ASSET PURCHASE AGREEMENT
BY AND BETWEEN
DIGITAL LIGHTWAVE, INC.
AND
TEKTRONIX, INC.
OCTOBER 30, 2002
#
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
October 30, 2002, by and between Digital Lightwave, Inc., a Delaware
corporation ("Buyer") and Tektronix, Inc., an Oregon corporation ("Seller").
RECITALS
Buyer is in the business of designing products and technology that
monitor, maintain and facilitate the management of optical-based networks.
Seller sells certain products as part of its Optical Transmission Test ("XXX")
Products line of business ( as further defined below, the "Products"). Buyer
desires to acquire from Seller, and Seller desires to sell to Buyer, certain of
the assets associated with the Products on the terms and subject to the
conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual agreements, representations, warranties
and covenants set forth below, Buyer and Seller agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "AFFILIATE" means with respect to any Person, a Person
directly or indirectly controlling or controlled by or under common control
with such Person.
(b) "CLOSING" means the consummation of the transactions
contemplated hereby.
(c) "CLOSING DATE" means the date of the Closing.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "GAAP" means generally accepted accounting principles of the
United States as set forth by the Financial Accounting Standards Board.
(f) "GOVERNMENTAL AUTHORIZATIONS" means the permits,
authorizations, consents or approvals of any Governmental Entity which are a
condition to the lawful consummation of the transactions contemplated hereby
and which are listed on Schedule 1.1(f) to this Agreement.
(g) "GOVERNMENTAL ENTITY" means any court, or any federal, state,
municipal or other governmental authority, department, commission, board,
agency or other instrumentality (domestic or foreign).
(h) "LIEN" means any mortgage, pledge, lien, security interest,
option, covenant, condition, restriction, encumbrance, charge or other third-
party claim of any kind.
(i) "MATERIAL ADVERSE EFFECT" with respect to a Person means any
event, change or effect that is materially adverse to the condition (financial
or otherwise), properties, assets, liabilities, business, operations, or
results of operations of such Person and its Affiliates, taken as a whole.
(j) "PERSON" means an individual, corporation, partnership,
association, trust, government or political subdivision or agent or
instrumentality thereof, or other entity or organization.
(k) "TAXES" means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in
respect thereof, (i) imposed by any federal, territorial, state, local or
foreign government or any agency or political subdivision of any such
government, for which Buyer could become liable as successor to or transferee
of the Purchased Assets (as defined in Section 2.1) or which could become a
charge against or lien on any of the Purchased Assets, which taxes shall
include, without limiting the generality of the foregoing, all sales and use
taxes, ad valorem taxes, excise taxes, business license taxes, occupation
taxes, real and personal property taxes, stamp taxes, environmental taxes, real
property gains taxes, transfer taxes, payroll and employee withholding taxes,
unemployment insurance contributions, social security taxes, and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which are required to be paid, withheld or collected,
or (ii) any liability for amounts referred to in (i) as a result of any
obligations to indemnify another person.
(l) "INTELLECTUAL PROPERTY" means all copyrights, copyright
registrations, proprietary processes, trade secrets, license rights,
specifications, technical manuals and data, drawings, inventions, designs,
patents, patent applications, product information and data, know-how and
development work-in-progress, software, business and marketing plans and other
intellectual or intangible property embodied in or relating solely to the
Products, whether pending, applied for or issued, whether filed in the United
States or in other countries.
(m) "TECHNOLOGY LICENSE AGREEMENT" means a Technology License
Agreement in substantially the form attached as Exhibit 1.1(m), which is to be
executed and delivered by the parties at the Closing.
(n) "MANUFACTURING SERVICES AGREEMENT" means a Manufacturing
Services Agreement in substantially the form attached as Exhibit 1.1(n), which
is to be executed and delivered by the parties at the Closing.
(o) "KNOWLEDGE OF SELLER" means the actual knowledge of the
individuals identified in Schedule 1.1(o).
(p) "SELLER TRADEMARKS" means the marks TEKTRONIX, TEK, and any
other trademarks, service marks, trade names, brands or other product
identifiers used by Seller.
2. SALE AND PURCHASE.
2.1 TRANSFER OF ASSETS. Subject to the terms and conditions of this
Agreement, Seller shall sell, assign, grant, transfer, and deliver (or cause to
be sold, assigned, granted, transferred and delivered) to Buyer, or to any
Affiliate of Buyer designated by Buyer, and Buyer shall purchase and accept
from Seller as of the Closing Date, free and clear of all Liens, all of the
Seller's rights, title and interest in and to the assets enumerated in this
Section 2.1 as the same shall exist on the Closing Date (the "Purchased
Assets"):
(a) all unique inventory, including raw materials, work in
process and finished goods relating to the products, which products are listed
on Schedule 2.1(a) (the "Products");
(b) all customer contracts, customer trials, sales funnels, sales
order backlog, bills of materials, purchase orders, license agreements,
maintenance and support contracts, development contracts, leases and other
contracts of Seller relating solely to the Products listed on Schedule 2.1(b)
(collectively, the "Contracts");
(c) all other equipment (including without limitation test,
engineering, prototype, and demo equipment), fixtures, machinery, furniture,
computer and networking equipment owned or controlled by, or in the possession
of, Seller, and all interests therein, which are used solely in connection with
the Products and are listed on Schedule 2.1(c);
(d) all of Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Products, including,
without limitation, unliquidated rights under warranties; provided that nothing
herein, other than pursuant to the Technology License Agreement and the
Manufacturing Services Agreement, shall give Buyer any rights in or to (i) any
copyrights, copyright registrations, proprietary processes, trade secrets,
license rights, specifications, technical manuals and data, drawings,
inventions, designs, patents, patent applications, trade names, trademarks
(including without limitation the Seller Trademarks), service marks, product
information and data, know-how and development work in progress, software,
customer lists, business and marketing plans (other than customer lists,
business and marketing plans relating solely to the Purchased Assets) and other
intellectual or intangible property of Seller whether pending, applied for or
issued, whether filed in the United States or in other countries, together with
all associated goodwill; or (ii) the XXX Patents, the XXX Technology, the
Tektronix Software or the XXX Software (as such terms are defined in the
Technology License Agreement);
(e) to the extent transferable, all permits, authorizations,
consents and approvals of any Governmental Entity listed on Schedule 2.1(e)
(the "Permits");
(f) all books, records, files and papers, whether in hard copy or
electronic format, relating solely to the Products, including without
limitation, engineering information, sales and promotional literature, manuals
and data, sales and purchase correspondence, lists of present, former and
prospective suppliers or customers, and any information relating to Taxes
imposed on the Purchased Assets;
(g) all goodwill associated with the Purchased Assets; and
(h) all proceeds, accounts receivable or other revenue relating
to the sale of Products during the period beginning on the date of this
Agreement and ending on the Closing Date.
2.2 TRANSFER OF LIABILITIES. Subject to the terms and conditions of
this Agreement, Buyer or an Affiliate of Buyer designated by Buyer agrees,
effective as of the Closing Date, to assume, pay, defend, discharge, and
perform the following liabilities of Seller (the "Assumed Liabilities"):
(a) all of Seller's current, future, and extended warranty
obligations, including all service obligations, related to the Products listed
on Schedule 2.2(a);
(b) all of Seller's current and future obligations under those
certain agreements related to the Purchased Asset listed on Schedule 2.2(b);
(c) all of Seller's current and future support obligations
related to the Products listed on Schedule 2.2(c).
2.3 EXCLUDED LIABILITIES. Except for those liabilities expressly
assumed by Buyer or any Affiliate designated by Buyer pursuant to Section 2.2,
Buyer shall not assume and shall not be liable for, and Seller and its direct
or indirect subsidiaries shall retain and remain solely liable for , any of the
debts, contracts, agreements, commitments, obligations and other liabilities of
any nature whatsoever of Seller and its direct and indirect subsidiaries,
whether known or unknown, accrued or not accrued, fixed or contingent,
including without limitation, the following:
(a) Any liability for breaches by Seller or any of its respective
direct or indirect subsidiaries on or prior to the Closing Date of any contract
or any other instrument, contract or purchase order or any liability for
payments or amounts due under any Contract or any other instrument, contract or
purchase order on or prior to the Closing Date;
(b) Any liability or obligation for Taxes attributable to or
imposed upon Seller or any of its direct or indirect subsidiaries for any
period (or portion thereof) through the Closing Date, including, without
limitation, any Taxes attributable to or arising from the transactions
contemplated by this Agreement unless such Taxes are attributable to Buyer's
failure to comply with its obligations under this Agreement;
(c) Any liability or obligation for or in respect of any loan,
other indebtedness for money borrowed, or account payable of Seller or any of
its direct or indirect subsidiaries, including any such liabilities owed to
Affiliates of Seller;
(d) Any liability or obligation arising as a result of any legal
or equitable action or judicial or administrative proceeding initiated at any
time, to the extent relating to any action or omission on or prior to the
Closing Date by or on behalf of Seller or any of its direct or indirect
subsidiaries, including, without limitation, any liability for infringement of
intellectual property rights, breach of product warranty, injury or death
caused by products, or violations of federal or state securities or other laws;
(e) Any liability or obligation arising on or prior to the
Closing Date out of any "employee benefit plan," as such term is defined by the
Employee Retirement Income Security Act of 1974 ("ERISA") or other employee
benefit plans, except for accrued vacation payments for Transferred Employees
under Section 7.1(b);
(f) Any liability or obligation for making payments of any kind
(including as a result of the sale of Purchased Assets or as a result of the
termination of employment by Seller of employees, or other claims arising out
of the terms and conditions of employment with Seller(except as provided in
Section 7.1(b)) or severance pay or otherwise) to employees of Seller or in
respect of payroll taxes for employees of Seller;
(g) Any liability of Seller incurred in connection with the
making or performance of this Agreement and the transactions contemplated
hereby;
(h) Any liability of Seller arising out of the violation of or
failure to comply with any Environmental Regulations (as hereinafter defined)
applicable to Seller's manufacture or sale of the Products; and
(i) Any costs or expenses of Seller incurred in connection with
shutting down, deinstalling and removing equipment not purchased by Buyer, and
the costs associated with all contracts and agreements of Seller not assumed by
Buyer.
2.4 PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, in
consideration of the Seller's sale of the Purchased Assets under Section 2.1,
Buyer agrees (a) to deliver to Seller or an account or accounts designated by
Seller $9,000,000.00 in immediately available funds (the "Immediate
Consideration"); (b) to deliver to an escrow agent to be designated by Seller
(the "Escrow Agent") or an account or accounts (the "Escrow Fund") designated
by Escrow Agent $1,000,000.00 in immediately available funds, which
consideration shall be subject to the provisions of the Escrow Agreement
substantially in the form attached as Exhibit A to this Agreement (the "Escrow
Consideration" and together with the Immediate Consideration, the "Purchase
Price"), and (c) to assume the Assumed Liabilities. All payments under this
Section 2.4 shall be (i) made in the form of certified or official bank check
payable to the recipient, or, at the recipient's option, by wire transfer, and
(ii) in US dollars.
2.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets and any Non-Competition Agreements (as
defined in Section 6.14 herein) as provided in Exhibit B for purposes of
complying with the requirements of Section 1060 of the Code and the regulations
thereunder. Buyer and Seller agree to each prepare and file on a timely basis
with the Internal Revenue Service (and applicable state tax authorities)
substantially identical and supplemental Internal Revenue Service Forms 8594
(and corresponding state tax forms) consistent with Buyer's allocation of the
Purchase Price. If any Tax authority challenges such allocation, the party
receiving notice of such challenge shall give the other prompt written notice
thereof and the parties shall cooperate in order to preserve the effectiveness
of such allocation. Buyer shall notify Seller within ninety (90) days after
Closing of Buyer's proposed allocation of the Purchase Price.
3. CLOSING.
3.1 CLOSING. Subject to the terms and conditions of this Agreement,
the Closing shall take place on such date, as soon as practicable after all
conditions precedent in Sections 8 and 9 have been satisfied or waived, as the
parties may agree, but in any case no later than 9:00 a.m. Pacific Daylight
Time October 30, 2002 (the "Closing Date") at the offices of Stoel Rives LLP,
000 X.X. Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx.
3.2 ACTIONS AT THE CLOSING. At the Closing, Seller shall deliver the
Purchased Assets to Buyer, Buyer shall deliver the Immediate Consideration to
Seller and deliver the Escrow Consideration to the Escrow Agent, and Buyer and
Seller shall take such actions and execute and deliver such agreements, bills
of sale, and other instruments and documents as necessary or appropriate to
effect the transactions contemplated by this Agreement in accordance with its
terms, including without limitation the following:
(a) XXXX OF SALE; ASSIGNMENT AND ASSUMPTION AGREEMENT. Seller
shall deliver to Buyer a general Xxxx of Sale substantially in the form
attached as Exhibit C and with respect to each Contract, an Assignment and
Assumption Agreement substantially in the form attached as Exhibit D (the
"Transfer Documents") in each case duly executed by Seller, and in the
aggregate assigning to Buyer all of Seller's right, title and interest in and
to the Purchased Assets. Buyer shall duly execute the Assignment and
Assumption Agreement. Buyer may designate one or more of its Affiliates as the
recipient of certain of the Purchased Assets, and as the party to assume
certain of the Assumed Liabilities, in which case Seller shall transfer such
Purchased Assets and Assumed Liabilities to Buyer or the Affiliate(s)
designated by Buyer pursuant to such Transfer Documents; provided, that Buyer
shall remain liable for the performance of the Assumed Liabilities in the event
it assigns the Assumed Liabilities to an Affiliate.
(b) PURCHASE PRICE. Buyer shall deliver the Immediate
Consideration to Seller and the Escrow Consideration to Escrow Agent.
(c) TITLE. To the extent such information relates solely to the
Purchased Assets, Seller shall provide reasonable evidence of valid title to
such of the Purchased Assets as Buyer may reasonably request in writing prior
to the Closing, in form and substance reasonably satisfactory to Buyer.
(d) THIRD PARTY CONSENTS AND ASSIGNMENTS. Seller shall deliver
to Buyer any assignments, and any required consents to assignment, that it has
obtained in respect of the Contracts, duly executed by parties having the
authority to so assign or consent to assign, in form and substance as Buyer
shall reasonably request.
(e) SELLER DOCUMENTS. At the Closing, Seller shall execute and
deliver to Buyer the Technology License Agreement, the Manufacturing Services
Agreement, the documents required under Section 8 of this Agreement and any
other closing documents reasonably requested by Buyer.
(f) BUYER DOCUMENTS. At the Closing, Buyer shall execute and
deliver to Seller the Technology License Agreement, the Manufacturing Services
Agreement, the documents required under Section 9 of this Agreement and any
other closing documents reasonably requested by Seller.
(g) POST-CLOSING ACTIONS. Subsequent to the Closing Date, Seller
shall, and shall cause any Affiliate of Seller to, from time to time execute
and deliver, upon the reasonable request of Buyer, all such other and further
materials and documents and instruments of conveyance, transfer or assignment
as may reasonably be requested by Buyer to effect, record or verify the
transfer to and vesting in Buyer of Seller's and any of Seller's Affiliates'
right, title and interest in and to the Purchased Assets, free and clear of all
Liens in accordance with the terms of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
In all other respects, each representation and warranty set out in this Section
4 is not qualified in any way whatsoever, will not merge on Closing or by
reason of the execution and delivery of any agreement, document or instrument
at the Closing, will remain in force on and after the Closing Date, is given
with the intention that liability is not confined to breaches discovered before
Closing, is separate and independent and is not limited by reference to any
other representation or warranty or any other provision of this Agreement, and
is made and given with the intention of inducing the Buyer to enter into this
Agreement. Seller represents and warrants to Buyer as follows:
4.1 ORGANIZATION, STANDING AND POWER. Seller is a corporation duly
organized and validly existing under the laws of the State of Oregon. Seller
has the requisite corporate power and authority and all necessary permits,
authorizations, consents, and approvals of all Governmental Entities to own,
lease and operate its properties and to carry on the manufacture and sale of
the Products as now being conducted, except where the failure to have such
power, authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Products. Seller is duly
qualified or licensed as a foreign corporation to do business, and, where
applicable, is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect on the Products.
4.2 AUTHORITY. The execution and delivery of this Agreement (and all
other agreements and instruments contemplated under this Agreement) by Seller,
the performance by Seller of its obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of
Seller, and no other act or proceeding on the part of or on behalf of Seller or
its shareholders is necessary to approve the execution and delivery of this
Agreement and such other agreements and instruments, the performance by Seller
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby. The signatory officers of Seller
have the power and authority to execute and deliver this Agreement and all of
the other agreements and instruments to be executed and delivered by Seller
pursuant hereto, to consummate the transactions hereby and thereby contemplated
and to take all other actions required to be taken by Seller pursuant to the
provisions hereof and thereof.
4.3 EXECUTION AND BINDING EFFECT. This Agreement has been duly and
validly executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto, upon their execution and delivery by Seller, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof
by Buyer), legal, valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms except as enforceability may
be limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
4.4 CONSENTS AND APPROVALS OF GOVERNMENTAL ENTITIES. Other than the
Governmental Authorizations, there is no requirement applicable to Seller to
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition
to the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Seller pursuant hereto or the consummation by Seller of the transactions
contemplated herein or therein.
4.5 NO VIOLATION. Neither the execution, delivery and performance of
this Agreement and all of the other agreements and instruments to be executed
and delivered pursuant hereto, nor the consummation of the transactions
contemplated hereby or thereby, will, with or without the passage of time or
the delivery of notice or both, (a) conflict with, violate or result in any
breach of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of Seller, (b) except with respect to the Required
Consents described in Section 4.6, conflict with or result in a violation or
breach of, or constitute a default or require consent of any Person (or give
rise to any right of termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any contract, notice, bond, mortgage,
indenture, license, franchise, permit, agreement, lease or other instrument or
obligation to which Seller is a party or by which Seller or any of the
Purchased Assets may be bound, (c) violate any statute, ordinance or law or any
rule, regulation, order, writ, injunction or decree of any Governmental Entity
applicable to Seller or by which any properties or assets of Seller may be
bound, or (d) result in any cancellation of, or obligation to repay, any grant,
loan or other financial assistance received by Seller from any Governmental
Entity. No "bulk sales" legislation applies to the transactions contemplated
by this Agreement.
4.6 CONSENTS. Schedule 4.6 sets forth each agreement, contract or
other instrument binding upon Seller requiring a consent as a result of the
execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, except such consents as would not,
individually or in the aggregate, have a Material Adverse Effect if not
received by the Closing Date (each a "Required Consent").
4.7 [Intentionally left blank]
4.8 ABSENCE OF CERTAIN CHANGES. Since May 31, 2002, Seller has
conducted the manufacture and sale of the Products in the ordinary course
consistent with past practice and Seller, with respect only to the Purchased
Assets:
(a) has not created, incurred or assumed (i) any borrowings under
capital leases, or (ii) any obligation which in any material way affect the
Purchased Assets;
(b) has not changed in any manner the compensation of, or agreed
to provide additional benefits to, or enter into any employment agreement with,
any Employee (as hereinafter defined);
(c) has maintained insurance coverage in amounts adequate to cover
the reasonably anticipated risks of the business conducted with the Purchased
Assets;
(d) has not acquired or agreed to acquire by merging or
consolidating with, or by purchasing any assets or equity securities of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any assets, which acquisition is or would be material, individually
or in the aggregate, to the Purchased Assets.
(e) has not sold, disposed of or encumbered any of the Purchased
Assets or licensed any Purchased Assets to any Person except for the sale of
Inventory (as hereinafter defined) in the normal course of business consistent
with past practice;
(f) has not engaged in any special promotion which promotes the
sale of Inventory with highly discounted terms;
(g) with the exception of this Agreement, has not entered into any
agreements or commitments relating to the Purchased Assets, except in the
ordinary course of business;
(h) has complied in all material respects with all laws and
regulations applicable to the Purchased Assets;
(i) has not entered into any agreement with any third party for
the distribution of any of the Purchased Assets, except in the ordinary course
of business;
(j) has not changed or announced any change to the Products;
(k) has not expanded the use of the Purchased Assets within the
organization of Seller beyond any use consistent with Seller's past practices;
(l) has not violated, amended or otherwise changed, in any way the
terms of any of the Contracts;
(m) has not commenced a lawsuit related to or involving the
Purchased Assets other than (a) for the routine collection of bills; or (b) for
a breach of this Agreement; or
(n) made any agreement to do any of the foregoing.
4.9 ASSETS GENERALLY.
(a) With the exception of the Seller Trademarks, the Purchased
Assets and the Intellectual Property to be licensed to Buyer under the
Technology License Agreement (the "Licensed Intellectual Property") include all
properties, tangible and intangible, and only such properties currently used by
Seller and necessary for Buyer to manufacture and sell the Products after the
Closing Date in a manner substantially equivalent to the manner in which Seller
has manufactured and sold the Products prior to and through the Closing Date.
Other than the Seller Trademarks, the Licensed Intellectual Property, the
Required Consents and the Governmental Approvals, no licenses or other consents
from, or payments to, any other Person are or will be necessary for Buyer to
use the Purchased Assets in the manner in which Seller has used the same.
(b) Seller holds good title or license to or leasehold interest
in all of the Purchased Assets and the Licensed Intellectual Property, subject
to any Required Consents or Governmental Approvals, has the complete and
unrestricted power and the unqualified right to sell, assign and deliver the
Purchased Assets to Buyer. Upon consummation of the transactions contemplated
by this Agreement, Buyer will acquire good title or license to or leasehold
interest in the Purchased Assets free and clear of any Liens and there exists
no restriction on the use or transfer of the Purchased Assets, except as may be
assumed hereunder by Buyer as an Assumed Liability. No Person other than
Seller has any right or interest in the Purchased Assets, including the right
to grant interests in the Purchased Assets to third parties, except for
Purchased Assets licensed or leased from the third parties which are set forth
in Schedule 4.9 and identified as such.
(c) None of the Purchased Assets that constitute tangible
personal property is held under any lease, security agreement, conditional
sales contract, lien, or other title retention or security arrangement.
(d) Except as provided in this Agreement, no restrictions will
exist on Buyer's right to sell, resell, license or sublicense any of the
Purchased Assets in the same manner in which Seller sold, resold, licensed, or
sublicensed the Purchased Assets, nor will any such restrictions be imposed on
Buyer as a consequence of the transactions contemplated by this Agreement or by
any agreement referenced in this Agreement.
(e) All of the Purchased Assets are in good operating condition
and repair, as required for their use by Seller as presently conducted, and
conform to all applicable laws, and no notice of any violation of any law
relating to any of the Purchased Assets or Assumed Liabilities has been
received by Seller.
4.10 INTELLECTUAL PROPERTY.
(a) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, including without
limitation, the execution, delivery and performance of the Technology License
Agreement, will not breach, violate or conflict with any instrument or
agreement governing the Licensed Intellectual Property or any other
intellectual property necessary or required for, or used in, the manufacture
and sale of the Products and will not cause the forfeiture or termination or
give rise to a right of forfeiture or termination of the Licensed Intellectual
Property or any other such Intellectual Property or in any material way impair
the right of Buyer or any of its affiliates to use, sell, license or dispose
of, or to bring any action for the infringement of, any such intellectual
property or portion thereof;
(b) Neither the development, manufacture, marketing, license,
sale, or use of Products by Buyer, nor the use of the Licensed Intellectual
Property by Buyer after the Closing Date, in each case in substantially the
same manner as conducted or used by Seller prior to the Closing Date, will
violate any license or agreement to which Seller is a party or infringe any
copyright, patent, trademark, service xxxx, trade secret or other intellectual
property or other proprietary right of any other party. All patents and
copyrights owned by Seller that relate to the Products or the Licensed
Intellectual Property are valid and subsisting. There is no pending or
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any of the Purchased Assets (including without
limitation the Licensed Intellectual Property) necessary or required for, or
used in, the manufacture and sale of the Products as presently conducted nor is
there any basis for any such claim, nor has Seller received any notice
asserting that any such Purchased Asset (including without limitation the
Licensed Intellectual Property) or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, nor is there any basis for any such assertion. There is no material
unauthorized use, infringement or misappropriation on the part of any third
party of the Purchased Assets (including without limitation the Licensed
Intellectual Property); and
(c) Seller has taken reasonable steps (including, without
limitation, entering into confidentiality and non disclosure agreements with
all current officers, if any, and employees of Seller located at Seller's
facility located at Chelmsford, Massachusetts (the "Chelmsford Facility") to
maintain the secrecy and confidentiality of, and its proprietary rights in, all
trade secrets owned by Seller that are necessary or required for, or used in,
the manufacture and sale of the Products as presently conducted. The Seller
Disclosure Schedule contains a complete and accurate list of all applications,
filings and other formal actions made or taken pursuant to federal, state,
local and foreign laws by Seller to perfect or protect its interest in the
Purchased Assets, including, without limitation, all patents, patent
applications, service marks and copyright or mask work registrations.
(d) All fees to maintain Seller's rights in the Licensed
Intellectual Property, including, without limitation, patent and trademark
registration and prosecution fees and all professional fees in connection
therewith pertaining to the Intellectual Property due and payable on or before
the Closing Date, have been paid by Seller or will be paid by Seller within a
reasonable period after the Closing.
4.11 SUPPLY AGREEMENTS.
(a) The Seller Disclosure Schedule contains a list (including
names, addresses, contact names and telephone numbers), which is complete in
all material respects, of all agreements or other arrangements pursuant to
which Seller is obligated to supply the Products (such agreements, as
supplemented below, are referred to collectively as the "Supply Agreements").
Seller has provided an accurate and complete copy of all Supply Agreements to
Buyer. All such Supply Agreements are in full force and effect and are valid
and effective in accordance with their respective terms against Seller, as the
case may be, and against the other party thereto. Seller holds right, title
and interest under the terms of each Supply Agreement free of all Liens.
Seller is not in material default under any such Supply Agreements (or has
caused an event which with notice or lapse of time, or both, would constitute a
material default), nor to the Knowledge of Seller is the other party thereto in
default (or has caused an event which with notice or lapse of time, or both,
would constitute a default) under any such Supply Agreements.
(b) Seller has not entered into any agreement under which Seller
is restricted from selling, licensing or otherwise distributing the Products to
any class of customers, in any geographic area, during any period of time or in
any segment of the market.
(c) After the Closing, with the exception of purchase orders
described on Schedule 4.11(c) or entered into in the ordinary course of
business and accepted by Seller prior to the Closing, Buyer will not be
prevented by any act of Seller from changing prices charged to existing or
future customers of the Products.
(d) Seller has not granted any third party the right to supply
the Products to any other third party. No agreement for supply of the products
or services by Seller obligates Seller, and no agreement would obligate Buyer
after the Closing Date, to provide any change in specification of such products
or services or to provide new products or services. No agreement pursuant to
which Seller has licensed the use of any products to any third party obligates
Seller to provide any change in specification in the performance of such
products or to provide new products or services.
4.12 WARRANTIES AND INDEMNITIES. The Seller Disclosure Schedule sets
forth a summary of all warranties and indemnities, express or implied, relating
to the Purchased Assets, and no warranty or indemnity has been given by Seller
which is not listed on the Seller Disclosure Schedule or which differs
therefrom in any material respect. Seller is in compliance with all warranties
summarized in the Seller Disclosure Schedule. The Seller Disclosure Schedule
also indicates all warranty and indemnity claims pending against Seller.
4.13 REAL PROPERTY.
(a) Seller is the lessee under the lease described in Schedule
4.13, which lease is in full force and effect (the "Lease"). The Lease is
valid and effective in accordance with its respective terms against Seller and
the other party thereto. Seller has delivered to Buyer a true, correct and
complete copy of the Lease. The premises or property described in the Lease
are presently occupied or used by Seller as lessee under the terms of the
Lease. Seller is the legal and equitable owner and holder of the leasehold
interest in the Lease. Seller has all right, title and interest of the lessee
under the terms of the Lease. Seller is not in material default under the
Lease (and has not caused an event which with notice or lapse of time, or both,
would constitute a material default), and to the Knowledge of Seller, the other
party thereto is not in default (and has not caused an event which with notice
or lapse of time, or both, would constitute a default) under the Lease.
(b) No violation of any law, regulation or ordinance, including
without limitation, laws, regulations or ordinances relating to zoning,
environmental, city planning or similar matters) relating to any Purchased
Assets currently exists or has existed at any time except for violations which
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Purchased Assets. There are
no investigations affecting any of the Purchased Assets pending or, to the
Knowledge of Seller threatened, which might materially detract from the value
of such Purchased Assets, materially interfere with any present or intended use
of any such Purchased Assets or have a Material Adverse Effect on the
marketability of the Purchased Assets.
4.15 INVENTORIES. Schedule 4.15 sets forth all of the unique inventory
of the Company related to the Products (the "Inventory"). All Inventories are
and will be items of a quality usable or salable in the ordinary and usual
course of business.
4.16 COMPLIANCE WITH LAWS. Except as otherwise provided herein, the
manufacture and sale of the Products by Seller have been and are currently
conducted in compliance with all applicable federal, state, local, and foreign
laws, ordinances, governmental rules, and other requirements of Governmental
Entities having jurisdiction over the same.
4.17 EMPLOYEES.
(a) All employees, consultants, officers, directors and
shareholders of Seller or any Seller Subsidiary that have had access to the
Licensed Intellectual Property are parties to a written agreement (a
"Confidentiality Agreement"), under which each such person or entity (i) is
obligated to disclose and transfer to Seller, without the receipt by such
person of any additional value therefor (other than normal salary or fees for
consulting services), all inventions, developments and discoveries which,
during the period of employment with or performance of services for Seller, he
or she makes or conceives of either solely or jointly with others, that relate
to any subject matter with which his or her work for Seller may be concerned,
or relate to or are connected with the Products, products or projects of
Seller, or involve the use of the time, material or facilities of Seller, and
(ii) is obligated to maintain the confidentiality of proprietary information of
Seller. To the Knowledge of Seller, none of Seller's employees, consultants,
officers or directors is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
conflict with their obligation to promote the interests of Seller with regard
to the Purchased Assets or that would conflict with the Purchased Assets.
Neither the execution nor the delivery of this Agreement, nor the manufacture
and sale of the Products by Seller's employees and consultants, will conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a material default under, any contract, covenant or instrument under
which any of such persons or entities are now obligated. It is not necessary
nor will it be necessary for Seller to utilize in the manufacture and sale of
the Products any inventions of any of such persons or entities (or people it
intends to hire) made or owned prior to their employment by or affiliation with
Seller. To the Knowledge of Seller, none of Seller's employees, consultants,
officers, directors or shareholders that has had knowledge or access to
information relating to the Purchased Assets has taken, removed or made use of
any proprietary documentation, manuals, products, materials, or any other
tangible item from his or her previous employer relating to the Purchased
Assets, except to the extent that any such activities would not have a Material
Adverse Effect on the Purchased Assets.
(b) Except for the Confidentiality Agreements, there are no
written or oral contracts of employment between Seller and any Transferred
Employee (as hereinafter defined).
(c) The Seller is not a party to a collective bargaining
agreement with any trade union covering any employees associated with the
Products, the Seller's employees associated with the Products are not members
of a trade union certified as a bargaining agent with the Seller and no
proceedings to implement any such collective bargaining agreement or
certifications with respect to such employees are pending.
4.18 EMPLOYEE BENEFIT AND COMPENSATION PLANS. Buyer will incur no
liability with respect to, or on account of, and Seller will retain any
liability for, and on account of, any employee benefit plan of Seller, any of
its Affiliates or any predecessor employer of any employee, including, but not
limited to, liabilities Seller may have to such employees under all employee
benefit schemes, incentive compensation plans, bonus plans, pension and
retirement plans, vacation plans (except as provided in Section 7.1(b)),
profit-sharing plans (including any profit-sharing plan with a cash-or-deferred
arrangement) share purchase and option plans, savings and similar plans,
medical, dental, travel, accident, life, disability and other insurance and
other plans or arrangements, whether written or oral and whether "qualified" or
"non-qualified," or to any employee as a result of termination of employment by
Seller as contemplated by this Agreement. Schedule 4.18 contains a list of the
retirement plans, pension plans, and employee benefit plans which Seller has
maintained or contributed to, or been obligated or required to contribute to,
on behalf of the Transferred Employees (as defined in Section 7.1(a)). Seller
is not a party to any collective bargaining agreement covering any employee
associated with the Products and Seller knows of no effort to organize any such
employee as a part of any collective bargaining unit. The Seller has complied
with all of its obligations (including obligations to make contributions) in
respect of the pension funds of which its employees associated with the
Products are members, there is no outstanding liability of the Seller or any of
its Affiliates to any such funds and all such funds are fully funded to meet
all potential claims for benefits by any and all such employees and any former
employee associated with the Products.
4.19 TAXES. All Taxes relating to the Purchased Assets have been or
will be paid by Seller for all periods (or portions thereof) prior to and
including the Closing Date. Seller and any other person required to file
returns or reports of Taxes have duly and timely filed (or will file prior to
the Closing Date) all returns and reports of Taxes relating to the Purchased
Assets required to be filed prior to such date, and all such returns and
reports are true, correct, and complete. There are no liens for Taxes on any
of the Purchased Assets. Seller has complied with all record keeping and tax
reporting obligations relating to income and employment taxes due with respect
to compensation paid to employees or independent contractors associated with
the Products. Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code. There are no pending or, to the Knowledge of Seller,
threatened proceedings with respect to Taxes relating to the Purchased Assets,
and there are no outstanding waivers or extensions of statutes of limitations
with respect to assessments of such Taxes. No agreement or arrangement
regarding compensation of any employee associated with the Products provides
for any payments which could result in a nondeductible expense to the Buyer
pursuant to Section 280G of the Code or an excise tax to the recipient of such
payment pursuant to Section 4999 of the Code.
4.20 [Intentionally left blank]
4.21 ENVIRONMENTAL MATTERS.
(a) DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "ENVIRONMENTAL CONDITIONS" shall mean any environmental
contamination or pollution or threatened contamination or pollution of, or the
Release or threatened Release of Hazardous Materials into, the surface water,
groundwater, surface soil, subsurface soil, air and land.
(ii) "ENVIRONMENTAL LAWS" shall mean all federal, regional,
state, county or local laws, statutes, ordinances, decisional law, rules,
regulations, codes, orders, decrees, directives and judgments relating to
public health or safety, pollution, damage to or protection of the environment,
Environmental Conditions, Releases or threatened Releases of Hazardous
Materials into the environment or the use, manufacture, processing,
distribution, treatment, storage, generation, disposal, transport or handling
of Hazardous Materials, whether existing in the past or present or hereafter
enacted, rendered, adopted or promulgated. Environmental Laws shall include,
but are not limited to, the following laws, and the regulations promulgated
thereunder, as the same may be amended from time to time: the Comprehensive
Environmental Response Compensation and Liability Act (42 U.S.C. 9601 et seq.)
("CERCLA"); the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.)
("RCRA"); the Clean Air Act (42 U.S.C. 7401 et seq.); the Clean Water Act (33
U.S.C. 1251 et seq.).
(iii) "ENVIRONMENTAL PERMITS" shall mean all permits,
authorizations, registrations, certificates, licenses, approvals or consents
required under or issued by any Governmental Entity pursuant to Environmental
Laws.
(iv) "HAZARDOUS MATERIALS" shall mean any toxic or hazardous
substance, material or waste and any pollutant or contaminant, or infectious or
radioactive substance or material, or any substances, materials and wastes
defined or regulated under any Environmental Laws, including without
limitation, petroleum, polychlorinated byphenyls and urea formaldehyde.
(v) "RELEASE" shall mean any intentional or unintentional
release, discharge, spill, leaking, pumping, pouring, emitting, emptying,
injection, disposal or dumping.
(b) Seller represents and warrants:
(i) PERMITS. Seller possesses all Environmental Permits
relating to the facility transferred as part of the Purchased Assets (the
"Facility"). Each Environmental Permit issued to Seller is in full force and
effect. Seller is in material compliance with all requirements, terms and
provisions of the Environmental Permits issued to Seller and relating to the
Facility, and has filed on a timely basis (and updated as required) all
reports, notices, applications or other documents required to be filed pursuant
to the Environmental Permits. Schedule 4.21 lists all of the Environmental
Permits relating to the Facility which have been issued to or are held by
Seller which by their terms or by operation of law will expire or otherwise
become ineffective on or before the Closing Date or within sixty (60) days
thereafter.
(ii) COMPLIANCE WITH ENVIRONMENTAL LAWS. The manufacture
and sale of the Products is, and at all times has been, in material compliance
with all Environmental Permits and Environmental Laws applicable to the
Purchased Assets.
(iii) REPORTS, DISCLOSURES AND NOTIFICATIONS. Seller has
filed on a timely basis (and updated as required) all material reports,
disclosures, notifications, applications, pollution prevention, stormwater
prevention or discharge prevention or response plans or other emergency or
contingency plans required to be filed under Environmental Laws applicable to
the Facility, including without limitation, Title III of the Superfund
Amendments and Reauthorization Act, 42 U.S.C. {section}11001 et seq.; provided
that Seller makes no representations regarding and disclaims all liability for
any actions or inactions of any landlord of any facilities transferred as part
of the Purchased Assets.
(iv) NOTICES. Seller has not received any notice that any
of the Purchased Assets: (i) is in violation of the requirements of any
Environmental Permit or Environmental Laws; (ii) is the subject of any suit,
claim, proceeding, demand, order, investigation or request or demand for
information arising under any Environmental Permit or Environment Laws; or
(iii) has actual or potential liability under any Environmental Laws, including
without limitation CERCLA, RCRA, or any comparable state or local Environmental
Laws.
(v) NO REPORTING OR REMEDIATION OBLIGATIONS. There are no
Environmental Conditions or other facts, circumstances or activities arising
out of or relating to the Purchased Assets, or the use, operation or occupancy
by Seller of the Purchased Assets that result or reasonably could be expected
to result in (A) any obligation of Seller pursuant to Environmental Laws to
file any report or notice, to conduct any investigation, sampling or monitoring
or to effect any environmental cleanup or remediation, whether onsite or
offsite; or (B) liability, either to Governmental Entities or third parties,
for damages specifically provided for under Environmental Laws (whether to
persons, property or natural resources), cleanup costs or remedial costs of any
kind or nature whatsoever.
(vi) LIENS AND ENCUMBRANCE. No federal, state, local or
municipal governmental agency or authority has obtained or asserted an
encumbrance or lien upon the Purchased Assets as a result of any Release, use
or cleanup of any Hazardous Material for which Seller is legally responsible,
nor has any such Release, use or cleanup occurred which could result in the
assertion or creation of such a lien or encumbrance.
(vii) STORAGE TRANSPORT OR DISPOSAL OF HAZARDOUS MATERIALS.
(A) There is not now nor has there ever been located
on the Facility any areas or vessels used or intended for the treatment,
storage or disposal of Hazardous Materials, including, but not limited to, drum
storage areas, surface impoundments, incinerators, landfills, tanks, lagoons,
ponds, waste piles or deep well injunction systems.
(B) Except in material compliance with Environmental
Laws, Seller, in connection with the Purchased Assets, has not transported for,
or arranged for the transportation of, storage, treatment or disposal, by
contract, agreement or otherwise, or arranged for the transportation, storage,
treatment or disposal of any Hazardous Material at or to any location
including, without limitation, any location used for the treatment, storage or
disposal of Hazardous Materials.
(viii)FUTURE LAWS. There are no Environmental Laws currently
enacted or promulgated, but as to which compliance is not yet required, that
would require Seller or Buyer to take any action with regard to the Purchased
Assets within one (1) year from the Closing Date in order to comply with such
Environmental Laws.
4.22 MATERIAL CONTRACTS.
(a) Schedule 4.22 contains a list of all Contracts which are
material to the Purchased Assets ("Material Contracts"). "Material Contracts"
shall consist of the following and shall be categorized in the Seller
Disclosure Schedule as follows:
(i) each Contract (other than routine purchase orders given
and pricing quotes received in the ordinary course of business and covering a
period of less than one year) for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the furnishing of
services relating to the Purchased Assets: (A) paid or otherwise gave
consideration of more than $50,000 in the aggregate during the fiscal year
ended May 25, 2002, (B) is likely to pay or otherwise give consideration of
more than $50,000 in the aggregate during the fiscal year ending May 31, 2003,
(C) is likely to pay or otherwise give consideration of more than $100,000 in
the aggregate over the remaining term of such contract or (D) cannot be
canceled without penalty or further payment of less than $50,000;
(ii) each customer contract and agreement relating to the
Purchased Assets (other than routine purchase orders, pricing quotes with open
acceptance and other tender bids, in each case, entered into in the ordinary
course of business and covering a period of less than one year) which (A)
involved consideration of more than $50,000 in the aggregate during the fiscal
year ended May 25, 2002, (B) is likely to involve consideration of more than
$50,000 in the aggregate during the fiscal year ending May 31, 2003, (C) is
likely to involve consideration of more than $100,000 in the aggregate over the
remaining term of the contract or (D) cannot be canceled;
(iii) (A) all distributor, manufacturer's representative,
broker, franchise, agency and dealer contracts and agreements relating to the
Purchased Assets (specifying on a matrix, in the case of distributor
agreements, the name of the distributor, product, territory, termination date
and exclusivity provisions) and (B) all sales promotion, market research,
marketing and advertising contracts and agreements relating to the Purchased
Assets which: (1) involved consideration of more than $50,000 in the aggregate
during the fiscal year ended May 25, 2002 or (2) are likely to involve
consideration of more than $50,000 in the aggregate during the fiscal year
ending May 31, 2003 or (3) are likely to involve consideration of more than
$100,000 in the aggregate over the remaining term of the contract;
(iv) all management contracts with independent contractors
or consultants (or similar arrangements) relating to the Purchased Assets and
which (A) involved consideration of more than $50,000 in the aggregate during
the fiscal year ended May 25, 2002, (B) are likely to involve consideration of
more than $50,000 in the aggregate during the fiscal year ending May 31, 2003
or (C) are likely to involve consideration of more than $100,000 in the
aggregate over the remaining term of the contract;
(v) all contracts and agreements related to the Purchased
Assets (excluding routine checking account overdraft agreements involving xxxxx
cash amounts) under which Seller has created, incurred, assumed or guaranteed
(or may create, incur, assume or guarantee) indebtedness;
(vi) all contracts and agreements that limit the ability of
any Person related to the Purchased Assets, or any of its affiliates, to
compete in any line of business or with any person or in any geographic area or
during any period of time, or to solicit any customer or client;
(viii)all contracts related to the Purchased Assets pursuant
to which Seller has agreed to supply products to a customer at specified
prices, whether directly or through a specific distributor, manufacturer's
representative or dealer; and
(ix) all other contracts (A) which are material to the
Purchased Assets or (B) the absence of which would have a Material Adverse
Effect on the Purchased Assets, or (C) which are believed by Seller to be of
unique value even though not material to the Purchased Assets.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Purchased Assets, each license, each Material
Contract and each other material contract or agreement relating to the
Purchased Assets which would have been required to be disclosed in Schedule
4.22 had such contract or agreement been entered into prior to the date of this
Agreement, is a legal, valid and binding agreement, and none of the Material
Contracts is in material default by its terms or has been canceled by the other
party; Seller is not in receipt of any claim of default under any such
agreement; and Seller does not anticipate any termination or change to, or
receipt of a proposal with respect to, any such agreement as a result of the
transactions contemplated hereby. Seller has furnished Buyer with accurate and
complete copies of all such agreements together with all amendments, waivers or
other changes thereto.
4.23 PRODUCTS. Each of the products and services produced, sold or
provided by Seller in connection with the Purchased Assets is, and at all times
has been, in compliance in all material respects with all applicable federal,
state, local and foreign laws and regulations and is, and at all relevant times
has been, fit for the ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmations of fact made
in connection with the sale of such product or service. There is no design
defect with respect to any of such products to, and each of such products
contains adequate warnings, presented in a reasonably prominent manner, in
accordance with applicable laws and current industry practice with respect to
its contents and use.
4.24 PRODUCT LIABILITY. There are no claims, actions, suits, inquiries,
proceedings or investigations pending by or against Seller, relating to the
Products and containing allegations that such products are defective or were
improperly designed or manufactured or improperly labeled or otherwise
improperly described for use.
4.25 LITIGATION; OTHER CLAIMS.
(a) There are no claims, actions, suits, inquiries, proceedings,
or investigations against Seller, or any of its officers, directors or
shareholders, relating to the Purchased Assets or the Licensed Intellectual
Property which are pending or, to the Knowledge of Seller, threatened, at law
or in equity or before or by any Governmental Entity that could reasonably be
expected to result either individually or in the aggregate, in a Material
Adverse Effect on the manufacture and sale of the Products, or which challenges
or seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby and no Governmental Entity has at any time challenged or
questioned the legal right of Seller to manufacture, offer or sell any of its
products or services in the present manner or style thereof.
(b) There are no grievance or arbitration proceedings pending or,
to the Knowledge of Seller, threatened, and there are no actual or, to the
Knowledge of Seller, threatened strikes or work stoppages with respect to the
Purchased Assets, nor is Seller aware of any basis for such proceedings or
events.
4.26 DEFAULTS. Seller is not in default under or with respect to any
judgment, order, writ, injunction or decree of any court or any Governmental
Entity which could reasonably be expected to have a Material Adverse Effect on
the Purchased Assets. There does not exist any default by Seller or, to the
Knowledge of Seller, by any other Person, or event that, with notice or lapse
of time, or both, would constitute a material default under any agreement
entered into by Seller as part of the operations relating to the Purchased
Assets which could reasonably be expected to have a Material and Adverse Effect
on the Purchased Assets, and no notices of breach thereof have been received by
Seller.
4.27 SCHEDULES. The schedules describing the Purchased Assets are
complete and accurate and describe the Purchased Assets.
4.28 [Intentionally left blank]
4.29 BROKERS AND FINDERS. Neither Seller nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder's fee in connection with
the transactions contemplated by this Agreement.
4.30 FAIR CONSIDERATION; NO FRAUDULENT CONVEYANCE. The sale of the
Purchased Assets pursuant to this Agreement is made in exchange for fair and
equivalent consideration. Seller is not now insolvent and will not be rendered
insolvent by the sale, transfer and assignment of the Purchased Assets pursuant
to the terms of this Agreement. Seller is not entering into this Agreement or
any of the other agreements referenced in this Agreement with the intent to
defraud, delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. The transactions contemplated in
this Agreement or any agreements referenced in this Agreement will not
constitute a fraudulent conveyance, or otherwise give rise to any right of any
creditor of Seller to any of the Purchased Assets after the Closing.
4.31 INSURANCE. There is no claim by Seller pending under any insurance
policies or fidelity bonds covering the Purchased Assets as to which coverage
has been questioned, denied or disputed by the underwriters of such policies
and bonds. All premiums due and payable under all such policies and bonds have
been paid and Seller is otherwise in material compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). To the Knowledge of Seller, there is no threatened
termination of, or material premium increase with respect to, any of such
policies.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Buyer Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
In all other respects, each representation and warranty set out in this Section
5 is not qualified in any way whatsoever, will not merge on Closing or by
reason of the execution and delivery of any agreement, document or instrument
at the Closing, will remain in force on and after the Closing Date, is given
with the intention that liability is not confined to breaches discovered before
Closing, is separate and independent and is not limited by reference to any
other representation or warranty or any other provision of this Agreement, and
is made and given with the intention of inducing the Seller to enter into this
Agreement. Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION. Buyer is a corporation duly formed and validly
existing under the laws of Delaware, and has full corporate power and authority
and the legal right to execute and deliver this Agreement and all of the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, and to consummate the transactions contemplated hereby and thereby.
5.2 AUTHORITY. The execution and delivery of this Agreement (and all
other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of
Buyer, and no other act or proceeding on the part of Buyer or its shareholders
is necessary to approve the execution and delivery of this Agreement and such
other agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Buyer pursuant to the provisions hereof
and thereof.
5.3 EXECUTION AND BINDING EFFECT. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof
by Seller), legal, valid and binding agreements of Buyer, enforceable against
Buyer in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
5.4 CONSENT AND APPROVALS. There is no requirement applicable to Buyer
to make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition
to the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except for filings (a) which are referred to in the
Seller Disclosure Schedule or (b) the failure of making which would not have a
Material Adverse Effect on the ability of the parties to complete the
transactions contemplated hereby.
5.5 NO VIOLATION. Neither the execution, delivery and performance of
this Agreement and of all the other agreements and instruments to be executed
and delivered pursuant hereto, nor the consummation of the transactions
contemplated hereby or thereby, will, with or without the passage of time or
the delivery of notice or both, (a) conflict with, violate or result in any
breach of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of Buyer, (b) conflict with or result in a violation or
breach of, or constitute a default or require consent of any Person (or give
rise to any right of termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any notice, bond, mortgage, indenture,
license, franchise, permit, agreement, lease or other instrument or obligation
to which Buyer is a party or by which Buyer or any of its properties or assets
may be bound, except where the conflict, violation, breach, default, required
consent, termination, cancellation, or acceleration would not have a Material
Adverse Effect on the ability of the parties to complete the transactions
contemplated hereby, or (c) violate any statute, ordinance or law or any rule,
regulation, order, writ, injunction or decree of any Governmental Entity
applicable to Buyer or by which any of its properties or assets may be bound,
except where the conflict, violation, breach, default, required consent,
termination, cancellation, or acceleration would not have a Material Adverse
Effect on the ability of the parties to complete the transactions contemplated
hereby.
6. COVENANTS.
6.1 ACCESS TO INFORMATION.
(a) Prior and subsequent to the Closing, Seller will permit Buyer
to make a full and complete investigation of the Purchased Assets and to
receive from Seller all information of Seller relating to the Purchased Assets.
Without limiting this right, Seller will give to Buyer and its accountants,
legal counsel, and other representatives full access, during normal business
hours, at a mutually agreeable location arranged in advance, to all of the
books, records, files, documents, properties, and contracts of Seller relating
to the Purchased Assets; provided Buyer shall ensure that all such persons are
under written obligations to treat all such information as proprietary and
confidential to Seller and Buyer will be responsible for any breach of any such
obligations by such persons. This Section 6.1 shall not affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Agreement. Seller shall maintain and make available the information and
records specified in this Section 6.1(a) in the ordinary course of Seller's
business and document retention policies, as if the transactions contemplated
by this Agreement had not occurred.
(b) At all times following the Closing, each party shall provide
the other party (at such other party's expense) with such reasonable
assistance, including the provision of available relevant records or other
information and reasonable access to and cooperation of any employees, as may
be reasonably requested by either of them in connection with the preparation of
any financial statement or tax return, any audit or examination by any taxing
authority, or any judicial or administrative proceeding relating to liability
for Taxes. If Seller incurs any loss, liabilities, costs, or expenses as a
result of Buyer's failure to provide reasonable assistance to Seller under this
Section 6.1(b), Buyer shall indemnify Seller any such loss, liability, cost, or
expense.
6.2 THIRD PARTY CONSENTS. Seller and Buyer shall use commercially
reasonable efforts to obtain, within the applicable time periods required, all
Required Consents, waivers, permits, consents and approvals and to effect all
registrations, filings and notices with or to third parties or Governmental
Entities which are necessary to consummate the transactions contemplated by
this Agreement so as to preserve all rights of, and benefits to, the Buyer in
the Purchased Assets.
6.3 CERTAIN NOTIFICATIONS. At all times prior to the Closing, Seller
and Buyer shall promptly notify the other party in writing of the occurrence of
any event which will result, or has a reasonable prospect of resulting, in the
failure to satisfy any of the conditions specified in Section 8 or Section 9 of
this Agreement.
6.4 REASONABLE EFFORTS. The Seller shall use commercially reasonable
efforts (i) to cause to be fulfilled and satisfied all of the conditions to the
Closing set forth in Section 8 below, (ii) to cause to be performed all of the
matters required of it at the Closing and (iii) to cause the Contracts to be
assigned to Buyer.
6.5 SELLER'S PRESERVATION OF THE ASSETS PRIOR TO CLOSING. During the
period from the date of this Agreement to the Closing Date, Seller will use
reasonable efforts to preserve the Purchased Assets and Seller shall consult
with Buyer if Seller desires to manufacture or sell the Products in a manner
not in the ordinary and usual course or consistent with past practice. Seller
shall promptly notify Buyer of any event or occurrence or emergency not in the
ordinary course of business, and any material event involving the Purchase
Assets.
6.6 NO OTHER BIDS. Until the earlier to occur of (a) the Closing or
(b) the termination of this Agreement pursuant to its terms, Seller shall not,
and Seller shall not authorize any of its officers, directors, employees or
other representatives to, directly or indirectly, (i) initiate, solicit or
encourage (including by way of furnishing information regarding the Purchased
Assets) any inquiries, or make any statements to third parties which may
reasonably be expected to lead to any proposal concerning the sale of the
Purchased Assets (whether by way of merger, purchase of capital shares,
purchase of assets or otherwise), or (ii) negotiate, engage in any substantive
discussions, or enter into any agreement, with any Person concerning the sale
of the Purchased Assets (whether by way of merger, purchase of capital shares,
purchase of assets or otherwise).
6.7 TAX RETURNS. Buyer and Seller shall cooperate in sharing
information to allow the timely filing of all returns and reports relating to
Taxes.
6.8 POST-CLOSING ACCESS TO INFORMATION. For a period of six (6) months
after the Closing Date, in order to properly manufacture and sell the Products
in a substantially similar manner as before the Closing Date, it is necessary
that Buyer obtain additional information within Seller's possession relating to
the Products, Seller will use reasonable efforts to furnish or cause its
representatives to furnish such information to Buyer.
6.9 [Intentionally left blank]
6.10 [Intentionally left blank]
6.11 PUBLIC ANNOUNCEMENTS. On and prior to the Closing Date, Buyer and
Seller shall advise and confer with each other prior to the issuance of any
reports, statements or releases concerning this Agreement (including the
exhibits and schedules hereto) and the transactions contemplated herein.
Neither Buyer nor Seller will make any public disclosure prior to the Closing
or with respect to the Closing unless both parties agree on the text and timing
of such public disclosure; provided, however, that nothing contained herein
shall prevent either party at any time from furnishing any information required
by applicable law or as required by any Governmental Entity to satisfy a
party's legal obligations. Public statements or press releases announcing this
transaction will be in a form and made in a manner to be approved by both Buyer
and Seller, and such approval will not be unreasonably withheld.
6.12 POST-CLOSING ACTIONS. Subsequent to the Closing Date, Seller
shall, from time to time, execute and deliver, upon the reasonable request of
Buyer, all such other and further materials and documents and instruments of
conveyance, transfer or assignment as may reasonably be requested by Buyer to
effect, record or verify the transfer to, and vesting in Buyer, of Seller's
right, title and interest in and to the Purchased Assets, free and clear of all
Liens, in accordance with the terms of this Agreement.
6.13 FUTURE AGREEMENTS. In the event Seller enters into any material
agreement between the date of this Agreement and the Closing that relates
primarily to the Purchased Assets, at the request of Buyer, Seller agrees to
include any such agreement within the Contracts.
6.14 NON-COMPETITION AGREEMENT.
(a) For purposes of this Section 6.14, the following terms shall
have the following meaning:
(i) "Licensed Field" shall mean the market for optical
network test products the primary purpose of which is protocol specific bit
error rate testing but which do not include oscilloscopes and communications
signal analyzer products.
(ii) "Restricted Business" shall mean any business or
activity which directly competes with Products sold or in development as of the
Closing Date; provided that any business acquired by Seller after the Closing
Date shall not be considered a Restricted Business; and, provided further, that
any business outside the Licensed Field shall not be considered a Restricted
Business.
(iii) "Territory" shall mean the counties, cities and states
of the United States of America and each political subdivision and/or nation
throughout the world.
(b) In consideration of the Buyer entering into this Agreement,
Seller undertakes that within the Territory for a period of two (2) years after
the Closing Date, neither it nor any Affiliate of it will:
(i) compete, participate, assist or otherwise be directly
or indirectly involved or concerned, financially or otherwise, as a member,
shareholder, unitholder, director, consultant, adviser, contractor, principal,
agent, manager, beneficiary, partner, associate, trustee, financier or
otherwise in any Restricted Business;
(ii) solicit, canvass, approach or accept any offer from any
person or entity who was at any time during the 24 months immediately preceding
the Closing Date a customer or supplier of the Products with a view to
establishing a relationship with or obtaining the patronage of that person or
entity in a Restricted Business;
(iii) interfere or seek to interfere, directly or indirectly,
with any relationship between Buyer and any client, customer, employee or
supplier of the Products in the Licensed Field.
(c) If any of the separate and independent covenants and
restraints referred to in clause (b) of this Section 6.14 are or become invalid
or unenforceable for any reason then that invalidity or unenforceability will
not affect the validity or enforceability of any other separate and independent
covenants and restraints.
(d) If any prohibition or restriction contained in clause (b) of
this Section 6.14 is judged to go beyond what is reasonable in the
circumstances, but would be judged reasonable if that activity was deleted or
that period or area was reduced, then the prohibitions or restrictions apply
with that activity deleted or period or area reduced by the minimum amount
necessary.
(e) Seller acknowledges that:
(i) the prohibitions and restrictions contained in clause
(b) of this Section 6.14 are reasonable and necessary; and
(ii) Seller has received valuable consideration for agreeing
to the covenants in clause (b) of this Section 6.14.
(f) Seller and Buyer acknowledge and agree that it will be
difficult to compute the amount of damage or loss to Buyer if Seller violated
any of their agreements under this Section 6.14, that Buyer will be without an
adequate legal remedy if Seller violated the provisions of this Section 6.14,
and that any such violation may cause substantial irreparable injury and damage
to Buyer not fully compensable by monetary damages. Therefore, Seller and
Buyer agree that in the event of any violation by Seller of this Section 6.14,
Buyer shall be entitled (i) to recover from Seller monetary damages, (ii) to
obtain specific performance, injunctive or other equitable relief, of either a
preliminary or permanent type, and (iii) to seek any other available rights or
remedies at law or in equity which may be exercised concurrently with the
rights granted hereunder.
6.15 PERMITS. At Buyer's reasonable request and entire expense, Seller
will assist Buyer in obtaining any licenses, permits or authorizations required
for the manufacture and sale of the Products but which are not transferable.
6.16 [Intentionally left blank]
6.17 TAXES. Seller shall be responsible for paying, shall promptly
discharge when due, and shall reimburse, indemnify and hold harmless Buyer
from, any sales or use, transfer, real property gains, excise, stamp, or other
similar Taxes arising from, imposed on or attributable to the transactions
contemplated by this Agreement. Prior to or at Closing, Buyer shall deliver to
Seller's Tax Department (via facsimile to 503-627-1882) a Massachusetts resale
certificate for purchased inventory where applicable for any Purchased Assets.
6.18 BROKERS' OR FINDERS' FEES. Each party shall indemnify and hold
harmless the other from any claim for brokerage or finders' fees arising out of
the transactions contemplated hereby by any person claiming to have been
engaged by such party.
6.19 ASSUMED LIABILITIES. Buyer will indemnify and hold Seller harmless
from any claim, suit, loss, liability, cost, or expense (including reasonable
attorneys' fees) incurred by Seller as a result of Buyer's performance or non-
performance of the Assumed Liabilities on or after the Closing Date.
6.20 COMMUNICATIONS WITH KEY CUSTOMERS. After the Closing Date Seller
will reasonably cooperate with Buyer to contact and introduce Buyer to those
customers of Seller listed on Schedule 6.20.
6.21 COMMUNICATIONS WITH KEY VENDORS. After the Closing Date Seller
will reasonably cooperate with Buyer to contact and introduce Buyer to those
vendors of Seller listed on Schedule 6.21.
7. EMPLOYEE MATTERS.
7.1 TRANSFERRED EMPLOYEES.
(a) OFFER OF EMPLOYMENT. Subject to and in accordance with the
provisions of this Section 7, Buyer may offer employment to any or all of the
employees identified by Seller to Buyer who are necessary for the manufacture
and development of the Products at the Chelmsford Facility as of the date of
this Agreement (the "Employees"). Seller shall provide reasonable cooperation,
including a joint on-site meeting involving Seller, Buyer, and the employees
prior to the Closing Date, and will make available, as reasonably necessary,
one of its human resources employees to assist Buyer for a period of up to one
(1) month after the Closing to facilitate the transition of Seller's employees
to Buyer, and to otherwise enable Buyer to offer employment to such employees.
Such employment shall be subject to Buyer's established policies generally
applicable to new employees. Upon Closing, Buyer (or any Affiliates designated
by Buyer) shall hire those Employees to whom it has made an offer in accordance
with this Section 7.1 and who accept such offer in the manner and within the
time frame reasonably established by Buyer. Each such Employee who is employed
by Seller on the Closing Date and who actually transfers to employment with
Buyer (or any Affiliate designated by Buyer) at or after the Closing Date as a
result of an offer of employment made by Buyer is hereafter referred to as a
"Transferred Employee." Transferred Employees shall not include any person on
a disability leave of more than twenty-six (26) weeks. Notwithstanding such
periodic disclosures made to Seller, Buyer shall not be obligated to hire any
employee unless an offer of employment is subsequently made to, and accepted
by, such employee; in addition, Buyer shall have no obligation to hire any
employees of Seller after the Closing Date.
(b) TRANSITION. The employment by Seller of the Transferred
Employees shall end at the close of business on the Closing Date and the
employment of the Transferred Employees by Buyer shall commence at 12:01 a.m.
on the day after the Closing Date. The terms of employment with Buyer (or
Buyer's Affiliates) shall be as mutually agreed to between each Transferred
Employee and Buyer (or Buyer's Affiliate, as the case may be), subject to the
provisions of this Section 7.1. Between the date of this Agreement and the
Closing Date, Seller will provide each Transferred Employee with the same level
of compensation as that currently provided by Seller. Buyer shall have no
obligation with respect to payments of salary, compensation, wages, health or
similar benefits, commissions, bonuses (deferred or otherwise), severance,
stock or stock options or any other sums due to any Transferred Employee, other
than vacation accruals up to and through the Closing Date for each Transferred
Employee. For each Transferred Employee who elects to transfer accrued
vacation from Seller to Buyer, Buyer agrees to transfer and assume liability
for each such Transferred Employee's vacation accrual, pursuant to the
documentation provided by Seller, in an amount equal to each such Transferred
Employee's accrued vacation listed on Schedule 7.1(b) attached hereto and
updated by Seller as of the close of business on the Closing Date. Seller will
be fully responsible for all amounts payable to any employee, including
(without limitation) all termination payments, redundancy compensation,
severance pay, and other amounts payable in respect of the termination of
employment of any employee, other than accrued vacation pay, in connection with
the sale of the Purchased Assets to the Buyer. In addition, Seller will be
fully responsible for all amounts owing to Transferred Employees prior to
Closing.
(c) RETENTION OF EMPLOYEES PRIOR TO CLOSING. Seller agrees to
use reasonable efforts to retain the Employees as employees of Seller until the
Closing Date, and to assist Buyer in securing the employment after the Closing
Date of those Employees to whom Buyer makes or intends to make offers of
employment under subsection (a) above. Seller shall not transfer any Employee
to employment with Seller outside of the Chelmsford Facility prior to the
Closing or without the consent of Buyer. Seller shall notify Buyer promptly
if, notwithstanding the foregoing, any Employee terminates employment with
Seller after the date of this Agreement but prior to the Closing.
7.2 COMPENSATION AND BENEFITS OF TRANSFERRED EMPLOYEES. Coverage for
Transferred Employees under Buyer's compensation and benefit plans and other
programs shall commence as of 12:01 a.m. on the day after the Closing Date.
Buyer shall be free to establish its own employee benefit plans; Buyer shall
have no obligation to offer benefit plans of the same type or with terms
similar to or better than the terms of Seller's current employee benefit plans.
Buyer may, at its option, give each Transferred Employee credit for such
Transferred Employee's years of most recent continuous service with Seller for
purposes of determining participation and benefit levels under all of Buyer's
vacation policies and benefit plans and programs.
7.3 OTHER EMPLOYEES. With respect to each employee located at the
Chelmsford Facility as of the Closing Date who is not a Transferred Employee
(each a "Non-Transferred Employee"), Seller agrees to either terminate such
Non-Transferred Employee's employment with Seller, effective prior to the
Closing or offer such Non-Transferred Employee continued employment with Seller
other than in connection with the manufacture and sale of the Products. Seller
further acknowledges that the Non-Transferred Employees shall not be employees
of Buyer after the Closing.
7.4 NO RIGHT TO CONTINUED EMPLOYMENT OR BENEFITS. No provision in this
Agreement shall create any third party beneficiary or other right in any Person
(including any beneficiary or dependent thereof) for any reason, including,
without limitation, in respect of continued, resumed or new employment with
Seller or Buyer (or any Affiliate of Seller or Buyer) or in respect of any
benefits that may be provided, directly or indirectly, under any plan or
arrangement maintained by Seller, Buyer or any Affiliate of Seller or Buyer.
Except as otherwise expressly provided in this Agreement, Buyer is under no
obligation to hire any employee of Seller, provide any employee with any
particular benefits, or make any payments or provide any benefits to those
employees of Seller whom Buyer chooses not to employ.
7.5 NO SOLICITATION OR HIRE BY SELLER. For a period of two (2) years
after the Closing: (a) Seller will not solicit any Transferred Employee for
employment, and (b) Buyer will not solicit any of Seller's employees who are
brought to the attention of Buyer by any of the Transferred Employees. For
purposes of this Section 7.5, the term "solicit" shall not include the
following activities by Seller or Buyer: (i) advertising for employment in any
bulletin board (including electronic bulletin boards), newspaper, trade journal
or other publication available for general distribution to the public without
specific reference to any particular employees; (ii) participation in any
hiring fair or similar event open to the public not targeted at the other
party's employees; and (iii) use of recruiting or employee search firms that
have been instructed by the party not to target any of the other party's
employees.
8. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
8.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE; CERTIFICATE.
(a) The representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as though such representations and warranties
had been made or given again at and as of the Closing Date; provided, however,
that, notwithstanding the foregoing, Buyer agrees the representations and
warranties of Seller contained in Section 4.15 and in Section 4.27 with respect
to Schedules 2.1(a), 2.1(b), 2.1(c), 2.2(a), 2.2(b) and 2.2(c) shall be true
and correct in all material respects as of October 23, 2002 and that any
material changes to such representations and warranties between October 23,
2002 and the Closing Date shall be disclosed in writing by Seller to Buyer on
the Closing Date.
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement in all material
respects through the Closing Date; and
(c) Buyer shall have received a certificate, dated as of the
Closing Date, signed and verified by an officer of Seller on behalf of Seller
certifying to the matters set forth in Sections 8.1(a) and 8.1(b) above.
8.2 CONSENTS. All Governmental Authorizations, Required Consents and
consents required to transfer the Material Contracts to Buyer on the terms and
conditions provided to Seller, without change as a result of the transfer to
Buyer, shall have been obtained.
8.3 NO PROCEEDINGS OR LITIGATION.
(a) No preliminary or permanent injunction or other order shall
have been issued by any Governmental Entity, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any Governmental
Entity which prevents the consummation of the transactions contemplated by this
Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Purchased Assets.
8.4 [Intentionally left blank]
8.5 GOVERNMENTAL FILINGS. The parties shall have made any required
filing with Governmental Entities in connection with this Agreement and the
exhibit agreements, and any approvals related thereto shall have been obtained
or any applicable waiting periods shall have expired. If a proceeding or
review process by a Governmental Entity is pending in which a decision is
expected, Buyer shall not be required to consummate the transactions
contemplated by this Agreement until such decision is reached or rendered,
notwithstanding Buyer's legal ability to consummate the transactions
contemplated by this Agreement prior to such decision being reached or
rendered.
8.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change relating to the Purchased Assets on the Closing Date as compared
with the date of this Agreement.
8.7 LEGAL OPINION. Buyer shall have received a legal opinion from
Stoel Rives LLP, legal counsel to Seller, dated the Closing Date, in the form
attached as Exhibit 8.7.
8.8 BOARD APPROVAL. This Agreement and the transactions it
contemplates shall have been approved and adopted by the Board of Directors of
Seller, and shall have otherwise been approved as required by law and the
charter documents of Seller.
8.9 ESCROW AGREEMENT. Buyer and Seller shall have entered into an
Escrow Agreement in substantially the form attached hereto as Exhibit A, and
such agreement shall remain in full force and effect.
8.10 MANUFACTURING SERVICES AGREEMENT. Buyer and Seller shall have
entered into the Manufacturing Services Agreement.
8.11 LICENSE AGREEMENT. Buyer and Seller shall have entered into the
Technology License Agreement.
8.12 KEY EMPLOYEES. Each of the Transferred Employees or alternative
Transferred Employees thereof, as the case may be, listed on Schedule 8.12
shall have accepted an offer of employment made by Buyer, such offer of
employment to be reasonable and to be made within 48 hours of execution of this
Agreement by Buyer and Seller; provided, however, that Buyer shall be deemed
expressly to have waived this condition if Buyer makes any public statement or
issues any press release or otherwise makes any public disclosure announcing
the transactions contemplated by this Agreement.
9. CONDITIONS TO SELLER'S OBLIGATIONS.
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law:
9.1 REPRESENTATIONS AND WARRANTIES TRUE PERFORMANCE; CERTIFICATE.
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had
been made or given again at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement in all material
respects through on the Closing Date; and
(c) Seller shall have received a certificate, dated as of the
Closing Date, signed and verified by an officer of Buyer on behalf of Buyer
certifying to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 CONSENTS. All Governmental Authorizations shall have been
obtained.
9.3 NO PROCEEDING OR LITIGATION.
(a) No preliminary or permanent injunction or other order shall
have been issued by any Governmental Entity, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any Governmental
Entity which prevents the consummation of the transactions contemplated by this
Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages.
9.4 GOVERNMENTAL FILINGS. The parties shall have made any filing
required with Governmental Entities, and any approvals shall have been obtained
or any applicable waiting periods shall have expired. If a proceeding or
review process by a Governmental Entity is pending in which a decision is
expected, Seller shall not be required to consummate the transactions
contemplated by this Agreement until such decision is reached or rendered,
notwithstanding Seller's legal ability to consummate the transactions
contemplated by this Agreement prior to such decision being reached or
rendered.
9.5 [Intentionally left blank]
9.6 BOARD APPROVAL. This Agreement and the transactions it
contemplates shall have been approved and adopted by the Board of Directors of
Buyer, and shall have otherwise been approved as required by law and the
charter documents of Buyer.
9.7 ESCROW AGREEMENT. Buyer and Seller shall have entered into an
Escrow Agreement in substantially the form attached hereto as Exhibit A.
9.8 MANUFACTURING SERVICES AGREEMENT. Buyer and Seller shall have
entered into the Manufacturing Services Agreement.
9.9 LICENSE AGREEMENT. Buyer and Seller shall have entered into the
Technology License Agreement.
10. ESCROW AND INDEMNIFICATION.
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
provided herein, all covenants to be performed prior to the Closing Date, and
all representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the consummation of the
transactions contemplated hereby and continue until the one year anniversary of
the Closing Date (the "Escrow Termination Date"); provided, that the
representations and warranties set forth in Section 4.10(a) and (b) shall
survive the consummation of the transactions contemplated hereby and continue
until the two year anniversary of the Closing Date (the "IP Warranty
Termination Date"); provided, further that if any claims for indemnification
have been asserted with respect to any such representations, warranties and
covenants prior to the Escrow Termination Date or the IP Warranty Termination
Date, as applicable, the representations, warranties and covenants on which any
such claims are based shall continue in effect until final resolution of any
claims; and provided, further, that representations, warranties and covenants
relating to Taxes shall survive until 30 days after expiration of all
applicable statutes of limitations relating to such Taxes. All covenants to
be performed after the Closing Date shall continue according to their terms.
10.2 INDEMNIFICATION. Subject to the limitations set forth in this
Section 10, from and after the Effective Time, Seller shall protect, defend,
indemnify and hold harmless Buyer and Buyer's Affiliates, officers, directors,
employees, representatives and agents (each of the foregoing Persons is
hereinafter referred to individually as an "Indemnified Person" and
collectively as "Indemnified Persons") from and against any and all losses,
costs, damages, liabilities, fees (including without limitation attorneys'
fees) and expenses (collectively, the "Damages"), that any of the Indemnified
Persons incurs by reason of or in connection with (a) any misrepresentation,
breach of, or default in connection with, any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement,
including any exhibits or schedules attached hereto, known to Buyer prior to
the Escrow Termination Date, or prior to the IP Warranty Termination Date with
respect to Section 4.10(a) and (b) and (b) any liabilities arising from
Seller's activities related to the Purchased Assets prior to the Closing Date,
excluding the Assumed Liabilities. Damages in each case shall be net of the
amount of any insurance proceeds and indemnity and contribution actually
recovered by Buyer. Whenever any Indemnified Party shall have determined, in
good faith, that there are facts or circumstances which entitle the Indemnified
Person to indemnification under this Section 10, such Indemnified Person shall
give Seller written notice of such a claim as soon as practicable thereafter,
and upon request of Seller, shall reasonably cooperate and assist Seller in the
defense of the action for which indemnity is sought; provided, that failure to
promptly give such notice will not relieve Seller of its indemnification
obligations under this section except to the extent, if any, that Seller has
been prejudiced thereby.
10.3 DAMAGES THRESHOLD AND LIMITATION. Notwithstanding the foregoing,
Buyer may not receive any amount of the Escrow Consideration from the Escrow
Fund unless and until a certificate signed by an officer of Buyer (an
"Officer's Certificate") identifying Damages in the aggregate amount in excess
of $50,000.00 (the "Basket Amount") has been delivered to the Escrow Agent and
such amount is determined pursuant to this Section 10 to be payable, in which
case, subject to the terms of the Escrow Agreement, including any provisions
governing disputes between the parties contained therein, Buyer shall receive
Escrow Consideration equal in value to the full amount of such Damages in
excess of the Basket Amount, without further deduction. Notwithstanding
anything to the contrary contained herein, in no event shall Seller's liability
for any and all claims made under this Section 10 cumulatively exceed in the
aggregate the amount of the Escrow Consideration existing at the time Buyer
becomes entitled to such amount under this Section 10. For purposes of
clarity, in no event shall Seller's liability for any and all claims made by
Buyer under this Section 10 before the IP Warranty Termination Date with
respect to Section 4.10(a) and (b) exceed in the aggregate the amount of the
Escrow Consideration existing at the Escrow Termination Date.
10.4 ESCROW PERIOD. Subject to the following requirements, the Escrow
Consideration shall be retained by the Escrow Agent until the Escrow
Termination Date. Upon the Escrow Termination Date, the Escrow Agent shall
deliver to the Seller all remaining Escrow Consideration provided, however,
that the amount of Escrow Consideration, which, in the reasonable judgment of
the Escrow Agent and the subsequent arbitration of the claim in the manner
provided in the Escrow Agreement, is necessary to satisfy any unsatisfied
claims specified in any Officer's Certificate delivered to the Escrow Agent
prior to the Escrow Termination Date with respect to facts and circumstances
existing on or prior to the Escrow Termination Date shall remain in the
possession of the Escrow Agent until such claims have been resolved. As soon
as all such claims have been resolved, any remaining Escrow Consideration not
required to satisfy such claims shall be distributed to the Seller.
10.5 METHOD OF ASSERTING CLAIMS. All claims for indemnification by the
Buyer or any other Indemnified Person pursuant to this Section 10 shall be made
in accordance with the provisions of the Escrow Agreement.
10.6 SOLE AND EXCLUSIVE REMEDY. The foregoing escrow and
indemnification provisions set forth in this Section 10 shall be the sole and
exclusive remedy of the Indemnified Persons with respect to any claim against
Seller for Damages under this Agreement; provided, however, that nothing herein
shall limit the liability of Seller for claims based on willful
misrepresentation or fraud.
11. TERMINATION.
11.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at any
time prior to the Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By either party, if the other party goes into liquidation, has
an application or order made for its winding up or dissolution, has a
resolution passed or steps taken to pass a resolution for its winding up or
dissolution, becomes unable to pay its debts as and when they fall due, or has
a receiver, receiver and manager, administrator, liquidator, provisional
liquidator, official manager or administrator appointed to it or any of its
assets; or
(c) By Buyer or Seller if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement; or
(d) By either party if the Closing does not occur by November 6,
2002.
(e) By Buyer if the condition set forth in Section 8.12 is not
satisfied or waived within 48 hours of execution of this Agreement by Buyer and
Seller.
11.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination
of this Agreement by any or all of the parties pursuant to Section 11.1,
written notice shall be given to each other party specifying the provision of
Section 11.1, pursuant to which such termination is made and shall become void
and there shall be no liability on the part of Buyer or Seller (or their
respective officers, directors, partners or Affiliates), except as a result of
any breach of this Agreement by such party or to the extent such a party is
entitled to indemnification under Section 10 of this Agreement.
12. MISCELLANEOUS.
12.1 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with
this Section 12 shall be binding upon the parties and their respective
successors and assigns.
12.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Notwithstanding the foregoing and except as expressly
provided in this Agreement, neither party shall assign its rights or delegate
its duties under this Agreement to any other party. Any assignment or
delegation in violation of the foregoing shall be null and void.
12.3 GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law.
12.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
12.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
12.6 NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified
or registered mail (airmail if sent internationally) with postage prepaid, if
such notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice.
12.7 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall
be excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
12.8 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other written
or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
12.9 ADVICE OF LEGAL COUNSEL. Each party acknowledges and represents
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its
behalf has read and understood all of the terms and provisions of this
Agreement. This Agreement shall not be construed against any party by reason
of the drafting or preparation thereof.
12.10 EXPENSES. Each party shall bear its own expenses in connection
with the preparation for and consummation of the transaction contemplated
herein.
[Signature pages follow]
This Agreement has been duly executed and delivered by the duly authorized
officers of Seller and Buyer as of the date first above written.
BUYER:
DIGITAL LIGHTWAVE, INC., a Delaware
corporation
By:
Xxxx X. Xxxxx
Executive Vice President
Address: 00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
SELLER:
TEKTRONIX, INC., an Oregon Corporation
By:
Name:
Title:
Address: Xxxxxx Xxxxxx Park
P.O. Box 500, MS 50-720
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
