parties to resolve a Local Transfer Impediment, the
closing of the transactions contemplated by the Purchase Agreement in any
particular country has not occurred within
-3-
nine months following the effective date of this Agreement, Buyer and Seller
will cooperate to develop a mutually agreeable solution that finally resolves
the transactions contemplated by the Purchase Agreement with respect to such
country within twelve months following the effective date of this Agreement,
provided that the dates set forth in this provision shall not be applicable to
--------
any country where the transaction continues to be under review by any agency,
court, panel, council, governmental entity or similar body or where the parties
have not exhausted the reasonable steps available to them to resolve a Local
Transfer Impediment.
SECTION 8. Assignments. As of the Closing, Seller has been unable to
-----------
obtain consent to assign certain Contracts or Assigned Licenses that are
necessary to the manufacture of certain NPB Products. Seller agrees that,
subject to compliance with all of the applicable terms of the Contract or
Assigned License and the Contract Supply and Manufacturing Agreement (or any
replacement agreement) including the payment provisions, Seller shall continue
to employ its rights under such Contracts or Licenses, including the Super Lat
license under the Meridian Agreement, to manufacture products or components, as
applicable, and to sell such products or components to Buyer. This provision
shall terminate (i) with respect to any particular Contract or Assigned License
that has terminated (unless terminated by Seller prior to its termination in the
ordinary course), or (ii) with respect to all of the applicable Contracts and
Assigned Licenses, upon termination of the Contract Supply and Manufacturing
Agreement, provided that in the event of any termination of the Contract Supply
and Manufacturing Agreement the parties shall use reasonable good faith efforts
to enter into a corporate agreement addressing such Contracts and Assigned
Licenses. This provision is not intended to supersede any provision of the
Purchase Agreement.
Meridian LAT License. Seller is entitled to certain net LAT Base
--------------------
License and royalty fees pursuant to a LAT Cross Licensing/Technology
Exchange/Marketing/ Service Agreement between Digital Equipment Corporation
and Meridian Technology Corporation executed November 16, 1992 and amended
March 1, 1994 (the "Meridian Agreement"). Seller agrees to pay to Buyer
all net LAT Base License and royalty fees actually received by it from
Meridian under the Meridian Agreement within 30 days of receipt by Seller
and Buyer agrees to assume all obligations of Seller under such Agreement
related to the license pursuant to which such fees are paid.
SECTION 9. Certificates. Section 6.1(f) of the Purchase Agreement is
------------
amended in its entirety to read as follows:
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 (S) 6.1(a), (b) and (d) are satisfied in all respects;
SECTION 10. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same document.
-4-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
CABLETRON SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
-------------------------------
Title: Senior Vice President and
Chief Financial Officer
-------------------------------
CTRON ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
-------------------------------
Title: Treasurer
-------------------------------------
DIGITAL EQUIPMENT CORPORATION
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
----------------------------------
Title: Vice President, Finance
-------------------------------
-5-
CABLETRON SYSTEMS, INC.
SCHEDULES AND EXHIBITS
INDEX
Schedule 1 -- Financial Statements to be Delivered
Schedule 2 -- Transfer Taxes
Schedule 3 -- Purchase Price Allocation
Exhibit A -- Statement of Assets
Schedule 1.2 -- Assigned Licenses
Schedule 1.3 -- Assigned Patents
Schedule 1.6 -- Retained Patents
Schedule 1.2(a) -- Encumbrances on Acquired Assets
Schedule 2.1(h) -- Contracts
Schedule 2.1(x) -- International Assets
Disclosure Schedule to Asset Purchase Agreement
Section 3.4
Section 3.15(a)
Section 3.16(b)
-6-
